STATE OF VERMONT

SUPERIOR COURT

WASHINGTON UNIT

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COMMISSIONER OF THE
DEPARTMENT OF FINANCIAL
REGULATION
PLAINTIFF,

v.

CARE RISK RETENTION GROUP, INC.,
RESPONDENT.

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CIVIL DIVISION
DOCKET NO. 25-CV-01615

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LIQUIDATOR’S FIRST STATUS REPORT

I, J. David Leslie, Special Deputy Liquidator, hereby submit this first status report concerning the liquidation of CARE Risk Retention Group, Inc. (“CARE” or the “Company”).

1. CARE was placed in rehabilitation by the Court’s Order for Rehabilitation of CARE Risk Retention Group, Inc. (“Rehabilitation Order”) entered on April 11, 2025. The Rehabilitation Order appointed the Commissioner of the Department of Financial Regulation (“Commissioner”) as Rehabilitator (“Rehabilitator”) and authorized him to implement a plan of rehabilitation (“Rehabilitation Plan”). Under the Rehabilitation Plan, the Company terminated all of its in-force policies of insurance upon ninety days advance notice so that insureds could find alternative coverage and minimize the risk that a claim cannot be paid in full. See Rehabilitation Petition, ¶¶ 8 and 8(d). The Company also ceased adjustment of all policy-level claims as well as the payment of any loss, defense, or other policy-related obligations pending an assessment of the Company’s ability to pay its policy-level claims in full. See 8 V.S.A. § 7081 (priority classes applicable in liquidation); Rehabilitation Petition, ¶ 8(b).

2. The Rehabilitation Plan required the Commissioner (as Rehabilitator) to report to the Court within sixty days as to his assessment of CARE’s ability to pay its obligations and his

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recommendations for next steps. Rehabilitation Petition, ¶ 8(f). The Commissioner conducted this assessment and concluded that further efforts to rehabilitate the Company would substantially increase the risk of loss to creditors, policyholders, or the public and that the Company’s financial condition would render any such efforts futile. See 8 V.S.A. § 7055(a). The Commissioner therefore included his analysis and recommendation to the Court in a Petition for Order of Liquidation for Care Risk Retention Group, Inc. (“Liquidation Petition”) filed on May 30, 2025. The Court granted the Liquidation Petition by its Order of Liquidation entered on July 2, 2025 (“Order of Liquidation”). Among other things, the Order of Liquidation appointed the Commissioner as Liquidator, authorized him to appoint a special deputy liquidator, directed him to take possession and control of the Company’s assets, and required that he establish a claim filing deadline and give notice of liquidation to creditors and others. See Order of Liquidation ¶¶ 1-3, 5-6. The Order of Liquidation also instructed the Liquidator to develop and file a plan of liquidation within thirty days. See id., ¶ 14. The Liquidator appointed me to serve as Special Deputy Liquidator.

3. On July 18, 2025, the Liquidator filed a Motion for Interim Distribution on Priority Class 3 Claims and for Approval of Liquidation Plans (“Motion for Distribution & Plans”). In the Motion for Distribution & Plans, the Liquidator proposed that the Court authorize a 25% interim distribution on claims allowed in priority class 3. The Liquidator also sought approval of a plan of liquidation (“Liquidation Plan”), a plan addressing claims for unearned premium (“Unearned Premium Plan”), and a plan for the offer of extended reporting periods (“Extended Reporting Period Plan”). The Motion for Distribution & Plans also advised that the Liquidator had set December 31, 2026 (the final business day before the maximum 18 month period allowed by statute), as the claim filing deadline because CARE still had in-force business

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at that time, had relatively “green” claims, and because resolution of the underlying medical malpractice disputes was likely to require substantially more than 18 months. The Court granted the Motion for Distribution & Plans by its order entered on July 22, 2025, authorizing the 25% interim distribution and approving the Liquidation Plan, Unearned Premium Plan, and Extended Reporting Period Plan.

4. The Liquidator has posted the Rehabilitation Order, Liquidation Petition, Liquidation Order, Liquidation Plan, Unearned Premium Plan, Extended Reporting Period Plan, and other key documents relating to this proceeding on a website established by the Department of Financial Regulation – www.dfr.vermont.gov/care-risk-retention-group-inc – which will be maintained for the duration of the liquidation.

Status Report

5. Provision of Notice. Pursuant to ¶ 6.a of the Liquidation Order, I caused notice of the Liquidation Order and December 31, 2026, claim filing deadline to be sent by first class mail, along with a blank proof of claim form and instructions for its submission, to the following:

   a. The chief insurance regulators and taxing authorities in each of the forty-five jurisdictions in which CARE was doing business;

   b. One hundred and eleven (111) former policyholders of CARE for which the Company had address information;

   c. Five hundred and fourteen (512) current policyholders of CARE for which the Company had address information;

   d. Ninety-one (91) defense counsel involved with claims shown as “open” in CARE’s books and records when the Rehabilitation Order entered and for which CARE’s claims systems included a mailing address;

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e. Thirty-five (35) plaintiff counsel involved with open claims shown as “open” in CARE’s books and records when the Rehabilitation Order entered and for which CARE’s claims systems included a mailing address;

f. One hundred fifty-two (152) other individuals and entities known or reasonably expected to have claims against CARE including vendors and former officers/employees.

6. Pursuant to ¶ 6.a.(iii) of the Liquidation Order, I caused notice of the Liquidation Order and claim filing deadline to be published in the Burlington Free Press on July 18, 2025, and the Louisville Courier-Journal on July 18, 2025.

7. In addition to traditional publication notice, a liquidation website was created as described above in ¶ 4 on which the notice, proof of claim form, and instructions for submission have been continuously posted and where they will be maintained throughout this proceeding.

8. Receipt of Proofs of Claim. As of March 31, 2026, the Liquidator has received and acknowledged a total of 118 completed proofs of claim (“POCs”). (Incomplete proofs of claim were returned to their senders with instructions for resubmission.) Additionally, pursuant to the Unearned Premium Plan and as stated in further detail below, the Liquidator deemed 491 policyholders to have filed a POC seeking return of unearned premium.

9. A POC may present a single claim (e.g. recovery for a loss resulting from a single incident) or multiple claims (e.g. the POC form encloses a schedule listing separate incidents). Further, some claims include both current obligations (e.g. defense expenses incurred to-date) as well as claims for future obligations (e.g. the possibility of indemnity and future defense expenses). Accordingly, the Liquidator has subdivided a number of POCs, assigning separate control numbers to each claim presented in a POC. For example, POC no. 46 has been

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subdivided into 17 subclaims assigned POC nos. 46.01 through 46.17. Counted in this manner, the Liquidator had received a total of 629 claims (including those which the Liquidator deemed filed pursuant to the Unearned Premium Plan) by March 31, 2026.

10. Because the insurance statutes permit third parties to file claims directly against the estate and because multiple entities may have a financial interest in a claim, a single incident may give rise to numerous related claims that may seek overlapping recovery (e.g. a tort claimant asserting the insured’s liability, another insurer asserting rights of subrogation/contribution, a policyholder seeking indemnity and post-liquidation defense expenses, and defense counsel seeks payment of pre-liquidation defense expenses.) This means that raw POC and claim counts are not a reliable metric for evaluating estate exposure or the amount of work remaining to crystallize CARE’s obligations and close the proceeding. The Liquidator has therefore attempted to group POCs by incident. As of March 31, 2026, this analysis showed 90 incidents for which at least one POC has been filed. This count is expected to increase as additional POCs are filed and further information collected regarding the POCs already received.

11. Retention of Vendors. Prior to its insolvency, CARE had no employees and received all administrative and other services from vendors. The Company received administrative services from its affiliate (and corporate parent) Care Professional Liability Association, LLC (“CPLA”) which has filed a Chapter 7 bankruptcy proceeding.¹ CPLA also maintained CARE’s books and records on a cloud-based system ESIS, Inc., (“ESIS”) served as third-party administrator for the investigation and handling of claims while Risk Services-

¹ The Liquidator filed a claim in the CPLA bankruptcy which was subsequently assigned to certain CARE creditors as part of a settlement agreement. Further information regarding CPLA, its bankruptcy, and the settlement is presented in the Liquidator’s Motion for Approval of Settlement Agreement with Claimants Adria Snover and Aruna Gupta filed on October 29, 2025.

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Vermont, Inc., (“Risk Services”) provided captive management, financial, and administrative services.

12. Following entry of the Rehabilitation Order, the Commissioner as Rehabilitator considered whether to maintain these relationships, evaluating whether they provided administrative efficiency (e.g. leveraging existing institutional knowledge and benefiting from vendors’ economies of scale), were necessary to maintain support and stability for policyholders, and were otherwise in the best interest of the estate. In all three instances, the Rehabilitator concluded that retaining the incumbent vendors (where possible) would be preferable, at least in the short term.

13. It was not possible to retain CPLA as a vendor because it was no longer a going concern. CARE’s former President, however, operated another entity -- Grande Insurance Management, LLC (“Grande”) -- which continued to operate and was able to provide the Rehabilitator with administrative services including making mailings, processing policy cancellations pursuant to the Rehabilitation Order, and assisting with requests for loss runs and credentialing support. Grande also agreed to maintain CARE’s books and records on the cloud-based platform and the central mailbox (lossruns@care-ins.com) used by insureds to request policy and claims history information. This relationship continued after entry of the Liquidation Order as Grande provided significant assistance in gathering the information necessary for unearned premium calculations. The underlying Services Agreement remains in effect but, at this time, serves primarily as the mechanism for maintaining CARE’s records in the cloud-based system and to provide ad hoc support in researching pre-liquidation records/transactions.

14. The Rehabilitator also engaged Risk Services to continue providing the financial and administrative services it delivered to CARE prior to liquidation. However, because much

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of the work typically provided by a captive management firm is unnecessary for a company in rehabilitation or liquidation, Risk Services agreed to a 50% reduction in the fees charged prior to insolvency. The Rehabilitator similarly arranged for ESIS to continue providing third-party administrator services to CARE on the same basis as it had prior to insolvency. Both of these relationships have continued following the transition from rehabilitation to liquidation. The Liquidator will continue to evaluate the scope and level of services required as the proceeding continues and the volume of open claims is reduced.

15. In addition, the Liquidator has engaged Patrick McGrath of McGrath Associates Claims & Risk Services, Inc., to serve as claims consultant by assisting the Liquidator with the investigation and evaluation of medical malpractice claims. Mr. McGrath has served in a similar capacity in the rehabilitation/liquidation of other Vermont insurance companies, and the Liquidator believes his expertise will facilitate the prompt and effective review/resolution of the many open CARE claims.

The Extended Reporting Period Plan

16. To address the risk of coverage gaps where an insurer writing “claims made” policies becomes insolvent, the insurance laws authorize the liquidators of such companies to offer extended reporting periods (“ERPs”) to the former policyholders. See 8 V.S.A. § 7060(b). The Liquidator therefore developed the Extended Reported Period Plan which contemplated that policyholders with coverage in-force as of the date CARE entered rehabilitation could elect to purchase an 18-month ERP from the CARE estate. The Court approved the Extended Reporting Period Plan as discussed above (see ¶ 3) and the Liquidator then included notice of the ERP offer in the liquidation notice letters sent to the eligible insureds.

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17. As required by statute, the Extended Reporting Period Plan included a cut-off date by which insureds were required to submit an election form (advising that they wished to purchase an ERP) and payment. Several CARE insureds contacted counsel for the Liquidator to seek further information regarding the ERP offer. In the event, however, no insured has actually submitted an election form or payment for an ERP. The Extended Reporting Period Plan therefore has no operative effect. However, the Liquidator will continue to maintain it on the proceeding website for informational purposes.

Unearned Premium Plan

18. The Liquidator’s Motion for Order Approving the First Report of Claims described implementation of the Unearned Premium Plan and reported determination of 497 claims for return of unearned premium. In brief summary, the Liquidator included a description of the Unearned Premium Plan in the notices of liquidation sent to CARE policyholders with coverage in-force when the Company entered rehabilitation. The Liquidator then identified all policies with unearned premium, calculated the return premium due on those policies, and sent notices of determination to the 497 affected policyholders. The notices of determination were mailed on October 2, 2025, and the Liquidator received a number of responses before the 60-day objection period ran in early December. See 8 V.S.A. § 7078(a) (“Within 60 days from the mailing of the notice [of determination] the claimant may file objections with the liquidator. If no such filing is made, the claimant may not further object to the determination.”) The Liquidator addressed these responses and resolved several disagreements/discrepancies with the result that only one claim has been classified as an objection requiring further investigation.

19. In parallel with the notice of determination process, the Liquidator also sent explanatory letters and premium bordereaux to the agents of record for each CARE policy in-