What happened: Georgia’s appeals court reversed the dismissal of the insurance commissioner’s claims to recover $21 million from a Delaware entity.
Who’s involved: Georgia Insurance Commissioner, Friday Health Plans of Georgia (insolvent HMO), FHP-ABC (Delaware assignee).
What’s at stake: $21 million in allegedly improper advance payments and $35 million in unpaid vendor debt.
Why it matters: The ruling confirms state liquidation statutes carry independent jurisdictional force - moving incorporation to another state may not shield assets from regulators.
Where it stands: Remanded to trial court; reconsideration window open until approximately November 13, 2026.
An HMO collapsed in Georgia owing $35 million in debt. The money, according to the state’s insurance commissioner, had already left the building.
Georgia’s Court of Appeals has reversed a trial court’s decision to throw out the commissioner’s lawsuit to recover $21 million allegedly drained from Friday Health Plans of Georgia before it went into liquidation. The November 3 ruling restored every claim against the Delaware entity that ended up holding the assets.
FHP-GA was a health maintenance organization wholly owned by FHP Management Services, itself owned by Friday Health Plans. FHP Management provided staff and services to FHP-GA for a fee but was contractually barred from taking advance payment. According to the complaint, it received $21 million in advanced funds between 2022 and 2023 while failing to pay FHP-GA’s vendors, building up $35 million in debt.
Both parent companies then moved their incorporation from Colorado to Delaware. A new Delaware entity, FHP-ABC, was formed and on July 6, 2023, became the assignee of all assets from both parents - including, the commissioner alleges, funds improperly taken from FHP-GA. FHP-ABC then struck a deal with a secured lender to pay over FHP-GA’s assets through a Delaware insolvency proceeding.
The commissioner, acting under Georgia’s Insurers Rehabilitation and Liquidation Act, sued all three entities and won default judgments against the two parents. FHP-ABC asked the court to throw the case out on five separate grounds. The trial court agreed on all five.
The appeals court, in a unanimous ruling, took them apart one by one. Georgia’s liquidation statute gave the court an independent basis to hear the case, because FHP-ABC held the insurer’s assets when liquidation formally began on August 1, 2023. The commissioner had clear authority to bring the claims. The complaint gave FHP-ABC fair notice of the accusations - enough at this stage. The third-party creditor did not need to be a party, since the Act hands the commissioner title to the insurer’s property automatically. And FHP-ABC had not shown the case belonged elsewhere - the Delaware court had actually stepped aside for Georgia.
The case now goes back for a hearing on the merits.
State insurance liquidation statutes carry their own jurisdictional force - moving incorporation to another state may not keep assets out of the regulator’s reach.
The underlying allegations have not been tested at trial. The appeals court addressed only whether the case should have been dismissed at this early stage.
