STATE OF TENNESSEE, ex rel.,            )
DOUGLAS M. SIZEMORE,                    )
Commissioner of Commerce and            )
Insurance for the State of Tennessee,   )
                                        )
      Plaintiff/Appellee,               )
                                        )   Appeal No.
                                        )   01-A-01-9610-CH-00449
VS.                                     )
                                        )   Davidson Chancery
                                        )   No. 92-1120-II(III)
UNITED PHYSICIAN INSURANCE              )
RISK RETENTION GROUP,                   )

      Defendant/Appellee,
                                        )
                                        )                 FILED
                                        )
IN RE: NARESH B. DAVE, M.D.             )                   April 16, 1997
                                        )
      Claimant/Appellant.        )                        Cecil W. Crowson
                                                         Appellate Court Clerk

                     COURT OF APPEALS OF TENNESSEE
                       MIDDLE SECTION AT NASHVILLE


APPEALED FROM THE CHANCERY COURT OF DAVIDSON COUNTY
AT NASHVILLE, TENNESSEE

THE HONORABLE ROBERT S. BRANDT, CHANCELLOR



RENARD A. HIRSCH
ROBIN L. HARRIS
SMITH & HIRSCH
619 Woodland Street
Nashville, Tennessee 37206
      Attorneys for Jeanne Barnes Bryant, Receiver for
      United Physicians Insurance Risk Retention Group

KENNETH M. BRYANT
WILLIAM E. LONG, JR.
TRABUE, STURDIVANT & DeWITT
2500 Nashville City Center
Nashville, Tennessee 37219
      Attorneys for Naresh B. Dave, M.D.


                            REVERSED AND REMANDED


                                            BEN H. CANTRELL, JUDGE


CONCUR:
TODD, P.J., M.S.
LEWIS, J.

                               OPINION
              The Receiver of an insurance company in liquidation denied the claim

of a policyholder, because the Proof of Claim form required under the Insurance

Rehabilitation and Liquidation Act, Tenn. Code Ann. § 56-9-101 et seq., was filed after

the deadline. Following a hearing on the denial of the claim, the Special Master for

the Chancery Court of Davidson County found that the failure to timely file was due

to excusable neglect, and recommended that the late filing be excused and the claim

be accepted as timely filed.



              The Chancellor declared that he was unable to follow the Master’s

recommendation, holding that the court had no more authority under the Act to excuse

the late filing than did the Receiver. We believe that the Chancellor was mistaken,

and we accordingly remand this case to the Chancery Court to determine if the facts

support the appellant’s assertion of excusable neglect.



                                          I.



              In 1991, Dr. Naresh P. Dave (pronounced Dah! vay), an orthopedic

surgeon practicing in Tampa Florida, purchased a policy of professional malpractice

insurance from the United Physicians Insurance Risk Retention Group (UPI), a

Tennessee company. The policy included retroactive coverage for acts performed on

or after October 1, 1987.



              UPI subsequently went into receivership.       On July 16, 1992, the

Chancery Court of Davidson County ordered that the company be liquidated, and

appointed Jeanne Barnes Bryant as Special Deputy Receiver for that purpose. The

Chancellor’s order specified July 23, 1993 as the deadline for filing of claims against

the liquidation estate.




                                         -2-
              Dr. Dave had performed knee surgery on Constance T. Hale on March

8, 1990. Ms. Hale subsequently sent Dr. Dave a notice of her intent to initiate

malpractice litigation against him, in accordance with the requirements of the Florida

malpractice statute. On August 19, 1992, Dr. Dave wrote a letter to UPI, which timely

notified the company of Ms. Hale’s claim. However Dr. Dave does not claim that this

notice was an effective substitute for the Proof of Claim form, whose filing was

necessary to preserve the claimant’s right to receive a share in the liquidation estate.

See Tenn. Code Ann. § 56-9-323.



              UPI appointed a Florida attorney named Kenneth Deacon to represent

Dr. Dave in the malpractice action. Like the other policyholders, Dr. Dave received

instructions from the Receiver regarding the necessity of filing the Proof of Claim form

in a timely manner. He also received a reminder from Mr. Deacon of the importance

of filing on time, together with another blank copy of the Proof of Claim form.



              Because of an apparent miscommunication between Ms. Nancy

Castellano, who was Dr. Dave’s office manager, and Bonnie Montgomery, a paralegal

employed by Mr. Deacon’s firm, the Proof of Claim form was not filed on time. Copies

of faxes and other documents in the record indicate that Ms. Castellano erroneously

believed that Mr. Deacon had agreed to submit the form on Dr. Dave’s behalf.



              On September 24, 1993, the Receiver sent Dr. Dave a letter notifying

him that because his Proof of Claim form was not timely filed, coverage to defend the

Hale claim would be terminated immediately. Dr. Dave subsequently retained his own

counsel, who submitted an executed Proof of Claim form to Ms. Barnes on October

27, 1993, together with an explanation of the circumstances surrounding the missed

deadline. The Receiver declined to reinstate coverage, and Dr. Dave timely objected,

thus preserving his right to a hearing in chancery court on the question. See Tenn.

Code Ann. § 56-9-327.


                                         -3-
              The Chancellor had appointed a Special Master to hear appeals by

those who objected to denials of coverage. The Special Master submitted a report on

Dr. Dave’s case, which summarized the facts leading up to the missed deadline,

concluded that the delay was due to excusable neglect, and recommended that the

Court apply its power under Tenn. R. Civ. P. 6.02(2) to retroactively extend the filing

deadline for Dr. Dave’s benefit, in order to render his notice timely.



              The Chancellor did not agree with the Master that the Court had the

authority to extend the filing deadline, and he accordingly sustained Ms. Barnes’

objection to the Master’s report, without commenting on the allegations of excusable

neglect. This appeal followed.



                                            II.



              In his memorandum, the Chancellor noted that under the circumstances

of this case, the Liquidation Statute does not permit the Receiver to treat a late-filed

claim as if it were timely filed. See Tenn. Code Ann. § 56-9-323. The memorandum

goes on to say:

                     “It is helpful to consider the respective roles of the
              court and the receiver . . . . The receiver does the real
              work. The court’s involvement is quite limited . . . .
              Restricting the court’s authority to allow late filed claims to
              the same authority given to the receiver seems to be in
              keeping with the respective roles for the court and the
              receiver established by the Act.

              ...


                       “This Court concludes that a court supervising a
              receivership is bound by the same statute that limits the
              authority of the Receiver to allow late filed claims . . . . If
              the Receiver concludes that a late filed claim should not
              be allowed, then judicial review of the Receiver’s decision
              is limited to consideration of whether the Receiver acted
              illegally, arbitrarily, or in an abuse of discretion. There is
              no de novo judicial review of the Receiver’s decision.”


                                           -4-
              We believe the Court applied an unnecessarily restricted interpretation

of its powers in deciding this case. While the liquidation statute assigns to the

Chancery Court of Davidson County a specified role in all insurance liquidation

proceedings, it does not purport to limit the traditional equitable powers of a court of

chancery, nor to abridge the application of the Tennessee Rules of Civil Procedure.



              Rule 6.02 Tenn. R. Civ. P. reads in pertinent part:

              Enlargement. -- When by statute or by these rules or by
              a notice given thereunder or by order of court an act is
              required or allowed to be done at or within a specified
              time, the court for cause shown may, at any time in its
              discretion, (1) . . . (2) upon motion made after the
              expiration of the specified period permit the act to be
              done, where the failure to act was the result of excusable
              neglect.



              Tenn. Code Ann. § 56-9-327 establishes a procedure whereby an

individual whose claim is denied by the Receiver may object and may receive a

prompt hearing. The statute states in part: “The matter may be heard by the court

or by a court-appointed referee who shall submit findings of fact along with such

referee’s recommendation.” If the legislature had intended to limit the standard of

review in the manner specified by the chancellor, this statute would seem to be a

logical place for it to so state. But no such statement is to be found in this statute or

in any other part of the Act.



              Perhaps the trial court was swayed by the language contained in a

recent Tennessee Supreme Court case which it cited in its memorandum, State of

Tennessee ex rel v. UPI, in re: Vasudev V. Kulkarni, M.D., 921 S.W.2d 176 (1996).

In that case, the Court emphasized the importance of a uniform treatment of claims

and of deadlines in order to avoid “a piecemeal and protracted processing of claims

inconsistent with the Act’s stated principles of efficiency, economy, and equity.” 921

S.W.2d at 180.


                                          -5-
              However the Kulkarni case did not involve the power of the chancery

court to review the actions of the Receiver. It rather raised the question of whether

the Receiver could establish a uniform accelerated date by which any medical incident

covered under any of UPI’s policies had to be reported in order to qualify for benefits,

regardless of the reporting periods provided for in the policies themselves. In holding

that the Receiver’s powers were broad enough to encompass such an action, we do

not believe the Court intended thereby to nullify the equitable powers of the chancery

court.



              In reaching this conclusion, we are not expressing an opinion one way

or another as to whether the facts found by the Special Master actually constitute

excusable neglect, but only that the chancellor is entitled to make that inquiry.



                                          III.



              The order of the trial court is reversed. Remand this cause to the

Chancery Court of Davidson County for further proceedings consistent with this

opinion. Tax the costs on appeal to the appellee.



                                           _____________________________
                                           BEN H. CANTRELL, JUDGE

CONCUR:




_______________________________
HENRY F. TODD, PRESIDING JUDGE
MIDDLE SECTION




_______________________________
SAMUEL L. LEWIS, JUDGE




                                         -6-
