[Cite as Hudson v. Petrosurance, Inc., 127 Ohio St.3d 54, 2010-Ohio-4505.] 

HUDSON, SUPERINTENDENT, APPELLANT, v. PETROSURANCE, INC., 

APPELLEE, ET AL. 

[Cite as Hudson v. Petrosurance, Inc., 127 Ohio St.3d 54, 2010-Ohio-4505.] 

No provision in the Insurers Supervision, Rehabilitation, and Liquidation Act, 

codified in R.C. Chapter 3903, authorizes payment of interest to any 

claimant.

(No. 2009-1816 — Submitted May 26, 2010 — Decided September 29, 2010.) 

APPEAL from the Court of Appeals for Franklin County, No. 08AP-1030, 

2009-Ohio-4307. 

__________________ 

SYLLABUS OF THE COURT

The Insurers Supervision, Rehabilitation, and Liquidation Act, codified in R.C. 

Chapter 3903, establishes nine prioritized classes of claims that can be filed 

against an insurer’s estate during liquidation and directs the liquidator to 

exhaust the estate’s assets by paying approved claims in full to the insurer’s 

creditors and preferred claimants in the order of the priority established by 

the General Assembly in R.C. 3903.42, but no provision in that act 

expressly authorizes payment of interest to any claimant. 

__________________ 

 O’DONNELL, J. 

{¶ 1} The superintendent of insurance for the state of Ohio, Mary Jo 

Hudson, acting in the capacity as liquidator of the Oil & Gas Insurance Company 

(“OGICO”), appeals from a judgment of the Tenth District Court of Appeals that 

reversed a grant of summary judgment in favor of the superintendent on a 

declaratory judgment action and held that the superintendent had no authority to 
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pay interest to creditors and claimants of OGICO before paying the shareholders 

of OGICO. 

{¶ 2} The issue presented on this appeal is whether the liquidator may 

pay interest to the insurer’s creditors and other preferred claimants on allowed 

claims before paying the funds remaining in the estate to the insurer’s 

shareholders, in this case, Petrosurance, Inc. 

{¶ 3} The Insurers Supervision, Rehabilitation, and Liquidation Act 

(“Liquidation Act”), codified in R.C. Chapter 3903, establishes nine prioritized 

classes of claims that can be filed against an insurer’s estate during liquidation 

and directs the liquidator to exhaust the estate’s assets by paying approved claims 

in full to the insurer’s creditors and preferred claimants in the order of the priority 

established by the General Assembly in R.C. 3903.42, but no provision in that act 

expressly authorizes payment of interest to any claimant. Accordingly, we affirm 

the judgment of the court of appeals that the superintendent lacks authority to pay 

interest to OGICO’s creditors and other claimants, and we remand the case to the 

trial court for further proceedings in accordance with our decision. 

Facts and Procedural History 

{¶ 4} The Oil & Gas Insurance Company operated as an Ohio property 

and casualty insurance company primarily insuring oil- and gas-related activities 

until August 1990, when the Franklin County Court of Common Pleas declared it 

insolvent and ordered the superintendent of insurance to liquidate the assets of the 

company, over the objection of its sole shareholder, Petrosurance, Inc. 

Subsequently, the court ordered all claims against the assets of OGICO to be 

submitted by December 31, 1997. 

{¶ 5} Pursuant to that court order, the superintendent of insurance 

collected and verified the submitted claims, and the trial court authorized payment 

to OGICO’s policyholder claimants in 2004 and to OGICO’s general creditors 

and state and local governments in 2006. After making these expenditures, the 
January Term, 2010 

3

superintendent held a balance in the estate exceeding $13 million. Thereafter, in 

2006, representatives of the superintendent provided a claim form to 

Petrosurance, suggesting that it assert its right to the remaining funds. 

{¶ 6} However, on April 30, 2007, before Petrosurance returned its proof 

of claim form, the superintendent filed a declaratory judgment action against 

Petrosurance and Mark Hardy,1 seeking a declaration that they had no right to any 

remaining funds because neither had an allowed claim against the estate. 

Petrosurance counterclaimed, asserting that it is entitled to the funds because it is 

OGICO’s sole shareholder and the liquidation statute provides that after paying 

all claims and any remaining administrative expenses, any balance belongs to 

shareholders of the liquidated insurance company. The trial court dismissed 

Petrosurance’s counterclaim, stating that a claimed right to the funds must be 

established in accordance with the Liquidation Act and that it lacked jurisdiction 

to hear the counterclaim because the act bars civil actions against an insurer or 

liquidator after the court enters its liquidation order. 

{¶ 7} On October 16, 2007, Petrosurance submitted its proof of claim to 

the superintendent, asserting entitlement to the remaining funds as the sole 

shareholder of OGICO. On November 1, 2007, the superintendent advised 

Petrosurance that its proof of claim would not be filed, because the company 

submitted it after the December 31, 1997 filing deadline and because its claim 

was encompassed in a prior claim filed by Hardy in 1991 and no objection had 

been filed in response to the superintendent’s denial of that claim.

 

1. {¶ a} In Fabe v. Prompt Fin., Inc. (1994), 69 Ohio St.3d 268, 269, 631 N.E.2d 614, this court 

described the relationship between Mark Hardy, Petrosurance, and OGICO as follows: “OGICO’s 

parent company is Petrosurance Incorporated, a subsidiary of Forum Holdings U.S.A., Inc. Forum 

Holdings U.S.A., Inc. is a subsidiary of Forum Re Group, Inc., a.k.a. The Group, Inc. * * * 

 {¶ b} “* * * [Hardy] is a director of OGICO and a director of Petrosurance Incorporated. Hardy 

is also a director of Forum Holdings U.S.A., Inc., and the chief executive officer and a director of 

Forum Re Group, Inc. * * * [I]t is apparent from the record that all related corporate entities 

come under the ultimate control of Hardy.” 
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{¶ 8} The superintendent then moved for summary judgment in the 

declaratory judgment action, arguing that Petrosurance had waived its right to the 

remaining funds by failing to submit a timely claim, and further arguing that 

Hardy had waived his right to the remaining funds by failing to object to the 

superintendent’s denial of his prior claim. The superintendent sought a 

declaration that Petrosurance had no interest in the OGICO liquidation estate and 

also sought permission to distribute pro rata shares of the remaining funds to the 

creditors whose claims had been allowed as interest on those claims. 

Petrosurance also moved for summary judgment, contending that its proof of 

claim properly asserted entitlement to the funds as OGICO’s sole shareholder. 

{¶ 9} On November 13, 2007, the court granted the superintendent’s 

motion for summary judgment with respect to Hardy, concluding that the 

superintendent had properly denied his 1991 claim because it had not been 

supported by any evidence and that Hardy lacked standing to complain of that 

denial because he failed to object in accordance with the procedure set forth in 

R.C. 3903.39. 

{¶ 10} Subsequently, on August 5, 2008, the court granted summary 

judgment in favor of the superintendent, concluding that interest could be paid to 

the creditors and preferred claimants on the principal of their claims. However, it 

declined to decide whether Petrosurance had properly asserted its claim, because 

it concluded that, as a practical matter, no funds would remain sufficient to pay 

Petrosurance once the superintendent paid interest on the other claims. 

{¶ 11} Petrosurance appealed to the Tenth District Court of Appeals, 

which reversed the trial court’s entry of summary judgment in favor of the 

superintendent, concluding that “Petrosurance did not waive its right to file a 

claim for the surplus funds, that the absolute final bar date did not apply to 

Petrosurance’s shareholder claim, and that the payment of interest to higher 

priority claimants is not permitted under R.C. 3903.42.” Hudson v. Petrosurance, 
January Term, 2010 

5

Inc., 10th Dist. No. 08AP-1030, 2009-Ohio-4307, ¶ 45. The appellate court also 

stated that the superintendent had erroneously refused to file Petrosurance’s proof 

of claim and had refused to request a hearing when Petrosurance objected to the 

superintendent’s refusal to file its claim. Id. at ¶ 46. The appellate court observed 

that, based on the trial court’s erroneous ruling that the superintendent could pay 

interest to creditors, the court had never determined whether Petrosurance was 

entitled to the surplus funds. The appellate court then remanded the matter for 

further proceedings. 

{¶ 12} On appeal to this court, the superintendent presents one proposition 

of law: “When all creditors’ claims against a liquidated insurance company have 

been paid in principal and a surplus remains, the liquidator must pay the creditors 

for interest that accrued during liquidation before paying any remainder to the 

company’s shareholders.” 

{¶ 13} The superintendent contends that although R.C. Chapter 3903 

neither explicitly allows nor prohibits the payment of interest to creditors, the 

absence of a specific provision for interest does not render the obligation to pay 

interest a nullity, since the purpose of the statute is to protect the insureds, 

claimants, creditors, and the public generally, and any ambiguity must be liberally 

construed in favor of these groups. The superintendent also asserts that the 

majority of other jurisdictions permit the payment of interest to creditors when 

sufficient funds exist and that allowing creditors to recover interest on their claims 

does not prejudice shareholder rights. 

{¶ 14} In response, Petrosurance contends that the Liquidation Act does 

not authorize the superintendent to pay interest to any creditors or claimants in an 

insurance company liquidation proceeding. It asserts that if the General 

Assembly had intended creditors and claimants to recover interest, it would have 

expressly provided for the payment of interest in the statute, as it has done in 
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statutes regarding bank liquidations, which provide for creditors to receive 

interest on claims before payment of funds to shareholders. See R.C. 1125.24. 

{¶ 15} Accordingly, we are asked to consider whether R.C. Chapter 3903 

permits the liquidator of an insurance company to pay interest to the insurer’s 

creditors and other preferred claimants on allowed claims before paying any 

remaining funds to the insurer’s shareholders. 

R.C. Chapter 3903 — The Liquidation Act 

{¶ 16} The Liquidation Act sets forth a comprehensive framework 

governing the liquidation of insurance companies operating in Ohio. The purpose 

of the act is to protect the interests of insureds, claimants, creditors, and the public 

generally, and the provisions of the act are to be liberally construed to effectuate 

this purpose. See R.C. 3903.02(C) and (D). When the superintendent of 

insurance believes that an insurer has become insolvent, R.C. 3903.17 authorizes 

the superintendent to file a complaint in the court of common pleas for an order of 

liquidation. Upon the court’s issuance of such an order, the superintendent takes 

possession of the assets of the insurer and is empowered to review all claims filed 

in the liquidation by creditors and other preferred claimants, and to recommend 

the amounts to be paid on each claim. R.C. 3903.18(A) and 3903.43(A). 

{¶ 17} R.C. 3903.35(A) specifies that “[p]roof of all claims shall be filed 

with the liquidator in the form required by section 3903.36 of the Revised Code 

on or before the last day for filing specified in the notice required under section 

3903.22 of the Revised Code * * *.” When the superintendent denies a claim in 

whole or in part, written notice must be given to the claimant or his attorney, and 

“[w]ithin sixty days from the mailing of the notice, the claimant may file 

objections with the [superintendent].” R.C. 3903.39(A). Further, if no such filing 

is made, the claimant may not further object to the determination. Id. 

{¶ 18} R.C. 3903.42 establishes nine prioritized classes of claimants and 

provides that “[e]very claim in each class shall be paid in full or adequate funds 
January Term, 2010 

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retained for such payment before the members of the next class may receive any 

payment.” The priority of classes is as follows: 

{¶ 19} “(A) Class 1. The costs and expenses of administration * * *. 

{¶ 20} “ * * * 

{¶ 21} “(B) Class 2. All claims under policies for losses incurred, 

including third party claims, all claims of contracted providers against a medicaid 

health insuring corporation for covered health care services provided to medicaid 

recipients, all claims against the insurer for liability for bodily injury or for injury 

to or destruction of tangible property that are not under policies, and all claims of 

a guaranty association or foreign guaranty association. * * * Claims under 

nonassessable policies for unearned premium or other premium refunds. 

{¶ 22} “(C) Class 3. Claims of the federal government. 

{¶ 23} “(D) Class 4. Debts due to employees for services performed * * *. 

* * * 

{¶ 24} “(E) Class 5. Claims of general creditors. 

{¶ 25} “(F) Class 6. Claims of any state or local government. * * * 

{¶ 26} “(G) Class 7. Claims filed late or any other claims other than 

claims under divisions (H) and (I) of this section. 

{¶ 27} “(H) Class 8. Surplus or contribution notes, or similar obligations, 

and premium refunds on assessable policies. * * * 

{¶ 28} “(I) Class 9. The claims of shareholders or other owners.” 

Analysis 

{¶ 29} This cause is now before our court upon acceptance of a 

discretionary appeal. Because this case was originally decided on summary 

judgment, our review is de novo, in accordance with the standard set forth in 

Civ.R. 56. See Comer v. Risko, 106 Ohio St.3d 185, 2005-Ohio-4559, 833 

N.E.2d 712, ¶ 8, and Albain v. Flower Hosp. (1990), 50 Ohio St.3d 251, 254, 553 

N.E.2d 1038, reversed on other grounds by Clark v. Southview Hosp. & Family 
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Health Ctr. (1994), 68 Ohio St.3d 435, 628 N.E.2d 46. As we stated in Grafton v. 

Ohio Edison Co. (1996), 77 Ohio St.3d 102, 105, 671 N.E.2d 241, “[i]n order to 

obtain summary judgment, the movant must show that (1) there is no genuine 

issue of material fact; (2) the moving party is entitled to judgment as a matter of 

law; and (3) it appears from the evidence that reasonable minds can come to but 

one conclusion when viewing evidence in favor of the nonmoving party, and that 

conclusion is adverse to the nonmoving party. State ex rel. Cassels v. Dayton 

City School Dist. Bd. of Edn. (1994), 69 Ohio St.3d 217, 219, 631 N.E.2d 150, 

152. This court has complete and independent power of review as to all questions 

of law. MCI Telecommunications Corp. v. Pub. Util. Comm. (1988), 38 Ohio 

St.3d 266, 268, 527 N.E.2d 777, 780; Indus. Energy Consumers of Ohio Power 

Co. v. Pub. Util. Comm. (1994), 68 Ohio St.3d 559, 563, 629 N.E.2d 423, 426.”

{¶ 30} Here, there are no questions of fact, and the only issue involves a 

question of law, which we consider on a de novo basis. In construing the 

Liquidation Act to determine whether the superintendent is authorized to pay 

interest to OGICO’s creditors and other preferred claimants before paying 

Petrosurance, our obligation is to ascertain and to give effect to the intent of the 

legislature as expressed in the statute. Dircksen v. Greene Cty. Bd. of Revision, 

109 Ohio St.3d 470, 2006-Ohio-2990, 849 N.E.2d 20, ¶ 16. In State ex rel. Russo 

v. McDonnell, 110 Ohio St.3d 144, 2006-Ohio-3459, 852 N.E.2d 145, ¶ 37, we 

explained that “in order to determine this intent, we must ‘ “read words and 

phrases in context according to the rules of grammar and common usage.” ’ ” Id., 

quoting State ex rel. Cincinnati Bell Tel. Co. v. Pub. Util. Comm., 105 Ohio St.3d 

177, 2005-Ohio-1150, 824 N.E.2d 68, ¶ 27, quoting State ex rel. Lee v. Karnes, 

103 Ohio St.3d 559, 2004-Ohio-5718, 817 N.E.2d 76, ¶ 23; see also R.C. 1.42. 

Moreover, as we recognized in State v. Lowe, 112 Ohio St.3d 507, 2007-Ohio606, 861 N.E.2d 512, ¶ 15, “a court may not add words to an unambiguous 
January Term, 2010 

9

statute, but must apply the statute as written.” Id., citing Portage Cty. Bd. of 

Commrs. v. Akron, 109 Ohio St.3d 106, 2006-Ohio-954, 846 N.E.2d 478, ¶ 52. 

{¶ 31} The Liquidation Act is silent as to the payment of interest, but the 

General Assembly could have expressly provided for payment of interest on 

claims against an insurer’s estate, if it had chosen to do so. We decline to add 

words to the statute or interpret the legislative silence as authorization to pay 

interest, as such a construction would materially affect the priority of payments to 

claimants as set forth in R.C. 3903.42. To interpret what is already plain “is not 

interpretation but legislation, which is not the function of the courts.” Iddings v. 

Jefferson Cty. School Dist. Bd. of Edn. (1951), 155 Ohio St. 287, 290, 44 O.O. 

294, 98 N.E.2d 827. 

{¶ 32} In other statutory contexts, the legislature has indicated its intent to 

authorize payment of interest to claimants with plain, direct, and express 

language. For example, R.C. 1125.24, the statute establishing the priority of 

distribution of the assets of an insolvent bank, provides that “[i]nterest shall be 

given the same priority as the claim on which it is based, but no interest shall be 

paid on any claim until the principal of all claims within the same class has been 

paid or provided for in full.” (Emphasis added.) In contrast, the legislative 

silence in R.C. 3903.42 cannot fairly be read to authorize payment of interest in 

insurer liquidations. 

{¶ 33} Our role as a court is to apply statutes as written, and we conclude 

that the General Assembly did not intend to authorize the superintendent of 

insurance, acting as liquidator of an insurance company, to pay interest to 

creditors and other preferred claimants of an insolvent insurance company before 

paying remaining funds to company shareholders. 

Conclusion 

{¶ 34} In accordance with R.C. 3903.42, which establishes a priority of 

classes for payment of claims against an insolvent insurance company but does 
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not authorize the payment of interest on any claim, we reject the superintendent’s 

proposition of law that interest should be paid to creditors and other preferred 

claimants to make them whole before the owners of the company may recover 

from assets of the liquidation estate. Also, because the plain meaning of the 

statute directs payment of these remaining funds to shareholders, we decline to 

follow the practice in other jurisdictions of distributing assets remaining after 

principal claims have been paid to creditors. 

{¶ 35} Accordingly, we affirm the judgment of the court of appeals, 

which reversed the grant of summary judgment to the superintendent and held that 

R.C. Chapter 3903 does not permit the payment of interest in an insurer 

liquidation and that the superintendent erroneously refused to file Petrosurance’s 

proof of claim. 

{¶ 36} It is undisputed in this record that Petrosurance is the sole 

shareholder of OGICO, that the superintendent has “considered all timely filed 

claims, and paid in full all claims that were determined proper and allowed by the 

Liquidator and the Court,” and that the superintendent is in possession of 

approximately $13 million resulting from the liquidation of OGICO’s assets. 

Moreover, R.C. 3903.42 establishes a priority for payment of claims from an 

insurer’s estate, but does not authorize payment of interest. 

{¶ 37} We also affirm the appellate court holdings regarding its rejection 

of the bases for the superintendent’s refusal to file Petrosurance’s 2007 proof of 

claim and its conclusion that Petrosurance did not waive its right to file that claim. 

In addition, we agree that the superintendent thwarted efforts of Petrosurance to 

collect these funds by erroneously refusing to file the proof of claim and then 

refusing to request a hearing on objections by Petrosurance to that refusal. 

{¶ 38} We further recognize, as did the appellate court, that the trial court, 

based on its erroneous conclusion that the superintendent could pay interest to 

creditors before making any payment to Petrosurance, never considered 
January Term, 2010 

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Petrosurance’s entitlement to the remaining funds held by the superintendent. 

Accordingly, the matter is remanded to the trial court to permit Petrosurance an 

opportunity to submit its proof of claim and for the trial court to determine its 

entitlement to the remaining funds in accordance with R.C. Chapter 3903 and its 

disposition of this matter in accordance with our opinion.

Judgment accordingly. 

 PFEIFER, LUNDBERG STRATTON, O’CONNOR, LANZINGER, and CUPP, JJ., 

concur. 

 BROWN, C.J., concurs separately. 

__________________ 

 BROWN, C.J., concurring. 

{¶ 39} I concur with the majority that no provision of the Insurers 

Supervision, Rehabilitation, and Liquidation Act (“Liquidation Act”) expressly 

authorizes payment of interest to any claimant. In the absence of express 

authorizing statutory language, I am reluctantly constrained to conclude that the 

superintendent may not pay interest to the Oil & Gas Insurance Company’s 

(“OGICO’s”) creditors and other preferred claimants before paying Petrosurance, 

an OGICO shareholder—an entity in the lowest priority class for receiving funds 

under R.C. 3903.42. 

{¶ 40} The superintendent has presented an appealing policy argument 

that she should be permitted to pay Class 2 through Class 8 claimants interest on 

their claims when adequate funds remain after satisfaction of their original claims, 

before distributing any remaining funds to Class 9 claimants, i.e., shareholders of 

the defunct company. As summarized by the National Association of Insurance 

Commissioners in its amicus brief in support of the superintendent, “the Ohio 

Liquidation statutes are designed and should be implemented to protect the 

interests of injured claimants over the interests of shareholders and owners whose 

actions likely caused the insolvency.” However, it is within the province of the 
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legislative branch, rather than the judicial branch, to determine public policy 

relative to the liquidation of insurance companies. 

{¶ 41} The superintendent correctly observes that R.C. 3903.21(A) vests 

in her, as liquidator, expansive powers and that R.C. 3903.43 provides her with 

the authority to “compound, compromise, or in any other manner negotiate the 

amount for which claims will be recommended to the court.” Moreover, R.C. 

3903.02(D) explicitly identifies the purpose of the Liquidation Act as the 

“protection of the interests of insureds, claimants, creditors, and the public 

generally.” It is tempting to accept the superintendent’s argument that these 

general statutory provisions vest her with authority to revisit previously awarded 

claims and add interest to them when funds remain at the conclusion of payment 

of Class 8 claims. In my view the equities weigh in favor of such a result. 

However, R.C. 3903.42 expressly states with specificity the “order of distribution 

of claims” and does not include authorization for payment of interest on claims. 

And as observed by the majority, the inclusion in R.C. 1125.24 of language 

specifically authorizing the payment of interest on claims filed in bank 

liquidations demonstrates that the General Assembly is capable of authorizing 

interest payments in liquidation proceedings when it intends to do so. Yet no such 

express authorization exists in R.C. Chapter 3903. 

{¶ 42} I therefore write separately to urge the members of the General 

Assembly to consider amending R.C. Chapter 3903 to expressly authorize the 

liquidator of an insurance company to pay interest on previously allowed claims, 

when surplus funds exist, prior to distributing funds to shareholders. The General 

Assembly has expressed the general purpose of the Liquidation Act as the 

protection of the interests of insureds, claimants, creditors, and the public 

generally. R.C. 3903.02(D). Amendment of the Liquidation Act to expressly 

authorize payment of interest on claims, when a surplus exists, would more fully 
January Term, 2010 

13

protect the interests of claimants and thereby more fully effectuate the stated goal 

of the act. 

__________________ 

 Richard Cordray, Attorney General, Benjamin C. Mizer, Solicitor General, 

Brandon J. Lester, Deputy Solicitor, and W. Scott Myers and Sean M. Culley, 

Assistant Attorneys General, for appellant. 

 Beckman Weil Shepardson, L.L.C., Peter L. Cassady, Laurie A. Lamb, 

and John (Hui) Li, for appellee. 

 Squire Sanders & Dempsey, L.L.P., and Aneca E. Lasley, urging reversal 

on behalf of amicus curiae, National Association of Insurance Commissioners. 

______________________