Worse Than `My Worst Nightmare'

For Katie Watson, it was adding insult to injury. Brain-damaged while in the hospital for pneumonia when she was 20 months old and still unable to walk or talk at age 11, the Phoenix girl relies on a $1.4 million annuity from a malpractice judgment her parents won in 1986 to pay for her medicine, therapy, and home care. Unfortunately, that annuity came from Executive Life Insurance Co. of California, which was seized by state regulators in mid-April.

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