The insurance companies said a receiver should be appointed with the power to raise revenue and run the sewer system. In California, the prison hospital system was placed in the care of a receiver because of lawsuits over inadequate care.

Courts are typically reluctant to take such steps, said Thomas Richey, chair of Powell Goldstein LLP's securities, corporate and fiduciary litigation group in Atlanta.

"It's pretty uncharted water,'' Richey said. "Receivership is considered to be a very serious remedy and one that the courts do not like to impose just to act. There's a natural reluctance on the part of courts to impose receiverships.''