The third circuit ruled that allowing a policyholder to pursue a claim against his disability insurer brought under the federal Racketeer Influenced and Corrupt Organization Act does not run afoul of the McCarran-Ferguson Act. Weiss v. First Unum Life Insurance Co. No. 05-5428 (3rd Cir. 2007)
Apparently, NJ state insurance laws do not provide, nor do they prohibit, a private right of action for a policyholder to bring a claim against the insurer. As a result, the Third Circuit interpreted the federal RICO act as complementary of the state’s laws. Here is the panel’s closing thoughts on the issue.
After canvassing the Humana factors, we are left with the firm conviction that RICO does not and will not impair New Jersey’s state insurance scheme. Though RICO is a powerful tool, we conclude as the Supreme Court did in Humana that “we see no frustration of state policy in the RICO litigation at issue here.” 525 U.S. at 313. Indeed, in light of the common law and statutory remedies available, we do not read New Jersey’s scheme as intended to be exclusive. Nor do we find that RICO will disturb or interfere with New Jersey’s state insurance regime. RICO’s provisions supplement the statutory and common-law claims for relief available under New Jersey law. We conclude that RICO augments New Jersey’s insurance regime; it does not impair it.
CONCLUSION
For the reasons set forth above, and in light of the facts described, we find that the McCarran-Ferguson Act does not bar Weiss’s civil RICO claim. The decision of the District Court will be reversed and the case remanded for proceedings not inconsistent with this opinion.
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04-05-07 | New York collision repair shops and consumers are tired of insurers trying to push them to give business to the insurers’ “preferred” shops. Shops allege insurers use any tactic to coerce consumers to patronize their contract shops. After being accused of committing fraud, one shop owner threw down the gauntlet and filed suit against Progressive for $40 Million.
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| http://www.fox23news.com/mediacenter/local.aspx?videoId=57363 |
NY appears to be following closely behind CT on its interest in protecting consumers and halting the coercive practices of insurers. “Steering” is the term used to describe an insurer’s attempt to direct claimants to shops with which they have an agreement. That agreement doesn’t necessarily contain terms that are good for consumers. But they are always full of terms that are great for insurers, like ensuring that shops agree to repair vehicles per insurance company dictates and to completely indemnify the insurer from any fall-out related to the claim.
Just about a year ago, I had a high-powered investment banker/venture capitalist say to me that if a big company hadn’t pounced on a particular idea for a new product or service, it must have already looked at and rejected the idea as unprofitable because big companies are run by smart people who know what they are doing, and they have the ability to hire outside experts to look at the question if they don’t have the in-house expertise. I really had to bite my tongue and be politic, because what had been said to me was idiotic drivel, and I was surprised he didn’t know that.
Take a look at the automotive industry as a prime example. The Detroit 3 are so far out to sea on how to profitably manage a large company and have been for so long that it’s actually astonishing they still exist. And, in the dire straits they currently find themselves in, they go right on making irrational decisions that undermine the very companies they are supposed to be saving.
Take General Motors’ recent SEC filing on the bonuses and stock options the company granted to its top executives. GM has announced that it is giving millions of dollars in stock, and stock options (and there is a plan afoot to allow GM executives to convert their options to cash from the company) to its top 18 executives. Yet, GM posted a $2 billion loss last year, and a $10 billion loss the year before. Call me idealistic, but it seems to me that a company that has not earned a profit has absolutely no business paying people in control of the company any bonuses. After all, where does the money for bonuses come from when you are consistently reporting losses? Worse yet, how do you pay bonuses to the people responsible for the health and well-being of the company when they are driving it into the ground?
GM’s timing could not possibly have been worse. It is about to negotiate a new contract with the UAW, and everyone expects GM’s management will ask workers for concessions on labor costs, health care, and pension benefits. How do you ask people who earn a fraction of what the top executives make to give up current and future benefits, when you are paying the company’s wealthiest workers far more than their salaries as a reward for their decisions that have been bad for the company overall?
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