Every new lawyer who has ever worked in a firm knows the terror of potentially writing a memorandum, brief, or making some representation of the status of a statute or case that is relied upon by others that turns out to be — well — wrong. I’m not talking of distinctions or hair-splitting about the case; I’m talking about cases that have been overturned, vacated, or heavily discredited and statutes that have been repealed or superseded. That’s a new lawyer’s nightmare and, for the obsessive-compulsive in the rest of us, that concern never quite goes away.
Apparently, that concern didn’t register with insurance representatives lobbying Connecticut’s Insurance and Real Estate Legislative Committee when they argued the Committee should not approve legislation drafted by the State’s Attorney General, Richard Blumenthal, to make the State’s “steering” law stricter. Three different insurance representatives told the Committee that a New York statute N.Y. Ins. Law § 2610 with similar language had been stricken as an unconstitutional violation of insurers’ right to commercial speech. What each of them neglected to tell the Committee, however, is that the District Court decision making that statement had been vacated, and, after several appellate court decisions, on remand the District Court had issued a different opinion refusing to enjoin the NY Department of Insurance from enforcing the statute, refusing to rule on the insurers’ First Amendment claims, and dismissing the lawsuit.
Even more troubling, the District Court’s new opinion reiterated the Second Circuit’s finding that insurers could not challenge the NY statute on facial grounds, indicating that the court’s original finding of a constitutional violation regarding the statute itself was in error.
The Second Circuit explicitly rejected a facial challenge to § 2610(b). That court noted, “to the extent that the parties [] present a facial challenge to § 2610(b), it is an ‘overbreadth’ challenge, and such a challenge cannot lie with respect to a regulation of commercial speech.” Allstate II, 261 F.3d at 153
Allstate Ins. Co. v. Serio, 2003 U.S. Dist. LEXIS 13541 (D.N.Y. 2003)
In other words, the insurance representatives’ statements were gross misrepresentations of the status of (existing) New York law.
I guess I’m shocked because I wouldn’t dream of stating something to a government entity – certainly not something as damning as a violation of The Constitution — without checking, rechecking, and re-rechecking to make absolutely certain it was true. But, when no one holds you accountable, I guess you feel that sloppy information presentation is perfectly acceptable. If this is any demonstration of how well state regulated insurance operates, insurers can kiss the McCarran-Ferguson Act goodbye.
Anyway, after all of these legal decisions, the NY Department of Insurance issued Circular 14 on December 4, 2003 plainly stating that the steering law was in effect and that it would be enforced per the interpretation of the NY Court of Appeals’ decision. Seven months later in June of 2004, the NY DOI’s General Counsel issued an opinion that insurers would be in violation of the steering statute if they informed claimants their vehicles could only be repaired at a facility certified by the claimants’ auto manufacturers.
Yeah, that’s really a statute that was struck down for its unconsitutional language.
The Allstate v. Serio cases, NY DOI Circulars, and NY DOI Opinion can be accessed via links below:
Allstate v. Serio 2000 US Dist Lexis 6055
Allstate v Serio 2001 US App LEXIS 16510 (2)
Allstate v Serio 2002 98 NY 2d 198 (3)
Allstate v Serio 2002 US App LEXIS 11155 (4)
Allstate v Serio 2003 US Dist LEXIS 13541 (5)
New York Insurance Laws and Regulations can be accessed here