the issue before the court is whether the filed rate doctrine prevents borrowers from having any remedy at all for the violation of their mortgage agreements which have a requirement that if they're charged for insurance after fail maintain their insurance to only be charged the cost of the insurance and the answer that question it is no there are two fundamental reasons and the first goes to the nature of lender placed insurance and this is something that the district court below both courts frankly which adopted rusty and ross in court the second circuit failed to acknowledge perhaps because they didn't have the record built up in the  but lender placed insurance is different from any other type of filed rate situation situation that's occurred in the past it's unlike electricity it's unlike your typical common carrier case it's unlike a case involving telephones because in that situation the insurance product is an insurance product that is specifically for the lender or service or and their portfolio it is not the house or insurance that all of us by on a day to day basis the first and most compelling reason why it's distinct is a statutory reason under florida statutes and pennsylvania statutes lender place insurance is called collateral protection insurance protecting the collateral for a lender and the language specifically excludes residential insurance so if you look at florida statute six twenty four six zero eighty five four to forty pennsylvania statutes nine hundred one eighteen zero two they both exclude this type of insurance from residential insurance indicating that the state governments themselves are recognizing that these regulatory regimes are not intended to go all the way to to the borrowers so their rate setting will not implicate the remedies of those borrowers and when you look at the actual insurance itself the product itself it's very clear that this is very different and it's for the lender and not for not for the ultimate  if you look at the amicus brief i property casualty pages it's six lays it out very clearly is a commercial insurance product that can only be obtained by a lender or service or through in most kates a master group property insurance policy issued by an lp i character there so in other words ordinary bars cannot even get this type of insurance are not the rates themselves regulated by the state in just the same way that is there is a master policy that's filed in the state approves it as with any other insurance product there is a process of approval of the richer honor but the the approval of those rates is very different from hauser insurance that ordinary borrowers purchase if we look at the at the policy for instance on the appendix and fowler it's there exhibit six starting a page eighty five you'll see that it's called mortgage interest protection program this is what the people the florida regulators are seeing not seeing house or insurance or seeing mortgage interest protection program and the elements of the program for instance i'm looking at page eighty eight of the appendix they examine eligible mortgages they look at the amount the amount that is charged or that is authorized in the filed rate is the amount that is passed on your clients now you're saying that that rate is hyper inflated you use that term throughout both of the complaints as i read them used terms excessive charges hyper inflated rates is that not correct you too can put your question first your honor yes a sick is taking that that raid and charging it to the bars but the second component respectfully i'd have to disagree with because what we're looking at is not a challenge to the reasonable us of the raid we're not attacking rates were attacking particular conduct in terms of commissions that are unearned and in fact dollar amount the dot the out of pocket or the charge to the to the borrower is is that is a premium that's true your honor but the conduct of the defendants is what we're looking at we're not looking at the setting of the rates are a lot of cases yes your honor your contention is i understand the briefs is that you are not challenging the rule the approved rated self but simply fact passing on cash or in kind to the lender or the service or and this is like a judge judge biogs colleagues decision in the whims case in the sixth circuit where was an attack based upon duke energy having preferential treatment side agreements for certain customers the irony in this case your honor is that the rate pair here is the lender or the service or and they're not paying the rate and yet they're trying to charge that rate to us they're getting kickbacks they're getting benefits in kind and so effectively they're not paying the rate and yet they're charging there's a saying we have to pay these rates and it cannot be examined by a court of law and the result of that your honor would be even even if the regulations extended there even if the statutes covered this and said residential properties are included and indicated that the regulators were going to be looking at the specifically as residential coverage the honor irony is these borrowers will have then have no remedy in court but they're saying is your out you have no ability whatsoever it is law and it is an exclusion that will lead to no result and the court i think in not in that context has to look very carefully at the regime very carefully at what is being regulated what is being passed upon i mean if we look at at this at this product the limitation of liability is determined presumptively based upon the loan balance not based upon the value of the home that's on page eighty eight they calculate the rates based upon the loan portfolio on page ninety four the quality of loan underwriting and the quality of the loan portfolio are what are what prices are set upon not anything like like your residence on page six voluntary insurance policies by contrast very different from this product are personal insurance products issued for a specific property and name the bar as the primary insured these lenders could have gone out into the market and gotten hazard hasn't surance could have gotten braided hazards that would be a very different case but here we're talking about a product that is the mortgage interest protection program it's collateral and so in that context your honor this is very much like the alston case and the court should depart from the ross dean case because ross dean frankly did not examine the nature of the product did not examine the statute or the applicable statutes simply were not before the court or they'd or they did not return the opinion and so does yours does your case have a stronger base is against the lender as against the insurance company or do you think it's as wrong as to both our case is primarily against the lenders oppose the insurance company your honor but the fall rate doctrine has in some context been applied beyond the beyond the insurance company  frankly that has not been well developed it seems to me like when we when you follow the law on the filed rate doctor and it's really more because originally it was about federal regulation that it came to govern state cause of action as well and then it and now in the most recent instance it's gone to this a b c context and most recently and a b c context where you don't have a wholesaler a retailer and a consumer but now  product that is basically a separate and independent product and then a consumer that isn't really a consumer but somebody who's charged money and has a duty of reimbursement my question was a little bit different and i'm sorry i didn't get it across correctly the insurance company is not precluded by any notion that i can think of from giving back a rebate to the if it so shoes is to continue getting the lenders business right that doesn't cause in and of itself that doesn't cause you any harm that's a borrower any harm whatsoever that's absolutely right your honor and so my question is whether you think that your argument applies taking it on its terms applies as strongly to the insurance company as it does to the lender it depends upon the facts your honor but you're absolutely right that the insurance companies and above board pass on benefits in order to get the business as long as that's passed on to the ultimate consumer because what we're ultimately in forcing is a contract a mortgage about the cost of insurance your hon or so so the primary wrongdoers leaves there to describe it as a referral fee i mean what's going on here is the insurance company is giving a referral fee back to the lender i know you call it a kickback not a make it a kickback it's really a referral fee well they would be fair to call that that's what the insurance companies doing i'm not sure if you referring at your for referring us business what i would call your know for sure what mortgage i mean what people cannot buy insurance so it has a master policy right yes your honor so it covers that all of its loan portfolio because they may be the person that done pay or it might be be it might be sick but they know some percentage are not going to pay right and they're going to have to place insurance is that kind of how it works yes your honor and ok and so what they do is they get an arrangement with an insurance company go cover everybody that's what they're doing more if we place it ourselves it will cost you but it will be cost of insurance your honor well this says forrest place insurance and it will cost you more the language of the mortgage does not say force place insurance but that is the effect and  it may cost you more may not cost you more but the issue is not that it may or may not cause i'm worth and issues about the referral fee that's paid back that you want to cover yes sure i have but i don't understand why all of this isn't just the cost of the hundreds doing business here but they're paying for the policy and it's just a business transaction but it's not the cost of business they call it a commission when they don't they don't earn it so basically it's just giving them cash and then they have services that are core obligations of the service or in their not performing them and then they also have learned reinsurance libertarians when they know their door is providing a great deal of business to the insurance company that's true your honor is not a service to the insurance company the lender is referring all this business to the insurance company that's not a service to the insurance company for the referral fee well no if the lender and i would just leave you with the fact that you know we're here on a pleading as been thrown out and that circumstance would be an issue of fact about the nature of the payment mr burt your honor thank you the finest kickback claims here fail for multiple reasons we articulate all of them in our briefing but especially through the application of the fold rate doctrine well let me let me start with this hypothetical for you all right let's say that the facts are as alleged except that the lender decides because it thinks that it's going to be able to garner business in the future from this the insurance company decides you know what for year twenty seventeen we're going to give them back one hundred percent rebate on their policy well that whoa i mean people won't start so let's say that a policy let's say that a let's use round numbers even though they may not affect real reality let's say that a master policy for in this scenario is going to cost a lender for its portfolio a million dollars and let's say that the insurance company says and the those are approved rates and the insurance company's board of directors gets together and has you know this insurance company this lender is going to be coming back year after year with a lot of business you know i bet you that we're going to keep getting that business if we give them back a rebate let's give them a rebate of fifty percent and some board member say why not seventy five and some say one hundred and at the end of the day they give them back a hundred percent of the premium lender then charges the borrower the amount when he or she does not obtain insurance is that kosher all right let me just first clarify he's paid by the way is not a rebate it's a commission to a license not not it's not in my it not in my hypothetical well i have to explain that that the regulator decides what that commission will be not in my hypothetical but that's why the fury the rate is this the insurance company says for this master plan master policy yes i am going with this many policies and this much in outstanding loan obligations i am going to charge lender x this amount of money and the regulators say approved you can charge for that portfolio a million dollars a year ok ok after they get the million dollars back the million dollar premium paid they give it all right back to the lender it's a hypothetical it's not this case ok i want you to take the hypothetical and it's a legit facts on their face well and all that money is given back to the lender and someone doesn't obtain insurance they get lender placed insurance through the master plan but there's no real cost to the because they've gotten their premium completely back can they charge to borrow or the amount that would have been charged to the lender had the full prng of a million dollars been paid and accepted it two points first that would be an unlawful when you are charging the borrower in my hypothetical for a cost that you never expended your the contract says if you don't get insurance we're going to force place insurance and it's going to be higher than you would otherwise be able to get so the borrower understands if they don't get hazard insurance and they were paying let's say five thousand dollars a year don't doesn't the borrower have a contractual claim against the lender for charging them something the lender didn't have to pay out ok first of all the  of those parties before the court what we have our loan use a hypothetical i understand that ok all right well the answer would be no there would be no claim because the and bank opinion in taf it says that the plaintiffs would suffer no cognizable injury by paying the filed an approved rate and you're their injuries if they are a pain in your a cost that the lender never had to expend regulators who are the two parties the insurance company and the lender who's playing the rates correct incorrect this is a hybrid product this whole not ratepayer argument it just makes no sense at all in the context of this product these are d interest products meeting that cover both the lender and the borrowers interest in the underlying property borrowers make tens of millions of dollars of claims every single year in fact all around the country it's billions of dollars in claims every single year on these policies so this isn't position just depends write off some people might have might might not yeah right exactly so that's why they have to cover everybody's interest and of course the second circuit said in ross dean the very same thing that this court has said in hill which is that the and the whole idea of the non just disability club strand is to keep the courts out of remaking this is not really making is whether or not you're charging for a cost that you didn't expend no one's challenging the rate well from the preview insurers perspective which is whom i represent we are filing our rates and we're being paid the filed rate and what's happening is that the lender here by the by the insurance come by the lender by the lender but immediately it's all done with a computer program that the premium is immediately then charged to the borrower and will not immediately not immediately it's whenever there's a deficiency or a violation well i mean in the sense that when the premium is paid by the loan servicer to the insure a general premium no no it's only hot well a group master policy is issued in many states there are five or six states where individual policies have to be issued like in new york but a group master policy is issued and then a certificate of insurance for every single property that is insured is issued covering the interest of both the borrower and the lender and that rate is presumably on some type of a perk per value it insists that is that that's what's approved by the regulators act exactly it's per hundred dollars of you know the borrower by pass through is pain the amount that the regulator has said the product is worth exactly now in judge jordan's hypothetical they are getting whatever you call it a kickback a commission that you know might be tickets to a football game might be a a trip to las vegas or it might be cash now you said i heard you if i heard you right that you want to call it a commission because it sounds nicer well that's i mean but then you said the regulator decides the commission is that correct that is correct and how so well when you make a rate filing you add commission loads all kinds of loads for veriest types of expenses and so forth these are expensive elements of the filed rate and the regulator approves that commission load and then that then  they don't send it then they approved but they're not the ones who set it well no there's a big interchange in every rate filing there are proceedings hearings but it is what you're saying that that any of the things that they're complaining about that were in the filed right and approved by the regulator and by the way it is a commission paid to a licensed agency the licensed agency is owned by the loan service or so that they have to step that third saying it's an insurance agency yes you don't yes that's exactly what this is i has another entity involved that is correct that is an affiliate of the insurer it's an affiliate or related to the insurer no it's an affiliate related to the loan service or ok thank you so you got a lender you got a loan servicer and you have it and if a licensed agency which happens to be owned by caliber or s l s so they just step in together and say oh we're paying caliber s l s the you know the rebate but there's no rebate here this is a commission that has been set by the regulators what is the commission here on these policies is that what is know i s it varies but i mean it's like well what is a range between eleven and fifteen percent which is very comparable to what is approved on any regular homeowner's policy let me let me ask you a different version of the hypothetical if the lender never pays the premium for fourth place insurance can that be passed on to the bar or no because there's no coverage if the lender doesn't pay you know and you get coverage you just don't make the payment well know that we wouldn't issue the policy there has to be the regulators will let you do that you can't give them is not the regulators the insurance company makes a mistake well rarely would that happen and i understand you have to and it would be to have to accept cancel you have to accept a corner i'm trying to paint you into ok that's right that's just the way it works ok so if a mistake happens and the lender tells the insurance company or the insurance company no that is doing the servicing right at this homeowner has not gotten hazard insurance right and they now need force place insurance the insurance company issues the policy and forces the insurance but they make some mistake and they never charge the lender the premium the lender then tells the b er we're adding that premium to your principal does the borrower in that circumstance have a claim that is not barred by the filed rate doctrine yes because there wouldn't be here's the issue though what so the amount that's collected matters it does because only it's on each individual property is that is the premium calculated and charged and paid by the service or and then church passed on to the bar it's and that's why when we're talking about the the kickbacks the so called kickbacks we're talking about commission loads and certain other expenses loads of these plaintiffs just don't happen to like but they've already been reviewed and approved by the regulators so that's why the you know it would undermine and subvert the authority of the regulators to decide what particular component should be included in a viable and appropriate rate their claims would just completely subvert it that's exactly what frosting held question more and more practical question about how this rate making works with you call them commissions kickbacks referral fees whatever are they on up her policy basis yes or on a portfolio basis none of these it's a group master policy but there's also there's no coverage until the individual certificate is issued on an individual property ok and how does  does the regulator know ahead of time what commission rate is appropriate for a policy that hasn't been forced yet because they're in a rate filing it's all perspective all over it making his perspective and so the actua put together and it's from zero ok there's no so it's like ok the expenses that ministration will be this the expenses for commissions are what are known as acquisition costs will be this and it all ends as up and then that is the rate that the that the regulator approves and what these plaintiffs want to do is say oh let's take some of those components of the approved rate and we want to have those damages where you just can't do that under my it's the entire rate making process on a voluntary basis so if i was what i'm trying to get at is is there one number when you say the far right doctrine and the far right i know they're complete but at the end of the day is there just a flat number perth thousand or so forth yes it would be like a dollar ninety per hundred dollars or something like that of value on the value of the home and the actually the the improvements to the home not the land of course so the commission part commission with a licensed agent and those run from eleven to fifteen percent net ready so that's why what they're challenging is something that's just an interval component of the filed an approved rate that's why you cost overhead of the lender is twenty percent and suppose they didn't spend twenty percent right i mean that turned out this year they laid off some people and they didn't actually spend twenty percent right on that component and then what happens is that the right that's right and what happens is that the rate is then refiled every couple of years and takes that into account the experience ok you've exhausted your you have five good morning your honor sara kemp first caliber home loans may please the court i certainly join in mr burt's comments at a few other points that i wanted to emphasize the first is that pla continuously argued that their claims in this case are based on defendant's conduct as opposed to a challenge to the rates themself but under this circuit's precedent in both the hill and the taff it cases that's a distinction without a difference it's the impact that the plaintiff's claims will have on rate making procedures and agency procedures not how it's framed that determines whether or not the doctrine applies and if this is in this case there would relief plaintiffs see which would effectively reduce the rate that they would pay that would leave them to plead to them paying different rates than other a sick insureds violating the  nondiscrimination principle as well not if you have a class action you have to pay everybody back well not necessarily your honor because that basically has one policy for each service or that use that type of product so even if you had everyone in a caliber class action get the same rebate on the rate you have bank of america walls fargo other loan servicers out there that use the same policy and those borrowers would end up paying more even though it's the exact same insurance product that happens in law the time groups of people sue other groups of people decide not to sue and at the end of the day they're treated differently depending on what legal options they've exercised or not why is that problematic it's problematic in this context because under the filed rate doctrine the nondiscrimination principle mandates that same rate and if you have a situation where the rate that the borrower pays for a product turns on whether or not the borrower is involved in certain class action or had his or her loan service by a certain service or you run afoul of that role that can't be the rule though because if you had a case where the filed rate doctrine absolutely did not apply the fact that only one set of consumers filed suit doesn't mean that you say the filed rate doctrine does apply that's crazy now the question is does the filed right doctrine apply or not as in his statement judge jordan just made was that if you look at a case where it doesn't apply but the issue here is for example you know i have a policy i have a huge rate from a utility and i think you've done something evil and i sue and i win and then i'll be paying less than the  guy who is in some other customer that's correct and even if it's a class action if it is the rost in court recognized if there are other customers who are not bound by that class action you still run afoul of the non so if i sued on behalf of all of the customers in miami dade county but f p and l also service broward and palm beach you'd have that same problem that's correct another point i want to emphasize your honour's is that plaintiffs have repeatedly made the case that these are our commercial policies that protect supposedly only the service or that isn't correct these are our dual interests policies that protect both the service or and the borrower borrowers can make claims under forced place insurance policy and it is contemplated at all times that these rates will ultimately be passed through  from from the insurer to the service or to the borrower there's a information on the florida office of insurance regulations website that contemplates that the rates will be passed through the certificates of insurance which are approved by the regula ors contemplate that the rates will be passed through and the borrowers mortgages also authorize the service or to charge for the expense of the policy can do you agree with mr burt that you can only pass through what you pay  i agree that you can pass you can pass through the expense of the policy under the mortgage only if you pay it though in other words a view in my hypothetical where there were a mistake is made and the lender never pays for the insurance policy gets issued you can't pass that expense through right i would agree that if there was no payment at all under under that hypothetical that you couldn't pass that expense through so whatever whatever the company pays matters whatever the lender pays matters at least in some circumstances right it might matter in that hypothetical but again that's not the case we have here i know  damages of three times the amount of the settlement charge without regard to the amount of the alleged kickbacks why should that matter if the filed rate doctrine doesn't even allow those sorts of challenges i mean your claim is that the filed rate doctrine supersedes federal and state law cause of action if that's correct why is that rationale it even a problem it does supercede federal and state cause of action the issue in that case was that there was no need and that's not a way for distinguishing that case because of the filed rate doctrine applies as broadly as you say it should have trump respa right it would trump  the if it violated one of those strands no it wouldn't matter but the distinction with the allston case is that it didn't violate either either strand because you had this unique remedy that provided three times the amount of the settlement charge so there was no need to rape why does that matter i don't understand that at all if you're getting money back and part of the money you're getting back is a is based on the alleged kickback or whatever you want to call it how does that not fly in the face of the filed right doctrine as you interpret it i'm distinguishing the the allston case because they're you and i'm suggesting to you that's not a proper basis for distinguishing the case given your view of the  the way that you and mr burke view the filed rate doctrine it doesn't matter what remedies respire provided that's irrelevant if you're trying to get back something that regulators approved whether you call that a commission a kickback or a referral fee that's the end of the matter it doesn't matter whether congress provided for trouble damages on certain types of fees there's a matter at all and shouldn't and couldn't is that not  right i think that that's incorrect your honor well as the district court found alston didn't raise a true filed rate issue because of that unique remedy you don't have to look at the settlement charge and see what the component of the alleged kickback was you just got triple the before amount of the settlement charge so there was no need to parse the rates and in the settlement charge part of the approved rate it is the entire rate it's of course the entire full you're challenging the rate yes under case and the mcrae case in those cases when there wasn't this unique provision under arrest by giving the triple of damage award the court went through and did the nondiscrimination alan analysis did the non disability analysis and actually cited the second circuit's decision in marcus in holding that those claims were barred thank you thank you on before you start to help me with our precedent because i don't think we're right on the plains light here we have taf and we have hill we do have are you familiar with the forest flood case of fear as well fargo yes you're out and they and that's why when you're in europe is long as you're charging the full right there's no other allegations above the right those cases all say these fraud crimes don't survive utility this is an insurance but you had to force flawed there they were paying different amounts just the borrower they are was paying for sixty three thousand dollars of insurance when the  charges to us that violated our contract says it was basically a question of contract interpretation of the fair with that was a lot of discussion and five as the bar's been put on notice that the contract the charges are going to be insurance program which has national rates and the question of whether there can be over insurance beyond beyond the loan amount and the borrower their alleged you can only charge me up to my limit because it's all the flood insurance i want and the courts said well you were warned you could there might be charges beyond that but there's no question about any about the legitimacy of any of those charges your honor it's totally different from our case we're saying there were charges that were illegitimate and violated our mortgages agency ok and they gave them a discount on the policy that is that is they bought it for less than the far right ok but yet they charge  the economic reality is these repairs indisputably there the rate payers are the ones to who are obliged to pay it they talked about the florida website it says that lender place coverage is coverage that a mortgage lender or bank purchases property it owns to protect its interests there they're the rate payers and if in fact they're not paying that because of the economic reality of the situation your honor there's a cause of action there and again we have to look at the we have to look at the regula equity and opposing counsel said hey there's a benefit to the borrower to that is in correct your honor only to a limited degree is there a benefit and it's only because that the owner of the bar own this this security this collateral the lender place insurance is for the outstanding loan amount so should judge box if in fact that occurs if there's one or place insurance and there is damage to the house it that well exceeds that the money can go straight to the pocket of the lender and no benefit whatsoever goes to the bar and that happens all the time and so you have an elderly couple they've got all you know a very small loan amount left in their property and their house is wiped out by disaster that type of thing happened under the mortgage they can say look it's economically infeasible for us to build the house again we're just going to take that money pay off your loan and here you go you have nothing and that's what happens because what they're protecting is their own economic interests and to say pot to earn the commission but it is a commission that's paid to the loan servicer is that not in the in only a fictional censure honor because when you do nothing to earn a commission the policy already exists it's applied on a lot of time when you have repeat business by the time you have the business you aren't doing anything just buying it from you i mean this is repeat business correct no your honor it's a master policy where in fact there are charges that arise and they're supposed to be passing down the cost only the cost of it's not a profit so whether this is a commission or not you do agree that on the far right doctrine commissions are allowed to be paid that was part of his argument you not legitimate commission a legitimate yes sure i would agree that a legitimate commission and so this you know not a commission because you're saying they didn't take in the conduct of passing the paper through the day if they did nothing about it i have a  systems and so the force insurance is placed in this to get commissioned this gets isn't that what's really going on the forced insurance is charged to the bar and they're taking that money and they're sending part of it to the insurance economic reality looking at the economic reality is that is a pass through they do nothing for that money and they've created other programs they don't nothing for the money that's another issue but you don't dispute the fact that what they're doing is they're taking the charge to the bar and they're dividing part of it goes to the insurance company and part of it goes to some of the entity that did nothing is that yes sure that's what happened that's right and what is this other entity that did nothing you know you know what it is i look at the planes it's there's enough there or there's nothing in the pleadings about it this is something they put into the record but it's it's an affiliated entity ok that is basically a way for them to have additional profit center right and how did they put it into this strike it it was put in the evidence in the district court is what we tried to do your honor was to put in our own evidence to meet it and to try to take discovery on it and it wasn't it wasn't put up what was their evidence that they presented that was considered by the