attention for the court is now sitting god save the united states and this honorable court called the reinsurance participation agreement was the matter in the first appeal and after the first appeal this court remanded the case to the district court to consider whether the r p a constitutes an insurance contract for the purposes of section thirty eight point two three twelve of virginia's insurance code and that section prohibits arbitration agreements in insurance contracts in actions against the insurer the district court found that the r b a was an insurance contract and denied hawkers motion to compel arbitration has appealed and here we are now since the papers cover the background pretty well i'd like to focus on just one thing and that's this that the district court didn't identify any definition of insurance contract that the r p a meets the virginian surance code doesn't define the term insurance contract but it does define the word insurance and the district court however didn't find met the statutory different definition of insurance instead the district court focused on the overall nature of the transaction and that it was an insurance tract engine and insurance traction was enough it had to say this about looking only at the r p a and i'm quoting now our position my client position rests entirely on parsing this transaction to the point of being completely disassociated with the realities of the overall transaction contends that that's an error and that parsing the transaction was exactly what was supposed to happen here because the question under thirty eight point two three twelve is whether the r p well your honor this the provision at issue which prohibits the an arbitration clause in an insurance plan it doesn't look at that it looks whether there is an actual insurance contract itself other states have that standard that's true california for example but the virginia surance co doesn't require that it requires there be an insurance contract and to be an insurance contract there has to be insurance but the r k doesn't meet that definition the r k doesn't endorsement of the insurers contract i think that would be well let me say this way that would be my understanding norseman anywhere so it seems i wouldn't have any grounds to argue with that but as i said i don't think so i think i think the term insurance contract refers to a larger panel of contra contracts than an insurance policy i think that's so now the answer is i don't think it has to be just an insurance policy but it has to have insurance in it and there is no insurance in the r k doesn't insure against any any any covered cat any casualty occurrence any covered peril and so it can't be insurance under the code as the code defines it should we interpret this as an insurance this term insurance contract in a way that would allow companies to circumvent genuine laws well let me push back just a little bit on that your honor i don't think the i don't think the no i don't think the purpose was to circumvent law i think i think the idea was that the purpose was to invent an insurance product that would allow small the mid sized businesses an opportunity to maybe get some money back at the end of the  contract if they kept their claims low which is why i think many went took the deal and i have a lot like that do now was one of these that retroactive prohibition up was because if you use that instead of the guaranteed method you contract but you don't think the r b a is a part of a proper well i do think it's part of a product but i think as as a standalone contract which is what the statutes looking for i don't think it's an insurance contract it doesn't do what is your  still makes it non insurance the r p a part isn't insurance it would be under that formulation would be almost the exact insured opposite of insert so there wouldn't be any risk transfer it's a it's an over under deal where you take an investor you invest in your ability to keep your claims that makes it not insurance under the venue virginia statute could mean the land have received the r p so under the program and just part of the program but yes that is true you don't get the program without signing the r p i but to your point judge gregory the only thing that matters here is whether the are p a a is an insurance contract excel and under that formulation as you've just described it wouldn't be insurance and that's our whole point is that the statute only prohibits arbitration contracts in insurance yeah so we're looking here to see whether there is an insurance contract virginia law in this the code defines the term insurance and the r p doesn't meet that yes but in answer to my question since you've conce correctly you can't have one without the other then how can we say that they are separable from each other well or for purposes of what is an insurance policy it just doesn't work well if you can't have this insurance policy without dealing with signing with us then that's all she wrote it's part of the insurance policy no matter how many times you talk about label them differently if they're inseparable they're together right well well for the purpose of an insurance transaction i think that's true i think i think as an insurance transaction that part and parcel of each other but when you start looking at the specific contracts there are three different contracts with three different entities involved in this in this insurance transaction i mean the corporate separate separateness doctrines don't disappear because it's an insurance insurance contracts that you can't take it can't go straight economy analyst and get this guaranteed policy that the law says and legal so you create this fictional type arrangement to avoid being classified in the retroactive rating comp worker's compensation sherm's and allow this entity to get a lower cost policy which you could get on a retroactive one  the thing is that the statute is looking for an insurance contract and there are three contracts and only one of them has an arbitration clause and anybody in it cool if you are what you are today i don't know if i don't know of any case my name is scott cry and i have the privilege of representing anyway in private they school in this appeal the first question is the patent is designed to circumvent all state regulatory authorities that's the purpose of it and  know and that is the what the law is this act or a law that's correct judge gregory that's exactly right and what i noticed on the reply brief they say you know intent is not relevant what's interesting here is the effect of the r p a matches their rating plans without getting approval of the state regulatory authorities they say it's difficult to get approval for rating plan so that is the purpose so their intent happens to lean in this the the i mean i knew that when you went to get it you knew the law  address here what i can say is many land nor anyone else could enter into a contract that violated thirty eight point two three twelve and i have knows you don't know that i'm referring to when you present it as though the other every other court has found and as the insurance commission of vermont has found as the department of insurance of wisconsin found as the insurance commission of california found when they reviewed this barred this product from being sold and ordered ordered them to remit funds above the guaranteed cost policies to those policyholders so i'm not being core your honor judge when i just can't answer that what my client knew it is just absolutely modifies in the terms of the california insurance regular it supplants the terms of the insurance policy one simple reason one simple example i will give to you is the terminations fees from the day this from ability applied underwriters who sold this product they under this r p a they are to provide a policy but the policy what do they pay what do they injured in those benefits and who would pay they would pay they do have to pay under their if you read you can go back actually this is another interesting part if you read their agreement with their insurance companies they have authority over entity their insurance co their insurance companies right continental insurance company is here they own that california company that pennsylvania insurance company they own that this r p a said one of our affiliates will issue a policy many land didn't know they could have picked any one of these policies the r p i gives this entity applied underwriters the authority to pick an entity to them because they're connected with insurance companies that makes the r v an insurance only reason no no but the interests of the reason that and deal with risk they pay big yes because they have contract to provide insurance coverage as they call it a program they talk about this r p a being one component of this program where the program is insurance and our statute defines a policy a policy under the law is a kind of contract i mean the p b can license worker's comp insurance company with the state of virginia they issued a guaranteed cost policy the form of that policy has been approved by virginia the rates that it says have been approved by are genuine this r p a impose that right so does apply to underwriters because they contract it to provide the coverage to this insured many when every insured so you tell me that of ca and i didn't claim they would have to pay sure they would have to insurance thirty eight point two one hundred insurance is defined in there and it says it's coverage it doesn't say necessarily a policy i suppose you could do it under any kind of a contract but a policy is a contract this r p s a completely supplant the terms of the policy in my point is your honor if i can get to this there on on december sixteenth two thousand and fifteen many lands insurance was terminated with terminate its insurance coverage was terminated and the reason given for the terminations was nonpayment of premium at that time many land had already paid twenty percent over the state approved rate for its insurance coverage already paid twenty eight percent over when it in the notice it said we are terminating your coverage for nonpayment premium applied underwriters didn't state but term the amount of the nonpayment of premium because they couldn't because they were charging them retrospectively as it turns out we filed this case we're going to demand for arbitration they want to nother three hundred forty seven thousand dollars that is forty six percent so now we're looking at what is nominally an approved worker compensation insurance coverage what is approved worker's compensation insurance supposedly but it has been terminated for failure to pay twenty six percent over now forty six percent over the state  sure terminations be that are under our state approved policy this says right here you pay us not continental when this if this policy is terminated you pay us why the underwriters not continental insurance the amount of the money they do under the policies plus eight percent plus other fees so they terminated this insureds excuse me in the remaining cost are owed under the r p a not to continental insurance company but to them so to go back to your question yes applied is the entity that is born the risk it's also the entity that is getting the funds and it is completely changed the terms of our state policy exactly right it's not but it's more than policy that the cost was too high it's that they imposed a rate play and that is not approved by this state and that's that's what it does and it's beyond definitional terms in the statute judge gregory it's just looking at it this is what it does and so the point i was making is the money goes to them they do have the risk it's they affiliated companies they say that right in the documents and it's one unified plan your honor it's one unified plan you know california changed their laws and the deal with this little bit no they are california have barred them from selling this recently and they have entered into a settlement agreement where this company has changed their business practices they didn't care or didn't change its laws they changed their business  s i apologize tremendously just very i mean laugh if i only thing going so well and that's at the the bottom line is that this document this that they have just like an endorsement like every other has found in dorset moaner a writer it's a contract because it amends the policy that they issue the policy is just part of it it's a scene was as they sell it a one unified programme of insurance interesting and they're in the record in the trial court has them all of that these agreements they have with them are more interesting before that before the trial court on remains and they tried to say oh applied underwriter's doesn't have anything to do with the insurance policy and that's just not true you can see the briefs where they have they have the right to set the reserves they can so they're actually intimately involved in the administration in the cl ministration and so in terms of risk judge gregory all of them and their affiliates are all in it together so what i was going to close with is what i want to show is if there's any doubt that this or create doesn't have has anything other than the substantive driver of this insurance coverage that is provided to insurance many land or anyone else all you need to look at is the fact that the terms of the r p a and the program that they impose the imposed a three year term our state approved policies are only for one year you've got a guaranteed rate says right on the front  this this r p is what drives it's what they cancelled it for these premiums and if you look at the cost in the premiums that they charge you can see that it applies to policy pay roll and in terms of our definitions rates or anything imposed by any contract for the fixture managed or the acquisition or the administration of insurance cover what they want to do is say that this is not a policy therefore by definition it's not insurance that's just not true that's as if to say you know formal improve approved indorsement to a former writer on a form are improved approved of course once they're sabet it back that this wasn't submitted it's still an insurance contract and in this case they use it's interesting they actually use our state approved guaranteed policies as a when in fact they're imposing retrospective rating plans for this year as part of the policy we  the insurance contractors with applied underwriters they could not get a policy without entering into subject to this r p i the r p a said policies will be issued by one of their affiliates but you responsibility of your client for the next two years to iraq to undergo to applied would sue them for breach of the insurance contract because it has a three year term and breach of a contract this this insurance coverage was obligated to last for three years but they had to employ they employed state guaranteed policies telling virginia oh this is the policy this is the insurance coverage that many lay on hands and they would show them a one year policy that was and then they were obligated to pay this three year program as set out in this or we're in there some state enforcement we he redress as with the state this is illegal it's not it's not appropriate and therefore that must be redress in the scheme of state remedies with a b no i mean i missed asking you quiet no i mean vermont have done here this doesn't mirror what you well events of superseded they were their policy was cancelled early on december sixteenth two thousand and fifteen they had no choice they had to find another insurer to provide them workers compensation insurance coverage which they have to have so events have superseded that that would bar them they're going to the state no corporation commission insurance to do that you know to redress that no but many land is  regulatory scheme of a state corporation commission the state the workers the virginia workers insurance commission could take this insurance company to task so could the f c c absolutely  some sort of state agency that their remedies lie there and pointed out to them whatever and these might be we have not your honor this is all been a dispute over whether we can arbitrate we haven't exactly yeah i'm afraid we haven't got that far  the are my with my own client test it with the state given as you already admitted since you brought it up with your record score card have been very good around the country who would you want to test this with the regulatory see what this is before we roll around here to the united states court of appeals for the fourth circuit i always think it's kind of strange that people who run businesses want courts to decide what their business as the last thing i want to this is person someone who knows nothing about markets things as well as well there are questions that you look so much like insurance and you know it's not some point it's raining and you're floating in your question is it will be some conclusion that you might be a duck well i think sometimes that's pretty apt but in this case the statute says there must be an insurance contract in order to prohibit arbitration and that's what we're here to look for and i think in the three contracts that are all in the that says that there's any suggestion that they are avoiding state statutes that would forbid something there's nothing it so i can be reading my joint appendix i'm not going to find a it because of insurance commissions unfamiliarity with new pricing schemes or something like that this is designed to be a non linear offer non linear retro pricing now i don't know the distinction between  this on one these law that controls here well those should be helping us know that that's true your honor and i apologize if i'm overall unhelpful but we had a very narrow issue in front of us the issue was could we arbitrator not s that's correct so it doesn't seem to me that those issues are so very far apart well i mean you're very narrow issue is right there intertwined with this other issue i wrote let me say this if it was true that the that the overall package is in insurance is a retro insurance policy that would be forbidden by virginia law i see that as separate from the question about whether this one of three contracts is an actual insurance contract the overall program may not may not i'm not saying it does or doesn't but our question was does this one contract shift risk and i think the answer is no and i don't think the district court found that it did either the district court took the overall transaction approach and said it's an insurance transaction so that was enough but i think that was an error the statute says what it says the legislature could have put something else in there but it didn't and so on that narrow  is almost missed tell me what's your best argument that this is not insurance even though it is non linear it's a little different is that minutes is unique is that while well because this part of the transaction doesn't transfer any risk that's already occurred with the policies that the insurer signed agreed to with many land that's why this isn't insurance that there isn't insurance as defined by the  statute and so without that you can't have an insurance contract you may have an insurance transaction but you don't have an insurance transact contract as to this particular piece my time is done thank you thank you w