FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

ALLIED PROFESSIONALS

INSURANCE COMPANY, 

A Risk Retention Group, Inc., 

an Arizona corporation,

Plaintiff-Appellee,

v.

MICHAEL SCOTT ANGLESEY;

ELISEO GUTIERREZ;

VERONICA GUTIERREZ,

Defendants-Appellants.

No. 18-56513

D.C. No. 

8:14-cv-00665-CBMSH

OPINION

Appeal from the United States District Court

for the Central District of California

Consuelo B. Marshall, District Judge, Presiding

Argued and Submitted January 23, 2020

Pasadena, California

Filed March 12, 2020

Before: Richard R. Clifton and Kenneth K. Lee, Circuit

Judges, and Frederic Block,* District Judge.

Opinion by Judge Clifton

* The Honorable Frederic Block, United States District Judge for the

Eastern District of New York, sitting by designation.
2 ALLIED PROFESSIONALS INS. CO. V. ANGLESEY

SUMMARY**

Preemption / Washington Law / Arbitration

The panel affirmed the district court’s order compelling

arbitration, and held that the Washington anti-arbitration

statute was preempted by the federal Liability Risk Retention

Act of 1986 (“LRRA”) as it applied to risk retention groups

chartered in another state.

The LRRA broadly preempts the authority of nonchartering states to regulate the operation of risk retention

groups within their borders. A Washington state statute,

RCW § 48.18.200(1)(b), has been held to prohibit binding

arbitration agreements in insurance contracts in that state.

The panel held that the federal McCarran-Ferguson Act,

which generally protects state regulation of insurance, did

not reverse-preempt the LRRA. The panel also held that

Washington’s anti-arbitration statute offended the LRRA’s

preemption language and that no exception applied to save

the law. The panel concluded that the Washington statute

was preempted by the LRRA as it applied to out of state risk

retention groups.

** This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.
ALLIED PROFESSIONALS INS. CO. V. ANGLESEY 3

COUNSEL

Andrea J. Clare (argued), Telquist Mcmillen Clare, PLLC,

Richland, Washington, for Defendants-Appellants.

Michael John Schroeder (argued), Michael J. Schroeder,P.C.,

Orange, California; Michael B. Kadish, The Kadish Law

Group, P.C., Santa Monica,California; for Plaintiff-Appellee.

Joseph E. Deems, Deems Law Offices, APC, Encino,

California, for Amicus Curiae National Risk Retention

Association.

OPINION

CLIFTON, Circuit Judge:

The Liability Risk Retention Act of 1986 (“LRRA”), 15

U.S.C. § 3901 et seq., broadly preempts the authority of nonchartering states to regulate the operation of risk retention

groups within their borders. A Washington state statute,

RCW § 48.18.200(1)(b), has been held to prohibit binding

arbitration agreements in insurance contracts in that state.

Dep’t. of Transp. v. James River Ins. Co., 292 P.3d 118, 123

(Wash. 2013) (“[W]e hold that unless the legislature

specifically provides otherwise, RCW 48.18.200 prohibits

binding arbitration agreements in insurance contracts.”). This

case asks us to determine whether the LRRA preempts this

provision as it applies to a risk retention group chartered in

Arizona but doing business in Washington. We hold that it

does. 
4 ALLIED PROFESSIONALS INS. CO. V. ANGLESEY

I. Background 

Plaintiff-Appellee Allied Professionals Insurance

Company (“APIC”) is a risk retention group, a liability

insurance company owned by its insured members, chartered

in Arizona and doing business in Washington. APIC

previously insured Dr. Michael Scott Anglesey, a

chiropractor in Washington.In December 2012,Dr.Anglesey

provided chiropractic treatment toMr.Eliseo Gutierrez which

allegedly resulted in Mr. Gutierrez suffering a stroke. A few

months later, Dr. Anglesey renewed his coverage with APIC

but, in doing so, did not inform the company of the potential

malpractice claim against him by Mr. and Mrs. Gutierrez.

When Dr. Anglesey later notified APIC of this potential

claim, the company advised him that it was denying coverage

and rescinding his 2012 and 2013 insurance policies.

A year later, Dr. Anglesey informed APIC that he was

planning to execute a consent judgment in favor of Mr. and

Mrs. Gutierrez and to assign his rights against APIC to them.

They had agreed to seek satisfaction on the judgment from

APIC and not from Dr. Anglesey. APIC responded by

demanding that all claims against APIC be sent to arbitration,

pursuant to the arbitration clause in the underlying policies.

Dr. Anglesey refused, and APIC filed this lawsuit on April

28, 2014, in the Central District of California against both

Dr. Anglesey and Mr. and Mrs. Gutierrez (collectively,

“Defendants”).1

1 After the commencement of this action in district court, a

Washington state court held the settlement agreement between

Dr. Anglesey and Mr. and Mrs. Gutierrez to be reasonable and entered the

stipulated judgment. Dr. Anglesey and Mr. and Mrs. Gutierrez have filed
ALLIED PROFESSIONALS INS. CO. V. ANGLESEY 5

The district court initially held that APIC did not have

standing to bring the underlying action to compel Defendants

to arbitrate. APIC appealed that decision to this court. We

ruled that APIC had standing to bring the action against Dr.

Anglesey to seek rescission of the policy and declaratory

relief and had standing against all Defendants to compel

arbitration of those claims. Allied Prof’ls Ins. Co. v. Anglesey,

680 Fed. Appx. 586 (9th Cir. 2017). On remand, the district

court granted APIC’s motion to compel arbitration, granted

the motion to stay proceedings pending arbitration, denied a

motion by Defendants to transfer venue to the Eastern District

of Washington, and certified a controlling interlocutory

question of law to this court under 28 U.S.C. § 1292(b). This

court granted permission to appeal. 

II. Discussion 

The question certified by the district court is “whether the

Liability Risk Retention Act preempts Wash. Rev. Code

§ 48.18.200(1)(b) as applied to risk retention groups.” “The

district court’s decision to grant or deny a motion to compel

arbitration is reviewed de novo.” Bushley v. Credit Suisse

First Boston, 360 F.3d 1149, 1152 (9th Cir. 2004). We 

review conclusions of law de novo. See Mull for Mull v.

Motion Picture Indus. Health Plan, 865 F.3d 1207, 1209 (9th

Cir. 2017). 

suit against APIC in the Eastern District of Washington based on APIC’s

denial of coverage. That suit is stayed pending a decision in this action.
6 ALLIED PROFESSIONALS INS. CO. V. ANGLESEY

A. Regulatory Structure

Congress enacted the Product Liability Risk Retention

Act of 1981 (“PLRRA”) as a response to “a seemingly

unprecedented crisis in the insurance markets, during which

many businesses were unable to obtain product liability

coverage at any cost.” Wadsworth v. Allied Prof’ls Ins. Co.,

748 F.3d 100, 102 (2d Cir. 2014). The Act supports the

formation of risk retention groups, organizations “whose

primary activity consists of assuming, and spreading all, or

any portion, of the liability exposure of its group members.”

15 U.S.C. § 3901(a)(4)(A). “Under the PLRRA, [a risk

retention group] is permitted to provide product liability

insurance in all states, free of insurance regulation by those

states, if it complies with the insurance laws of the state it

chooses as its ‘chartering jurisdiction.’” Nat’l Warranty Ins.

Co. RRG v. Greenfield, 214 F.3d 1073, 1075 (9th Cir. 2000)

(quoting 15 U.S.C. § 3901(a)(4)(C)(i)). The PLRRA only

covers risk retention groups in the product liability insurance

market. In 1986, Congress enacted the LRRA to expand the

benefits of the PLRRA to all commercial liability insurance. 

The PLRRA and LRRA create a “tripartite” regulatory

scheme for risk retention groups. See Wadsworth, 748 F.3d at

103. First, at the federal level, the statutes preempt state laws

regulating the operation of risk retention groups. 15 U.S.C.

§ 3902(a)(1). Second, at the state level, they authorize the

chartering state to regulate the groups’ formation and

operation. Id. Finally, also at the state level, they “sharply

limit[] the secondary regulatory authority of nondomiciliary

states over risk retention groups to specified, if significant,

spheres.” Wadsworth, 748 F.3d at 104; see also 15 U.S.C.

§§ 3902(a)(1)(A)–(I); 15 U.S.C. § 3905. These regulatory

divisions allow for “the efficient operation of risk retention
ALLIED PROFESSIONALS INS. CO. V. ANGLESEY 7

groups by eliminating the need for compliance with numerous

non-chartering state statutes that, in the aggregate, would

thwart the interstate operation [of] ... risk retention groups.”

H.R.Rep. No. 97-190, at 12 (1981), reprinted in 1981

U.S.C.C.A.N. 1432, 1441.

B. The LRRA’s Preemptive Effect

The answer to the question posed in this case is that the

LRRA does preempt Washington’s anti-arbitration statute,

RCW § 48.18.200(1)(b), as it applies to risk retention groups

chartered in other states. In reaching this conclusion, we

follow the guide of our own precedent and that of the Second

Circuit. See Attorneys Liab. Prot. Soc’y, Inc. v. Ingaldson

Fitzgerald, P.C., 838 F.3d 976 (9th Cir. 2016); Wadsworth,

748 F.3d 100. 

1. The McCarran-Ferguson Act does not reversepreempt the LRRA 

Defendants first contend that the LRRA does not preempt

the Washington anti-arbitration statute because it is

“reverse-preempted” by the McCarran-Ferguson Act, 15

U.S.C. § 1011 et seq. The McCarran-Ferguson Act is

generally understood to protect state regulation of insurance.

The Washington Supreme Court relied upon the

McCarran-Ferguson Act in holding that RCW

§ 48.18.200(1)(b) is shielded from preemption by the Federal

Arbitration Act. James River Ins. Co., 292 P.3d at 124.

Although our court has not opined on the precise issue of the

relationship between the McCarran-Ferguson Act and the

Federal Arbitration Act, we have repeatedly held that the

LRRA is an exception to the McCarran-Ferguson Act’s

preference for state regulation of insurance. See Attorneys
8 ALLIED PROFESSIONALS INS. CO. V. ANGLESEY

Liab. Prot. Soc’y, Inc., 838 F.3d at 982 n.4 (“We have

squarely held that even though the McCarran-Ferguson Act

reserves insurance regulation to the states, the LRRA was

meant to be an exception for [risk retention groups].”); Nat’l

Warranty Ins. Co., 214 F.3d at 1077 (“Even with a general

presumption that insurance law should ordinarily be regulated

under state law, as reinforced by the McCarran-Ferguson Act,

the language and purpose of the LRRA clearly indicate an

intent to preempt state laws regulating [risk retention

groups].”). Under our precedent, therefore, the

McCarran-Ferguson Act does not “reverse-preempt” the

LRRA.

2. The LRRA preempts Washington’s anti-arbitration

statute

Defendants next contend that the LRRA was specifically

designed not to preempt all state laws, including ones like the

Washington anti-arbitration statute. “When considering

whether the LRRA preempts a state law, we first determine

whether the challenged aspect of the state law offends the

LRRA’s broad preemption language. If so, we consider

whether one of the LRRA’s exceptions, which are contained

in §§ 3902(a)(1) and 3905, applies to save the state law. If no

exception applies, the law is preempted.” Attorneys Liab.

Prot. Soc’y, Inc., 838 F.3d at 980 (citations omitted). We

conclude that Washington’s anti-arbitration statute offends

the LRRA’s preemption language and that no exception

applies to save the law. 

The LRRA states in relevant part, “[e]xcept as provided

in this section, a risk retention group is exempt from any

State law, rule, regulation, or order to the extent that such

law, rule, regulation, or order would – (1) make unlawful, or
ALLIED PROFESSIONALS INS. CO. V. ANGLESEY 9

regulate, directly or indirectly, the operation of a risk

retention group[.]” 15 U.S.C. § 3902(a). Defendants argue

this language ought to be construed narrowly. They contend

that the LRRA only requires non-chartering states to refrain

from passing laws which prevent risk retention groups from

“operating” as an insurance company, and that the

anti-arbitration statute in question does not concern their

operation. In doing so, Defendants construe the LRRA as an

anti-discrimination statute, one which is designed only to

keep states fromtreating risk retention groups differently than

other insurance companies.

Defendants’ understanding ofthe statute is mistaken. The

LRRA’s preemption provision is broadly worded, and this

court has repeatedly held that the LRRA has a broad

preemptive effect. See Attorneys Liab. Prot. Soc’y, Inc., 838

F.3d at 980–81 (“The LRRA ...broadly preempts ‘any

[non-chartering] State law . . . .’” (quoting 15 U.S.C.

§ 3902(a)(1))); All. of Nonprofits for Ins., Risk Retention

Group v. Kipper, 712 F.3d 1316, 1321 (9th Cir. 2013) (“The

LRRA broadly preempts ‘any State ... order to the extent that

such ... order would ... make unlawful, or regulate, directly or

indirectly, the operation of [an RRG].’” (quoting 15 U.S.C.

§ 3902(a)(1)) (alterations in original)); Nat’l Warranty Ins.

Co. RRG, 214 F.3d at1077 (“[T]he language and purpose of

the LRRA clearly indicate an intent to preempt state laws

regulating [risk retention groups].”). This broad effect

requires that the term “operation” be read generously. We

have previously held that an Alaska statute which prohibited

insurance providers from seeking reimbursement of fees

incurred defending a non-covered claim regulated the

“operation” of a foreign risk retention group. See Attorneys

Liab. Prot. Soc’y, Inc., 838 F.3d at 980. The state statute

placed “a restriction on Alaska contracts that is ‘not
10 ALLIED PROFESSIONALS INS. CO. V. ANGLESEY

contemplated by the LRRA, and that is not [precluded] by all

other states,’” and therefore regulated the risk retention

group’s operations in conflict with the LRRA. Id. at 981

(quoting Wadsworth, 748 F.3d at 108) (alteration in original).

Similarly, Washington’s anti-arbitration statute places a

restriction on risk retention groups that is not required by the

LRRA or by all other states. Thus, the Washington

anti-arbitration statute “regulate[s], directly or indirectly, the

operation of a risk retention group.” 15 U.S.C. § 3902(a)(1). 

Moreover, Defendants’ reading of the LRRA would

jeopardize the purpose of the statute. The LRRA was not

enacted simply to keep states fromdiscriminating against risk

retention groups. Instead, as described above, the LRRA was

passed by Congress in an effort to support a struggling

insurance market. In order to do so, the Act “eliminat[ed] the

need for compliance with numerous non-chartering state

statutes that, in the aggregate, would thwart the interstate

operation [of] . . . risk retention groups.” H.R.Rep. No. 97-

190, at 12 (1981), reprinted in 1981 U.S.C.C.A.N. 1432,

1441 (House report for the PLRRA); see also H.R. Rep. No.

99-865, at 8–9 (1986), reprinted in 1986 U.S.C.C.A.N. 5303,

5305–06 (House report for the LRRA explaining that it “is

necessary to exempt risk retention and purchasing groups

from State law . . . in order to achieve the beneficial effects of

such groups referred to above.”). Allowing a state such as

Washington to force foreign risk retention groups to alter

their contracts would threaten this goal.

As the anti-arbitration statute “offends the LRRA’s broad

preemption language,” it may only be “save[d]” if an

exception in 15 U.S.C. §§ 3902(a)(1) or 3905 applies.

Attorneys Liab. Prot. Soc’y, Inc., 838 F.3d at 980. These

exceptions generally “authorize[] nonchartering states to
ALLIED PROFESSIONALS INS. CO. V. ANGLESEY 11

require risk retention groups to comply only with certain

basic registration, capitalization, and taxing requirements, as

well as various claim settlement and fraudulent practice

laws.” Wadsworth, 748 F.3d at 106. Defendants contend that

the Washington anti-arbitration statute falls into two of these

exceptions. First, they argue that the anti-arbitration statute is

an example of Washington requiring foreign risk retention

groups to “comply with the unfair claim settlement practices

law of the State.” 15 U.S.C. § 3902(a)(1)(A). Second, they

claim the Washington statute falls under the exception for

state laws “regarding deceptive, false, or fraudulent acts or

practices.” 15 U.S.C. § 3902(a)(1)(G). Defendants fail to

explain how an anti-arbitration statute is an “unfair claim

settlement practices law” or how it deals with “deceptive,

false, or fraudulent acts,” and we do not find support for

either contention.

Washington’s anti-arbitration statute offends the LRRA’s

broad preemption language and fails to fall into one of its

exceptions. Therefore, the statute is preempted by the LRRA

as it applies to out of state risk retention groups. 

III. Conclusion

The Washington anti-arbitration statute is preempted by

the LRRA as it applies to risk retention groups chartered in

another state. We affirm the order of the district court

compelling arbitration.2

2 Defendants moved to certify a question to the Washington Supreme

Court. Specifically, Defendants proposed to ask that court whether RCW

§ 48.18.200(1)(b) applied to prohibit the arbitration clause in this risk

retention contract. The question of whether that statute, if so interpreted,
12 ALLIED PROFESSIONALS INS. CO. V. ANGLESEY

AFFIRMED and REMANDED FOR FURTHER

PROCEEDINGS.

has been preempted by the LRRA is a question of federal law, not state

law. We deny the motion to certify.

We grant the motion of the National Risk Retention Association for

leave to file an amicus curiae brief in support of APIC.