Document: 525 U.S. 299119 S.Ct. 710142 L.Ed.2d 753 114 F.3d 1467, affirmed. SUPREME COURT OF THE UNITED STATES119 No. 97 303 HUMANA INC., et al., PETITIONERS v. MARY FORSYTH al. ON WRIT CERTIORARI TO STATES APPEALS FOR NINTH CIRCUIT [January 20, 1999] Justice Ginsburg delivered the opinion of Court. 1 This case concerns regulation business insurance by States, as secured McCarran-Ferguson Act, 59 Stat. 33, amended, 15 U.S.C. § 1011 seq., and extent to which federal legislation, specifically, Racketeer Influenced Corrupt Organizations Act (RICO), 18 1961 is compatible with state regulation. The controversy before us stems from a scheme employed petitioner Humana Health Insurance Nevada, Inc. (Humana Insurance), group health insurer, gain discounts for hospital services insurer did not disclose pass on its policy beneficiaries. alleged violate both Nevada law RICO. Under legislation may be applied if it does "invalidate, impair, or supersede" State's 1012(b). 2 at issue, RICO, proscribe conduct that laws governing permit. But remedial regimes differ. Both provide private right action. RICO authorizes treble damages; permits recovery compensatory punitive damages. We hold can in this harmony When aid enhancement regulation, frustrate any declared disturb administrative regime, bar 3 * Plaintiffs District Court, respondents are beneficiaries policies issued Insurance. Between 1985 1988, plaintiffs-respondents received medical care Hospital-Sunrise, an acute facility owned codefendant (now copetitioner) agreed pay 80% beneficiaries' charges over designated deductible. bore responsibility payment remaining 20%. pursuant concealed agreement, complaint action alleged, gave large insurer's portion hospital's provided beneficiaries.1 As result, paid significantly less than actual received, more 20% those charges.2 4 employee brought suit United States Court Nevada,3 alleging violated through pattern racketeering activity consisting mail, wire, radio, television fraud.4 Defendants moved summary judgment, citing §2(b) provides: 5 "No Congress shall construed invalidate, supersede enacted State purpose regulating insurance, imposes fee tax upon such business, unless specifically relates insurance." 6 granted motion. In court's view, RICO's remedies, including statute's damages provision, 1964(c), so exceeded Nevada's penalties fraud, see infra, 10 11, applying would have been "tantamount allowing intercede area expressly left states under Act," 827 F. Supp. 1498, 1521 1522 (Nev. 1993).5 7 Ninth Circuit reversed relevant part. See 1482 (1997). Merchants Home Delivery Serv., Frank B. Hall & Co., 50 1486 (1995), decision handed down after rejected sue case, Appeals adopted "direct conflict" test determining when "invalidate[s], impair[s], supersede[s]" insurance. Home, preclude "application statute prohibiting acts also prohibited state's laws." Id., 1492. Guided assuming remedies only, held F.3d, 1480. courts divided question presented: Does law, proscribes same but provides materially different "impair" Act? certiorari address question. 523 ___ (1998). II 8 Prior our South-Eastern Underwriters Assn., 322 533 (1944), we had consistently was commerce. See, e.g., Paul Virginia, Wall. 168, 183 (1869) ("Issuing transaction commerce."); South-Eastern, U.S., 544, n. (collecting cases relying generalization). consequence, largely immune St. Fire Marine Ins. Co. Barry, 438 531, 539 (1978) ("[T]he enjoyed virtually exclusive domain industry."). first time company doing across lines engages interstate 553. accord holding, further decided Sherman id., 553 562. 9 Concerned might undermine efforts regulate 1945 Act. Section "continued taxation several public interest," "silence part impose barrier States." 1011. centerpiece ensured statutes identified yet automatically override 2(b) enacts relating controls. §1012(b). subsection general character "construed Ibid.7 thus precludes application face "enacted . insurance," measure "specifically relat[e] law. Department Treasury Fabe, 508 491, 501 (1993). therefore turns question: Would claims issue insurance? 11 term "invalidate" ordinarily means "to render ineffective, generally without providing replacement rule law." Brief Amicus Curiae 17, (citing Carter 321 131, 139 (1944) (Black, J., concurring)). And "supersede" displace (and ineffective) while substitute rule." Illinois Commerce Comm'n Thomson, 318 675, 682 (1943)). these standard definitions, neither nor 12 key question, then, whether defendants collaborated, detriment plaintiff beneficiaries, answer "no" were read "impair," suggest, "interchangeabl[e]" "supersede." Respondents 14; (describing use three terms "instanc[e] lawyerly iteration"). understood mean "the displacement some preclusion certain contexts." 14. because insurers comply These do directly conflict. identify unlawful 12. 13 On other hand, "yes" agree word context, signals legislators' intent withdraw field [of insurance] absent express congressional statement contrary." Petitioners 10. reading, convey "a very broad proscription against where has regulated, chosen regulate, industry." 1491 (emphasis original). Reply (McCarran-Ferguson "precludes material variance substantive prohibitions, procedures remedies."). 14 reject suggestion intended cede saving only instances orders otherwise. If meant preempt could said, noted: [that say explicitly] apply 1492 original) (internal quotation marks omitted); 24 ("The declare 'No thereto.' "). Alternatively, provided, respect Sherman, Clayton, Federal Trade Commission Acts, 1012(b), generally, particular, "applicable [only] regulated Law," ibid. added). Moreover, §2(b)'s second prohibition bears attention regard. That proscription, barring construction "any [state] [the insurance]," belies merely liability additional to, greater than, Were so, imposing fees taxes whenever imposed liability. system dual taxation, however, scarcely doubt "generally applicable 'invalidate, supersede' within meaning nothing paying both." 26. 16 While sort preemption, polar opposite i.e., green light collide head dictionary definition "[t]o weaken, make worse, lessen power, diminish, relax, otherwise affect injurious manner." Black's Law Dictionary 752 (6th ed. 1990). following formulation seems capture construe, most sensibly, text §2(b): conflict interfere application. National Association Commissioners 7. 17 Our Shaw Delta Air Lines, Inc., 463 85 (1983), similar tenor. considered New York forbidding discrimination benefit plans basis pregnancy preempted ERISA. agencies officials, appellants Shaw, argued preempted; they relied ERISA §514(d), ERISA's preemption clause alter, amend, modify, 29 1144(d). officials maintained preempting impair administration Title VII Civil Rights 1964, 78 253, 42 2000e amended 1978 Pregnancy Discrimination 92 2076, 2000e(k), enforcement accommodates, serve promote compliance antidiscrimination prescriptions. 101 102. practices lawful VII. 103. To explained, blanket urged employer appellees pointed out, "frustrat[ing] goal encouraging joint state/federal measure]." supports view hinder operation "frustrate [a] goal" 19 accords SEC Securities, 393 453 (1969). upheld, challenge, Securities Exchange Commission's authority unwind merger Arizona Director approved. absence conflict": "Arizona commanded something Government seeks prohibit. It permitted consummate merger; order them so." 463. stand alone. observed 'impairment' [that] [was] indirect one." Ibid. concluded: "The paramount interest protecting shareholders perfectly policyholders." There, here, "directly regulation," policy," "interfere regime." Supra, 9. 20 Applying just announced facts conclude precluded statutory common-law check fraud. Unfair Practices Nev. Rev. §686A.010 seq. (1996), patterned substantially Commissioners' model Act,8 comprehensive prohibits various forms fraud misrepresentation.9 Commissioner there reason believe violated, §686A.160, cease desist administer fees, §686A.183. 21 Victims pursue actions violations number unfair practices, "[m]isrepresenting insureds claimants pertinent provisions coverage," §686A.310(1)(a). §686A.310(2) ("In addition rights available commissioner, liable insured sustained result commission act set forth practice."). hermetically sealed; exclude laws, decisional. Specifically, duty negotiate good faith deal fairly." Ainsworth Combined Am., 104 587, 592, 763 P.2d 673, 676 (1988); Fidelity Guaranty Peterson, 91 617, 620, 540 1070, 1071 (1975) (recognizing tort breach implied covenant fair dealing).10 22 Furthermore, aggrieved parties awarded jury finds clear convincing evidence guilty "oppression, malice." §42.005(1) (1995). Nev- ada's places limits times amount compensa- tory $100,000, $300,000 compensatories $100,000. §42.005(1)(a), (b). adds "[a]n who bad regarding obligations coverage." §42.005(2)(b).11 Accordingly, plaintiffs seeking relief eligible exceeding RICO.12 23 sum, no frustration litigation here. provision appears complement relief. regard, note filed brief stage lawsuit urging policy, regime. Cf. NAACP American Family Mut. 978 F.2d 287, 297 (CA7 1992) ("No official Wisconsin appeared remedy Fair Housing policy."). insurers, too, victims. Aetna Cas. Sur. P B Autobody, 43 1546, 1551 (CA1 1994); Policyholders 21. 25 Because advances combating articulated block respondent recourse case. reasons stated opinion, judgment 26 Affirmed. Notes 27 1. ranged between 40% 96%. 1503 1993). For example, given bill $550 $5,000 gross charge. beneficiary, undiscounted rate $5,000, $1,000. 35% total ($550 out $1,550), beneficiary 65%. 80%/20% arrangement, should $1,240 (80% $310. 1508; 6. 28 2. investigation scheme, launched Attorney General, terminated entered into consent decree fine $50,000. 3. separated two classes, "Co-Payor Class" comprising "Premium Payor employers purchased policies. 1472 (CA9 1997). Only employees' placed 30 4. presented Employee Retirement Income Security 1974 (ERISA), 88 829, 1001 §2 209, disposition germane Court's review sought granted. 31 5. inaccurately projected only. 32 Compare 1486, 1995), ("[S]tate rules substantively identical differ penalty each other."), Doe Norwest Bank Minnesota, N. A., 107 1297, 1307 (CA8 1997) intrusion substantial damage regulatory program RICO."), Kenty One, Columbus, 384, 392 (CA6 1996) Ohio violations, well standards proof necessary demonstrate misrepresentations, ability [unfair deceptive acts]."). 33 "after June 30, 1948, July 2, 1890, known October 15, 1914, Clayton September 26, [15 41 seq.], Law." "[n]othing contained chapter manner 5, 1935, Labor Relations [29 151 25, 1938, Standards 1938 201 1920, Merchant 1920 [46 App. C. 861 seq.]." §1014. 34 8. Commissioners, Model Laws, Regulations Guidelines 880 35 §686A.030 (1996) (misrepresentation false advertising); §686A.040 (publication information); §686A.070 (falsification records financial statements); §§686A.281 686A.289 (fraudulent claims); §686A.291 (insurance fraud). 36 existence dilutes force assertion, made amicus brief, affirming Circuit's cause reluctant settle commissioners avoid compromising defenses litigation. Consumer Credit Presumably, equally 37 11. §42.007(2) (limiting wrongful employees except "an coverage"). 38 At oral argument, counsel petitioners suggested even though damages, threaten solvency defendant. Tr. Oral Arg. appear prohibit defendant insolvent, Cement Lemler, 89 447, 452, 514 1180, 1183 (1973) (noting "[i]deally allowance financially annihilating defendant" wrongdoer punished, destroyed"), record contains insolvency

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