Court Opinion

ID: 8967650
Source: CourtListenerOpinion
Date Created: 2022-11-27 10:14:16.968242+00
Date Added: 2024-06-11T17:10:21.668232
License: Public Domain

BEAM, Circuit Judge,
concurring.
I concur with the result reached by the majority, finding that the district court erred in granting summary judgment in favor of defendants in reliance upon the McCarran-Ferguson Act, but do so for reasons different from those expressed in the majority opinion. In my view, the alleged acts of price fixing mentioned in the complaint were not “regulated by state law” as envisioned by McCarran-Ferguson. The Act does not, therefore, bar plaintiffs’ statutory claims.
The McCarran-Ferguson Act is designed primarily to preserve state regulation and taxation of the business of insurance. 15 U.S.C. § 1011. The Act exempts the business of insurance from the operation of any federal law which operates to “invalidate, impair, or supersede” state insurance regulation. 15 U.S.C. § 1012(b). However, the Act also provides that the Sherman Act and the Clayton Act “shall be applicable to the business of insurance to the extent such business is not regulated by State law.” Id. Further, regardless of the existence of state regulation, the Sherman Act applies to any agreement between insurers to “boycott, coerce, or intimidate, or [any] act of boycott, coercion, or intimidation.” 15 U.S.C. § 1013(b). This statutory framework establishes three requirements which must all be met to obtain the exemption from anti-trust liability. Conduct which is 1) part of the business of insurance; 2) regulated by state law; and 3) not in the form of coercion, intimidation, or boycott, is removed from antitrust scrutiny under the Act. Health Care Equalization Committee v. Iowa Medical Soc’y, 851 F.2d 1020, 1028 (8th Cir.1988). See Union Labor Life Ins. Co. v. Pireno, 458 U.S. 119, 124, 102 S.Ct. 3002, 3006, 73 L.Ed.2d 647 (1982). My concern in this case is with the application of the second requirement.1
Defendants allege that the State of Minnesota enacted a generally comprehensive regulatory scheme which encompassed the setting of workers’ compensation insurance rates, and that such a general regulatory scheme is sufficient to meet the requirement of state regulation under McCar-ran-Ferguson. The district court agreed, and found that the challenged conduct was regulated as required by McCarran-Fergu-son. In so holding, the court relied on two decisions it deemed controlling, Federal Trade Comm’n v. National Casualty Co., 357 U.S. 560, 78 S.Ct. 1260, 2 L.Ed.2d 1540 (1958), and Lawyers Title Co. v. St. Paul Title Ins. Co., 526 F.2d 795 (8th Cir.1975). I believe these cases support the conclusion that the facts here do not satisfy the state regulation requirement.
In National Casualty, the plaintiffs sought to set aside certain cease-and-desist orders issued by the Federal Trade Commission which prohibited alleged false and misleading advertising practices. Plaintiffs alleged that McCarran-Ferguson prohibited such interference because unfair and deceptive advertising practices were a part of the business of insurance which was regulated by state law. The Supreme Court agreed, deciding that the states in question had “regulated” the practices at issue. The Court said that each state had enacted “prohibitory legislation which proscribes unfair insurance advertising and authorizes enforcement through a scheme of administrative supervision.” Id. at 564, 78 S.Ct. at 1262. While the Court did speak in terms of a generally comprehensive regulatory scheme, the regulations involved in the case dealt specifically and in detail with the practices at issue in the *1569lawsuit. There was more than simply a regulatory presence in the industry — there were specific directives which prohibited the challenged conduct. National Casualty does not, as the district court and the majority suggest, infer that regulation which only inferentially affects a challenged practice is sufficient to satisfy the McCarran-Ferguson requirement.
In Lawyers Title, plaintiffs set forth allegations of predatory pricing activities against the defendant title insurance company. At issue was whether Missouri statutes “regulated” pricing practices within the title insurance industry. The court said that Missouri did so regulate the practice, noting “if the state statute generally regulates the pricing schedules and conduct of insurance companies, this suffices to exempt the insurance carriers so regulated from federal antitrust suits.” Id. at 797 (citations omitted). While the court spoke in terms of a “general” regulatory presence, as in National Casualty, the court also determined that the specific regulation at issue addressed the very practices involved in the lawsuit. Both of these cases, I believe, focused narrowly upon the existence of regulation of the specific conduct at issue in the lawsuit, not upon a general state regulatory presence in the insurance industry. See United States v. Crocker Nat’l Corp., 656 F.2d 428, 453 n. 85 (9th Cir.1981) (referring to Lawyers Title as representative of cases where the court “focused on whether the state regulated the specific conduct alleged to be in violation of the federal antitrust laws”), rev’d on other grounds sub. nom. Bankamerica Corp. v. United States, 462 U.S. 122, 103 S.Ct. 2266, 76 L.Ed.2d 456 (1983); Crawford v. American Title Ins. Co., 518 F.2d 217 app., 218 (5th Cir.1975) (McCarran-Ferguson renders antitrust law inapplicable when state “generally proscribes, permits or otherwise regulates the conduct in question”). Cf. Feinstein v. Nettleship Co., 714 F.2d 928, 932 (9th Cir.1983), cert. denied, 466 U.S. 972, 104 S.Ct. 2346, 80 L.Ed.2d 820 (1984); Klamath-Lake Pharmaceutical Ass’n v. Klamath Medical Serv. Bureau, 701 F.2d 1276, 1287 n. 10 (9th Cir.) (distinguishing Crocker National, the court found it was enough that a detailed overall scheme of regulation existed), cert. denied, 464 U.S. 822, 104 S.Ct. 88, 78 L.Ed.2d 96 (1983).
In light of this standard, I believe the facts of this case compel a conclusion that the State of Minnesota did not “regulate” workers’ compensation insurance pricing practices within the meaning of McCarran-Ferguson. Prior to 1979, Minnesota required all workers’ compensation insurers to charge rates promulgated by the state rating bureau. In 1979, however, the state amended its statutes to provide for only a maximum rate — insurers were expressly permitted to charge rates below the maximum. See Minn.Stat. § 79.21 (1982). The undisputed purpose of this amendment was to deregulate the pricing of workers’ compensation insurance and encourage competition among insurers at rates below the maximum. While other general pricing regulations were left in place, the matter of setting premiums to be charged was intentionally left to the discretion of insurers. See Addendum of State of Minnesota as Amicus Curiae at 31-32 (Affidavit of Michael Hatch, Commissioner of the Minnesota Department of Commerce).
Given Minnesota’s intentional deregulation of workers’ compensation rates, I would find that Minnesota does not “regulate” these rates for purposes of application of McCarran-Ferguson. While the state did maintain a general regulatory presence in the field, there was no specific regulation targeted at the alleged practices at issue in this lawsuit — price-fixing below the maximum allowable rate. To hold otherwise reaches a truly ironic result. If the amended statutory scheme is deemed to constitute “regulation” under McCarran-Ferguson, then the very statute intended to deregulate rates and encourage price competition would work to displace the obligation to compete imposed by federal antitrust laws. Such a result certainly was not intended by those who implemented the amended statute, nor is such a result consistent with the purpose of McCarran-Fer-guson. Under the unusual facts presented here, neither Minnesota’s more general *1570-1572workers’ compensation regulations, nor, as defendants also suggest, Minnesota’s version of the Model Unfair Trade Practices in Insurance Act, sufficiently regulate acts of workers’ compensation rate price fixing to satisfy the “state regulation” requirement of McCarran-Ferguson.
I would reverse the district court and find the McCarran-Ferguson Act inapplicable to plaintiffs’ price-fixing claims because the practice is not “regulated” by the State of Minnesota as required by the Act.2

. In applying this statute to the case at hand, it should be remembered that exemptions from the antitrust laws are to be narrowly construed, and that the burden of establishing the applicability of such an exemption is upon the party asserting it. See Pireno, 458 U.S. at 126, 102 S.Ct. at 3007; Seasongood v. K & K Ins. Agency, 548 F.2d 729, 732 (8th Cir.1977).

. Given this conclusion, I would not reach the third requirement necessary for the McCarran-Ferguson exemption, that the conduct was not in the form of coercion, intimidation or boycott.