Court Opinion

ID: 8913648
Source: CourtListenerOpinion
Date Created: 2022-11-27 04:05:46.375364+00
Date Added: 2024-06-11T17:08:46.179167
License: Public Domain

SLOVITER, Circuit Judge,
dissenting.
I.
The majority opinion is a paradigm of the existentialist statement by Humpty Dumpty that words mean what he says they mean,1 or, as in this case, that the issue is *234what the majority says it is. In essence, Judge Gibbons analyzes the conspiracy alleged as if it were that Aetna, acting in concert with other members of the rating bureau, decided to provide medical malpractice coverage only at group rates through state medical societies. He then concludes that such activity is the business of insurance and therefore qualifies for treatment under the McCarran-Ferguson Act exemption to the Sherman Act, that it is regulated by New Jersey state law, and that the boycott exception is inapplicable. As for the division of markets claim which the majority acknowledges is raised, the majority finds that plaintiff has failed to produce sufficient evidence to raise a genuine issue of material fact, and therefore affirms the grant of summary judgment.
Viewed in isolation, the majority makes a plausible construction of the McCarran-Ferguson Act applied to its version of this case. If the conspiracy alleged were limited to joint action with regard to preparation of a rating schedule, filed through the rating bureau, or with regard to the price of group insurance, I would find it difficult to dissent from the proposition advanced by the majority that such alleged activities fall within the “business of insurance.” However, I find one elementary and overriding flaw in the majority’s analysis: it deals with an issue that was not presented to the district court in support of Aetna’s motion for summary judgment; it is an issue not considered or decided by the district court in granting summary judgment; and it is an issue on which defendant Aetna did not rely either in its brief or at argument before us. While appellate courts have the power to grant summary judgment on grounds other than those relied upon by the district court, this is patently not an appropriate situation for application of that power.2
I appreciate the desire of the majority to attempt to make some order out of the somewhat rambling effort of plaintiff to find a viable claim to remedy a perceived wrong. However, the fact is that this was not a case orchestrated by the able analytical hand of Judge Gibbons, however much it would have benefited thereby. To identify the issue appropriately before us, we must resort to the district court’s analysis and the briefs and arguments of the parties before us.
Turning first to the district court’s opinion, the court recognized that “[pjlaintiff’s complaint is fraught with side issues that fail to bolster any genuine claim he may have against Aetna defendants.” Therefore, the district court struck “all references and claims with regard to alleged unjustifiable rate increases for medical malpractice insurance.” The court found that “whether Aetna was or was not granted a rate increase and the propriety of such proceedings are totally irrelevant with regard to any cause of action which may survive between plaintiff and Aetna defendants.” Joint Appendix 151. Plaintiff did not appeal this action by the district court. Thus, I believe the majority errs in attempting to reconstruct a somewhat modified antitrust claim relating in any way to rates for malpractice insurance. The district court then turned to its analysis of “plaintiff’s suit as it presently stands against the Aetna defendants” and found it was “limited to two major issues”: the first being the antitrust claims and the second being the libel claim, not relevant here.
As to the antitrust claims, the complete summary of those claims by the district court was as follows:
Plaintiff alleges illegal division of insurance markets in New Jersey between *235Aetna, Chubb and Federal. He theorizes that the agencies conspired to reduce medical malpractice losses by splitting up states in which each would offer that coverage, thus effectively creating a monopoly for the one remaining in the field. This would be accomplished through an organized group such as NJMS. In exchange, the company withdrawing would have the exclusive market with group members for automobile and homeowners insurance.
A reading of the issue as framed by the district court discloses that it construed plaintiff’s claim, as it evolved by the time of the grant of summary judgment, to be that Aetna, Chubb and Federal engaged in both a geographic market division, “splitting up states,” and a customer division, allocating to the alleged conspirators the types of insurance which each would sell within New Jersey. While the stimulus for the alleged conspiracy may have been the desire to operate through group marketing plans for malpractice insurance, this cannot mask the essence of the allegations that such a program entails a geographic market division. I therefore find the majority’s discussion of rate making through rating bureaus gratuitous to this case in its present posture.
Turning then to the majority’s treatment of the true issue before us, the grant of summary judgment on the market division claim, the majority affirms the district court on the ground that plaintiff has failed to come forward with a showing that there is issue of material fact. It is important, I believe, to iterate and reiterate that this was not the basis on which the district court granted summary judgment on the antitrust claims. Indeed, analysis of Aetna’s Motion for Summary Judgment and the Memorandum in support, filed in the district court, discloses that this was not the basis of its claim for summary judgment.3 This is confirmed by Aetna’s position in its brief filed before us, where it stated:
With respect to the second antitrust claim (alleging a division of markets), the Aetna defendants did not rely on the paucity of plaintiff’s evidence of any such agreement, but rather demonstrated that this claim was subject to dismissal on two distinct legal grounds. These are, first, that the alleged conduct is within the “business of insurance” and as such is exempt from the antitrust laws under the McCarran-Ferguson Act; and second, that the claim of an alleged market division is one that plaintiff lacks standing to assert. Aetna’s brief at 3 (emphasis added).
Thus, plaintiff appearing as appellant before us never had the opportunity to argue that it had produced enough evidence to withstand summary judgment on that ground. As the majority acknowledges, the record in this case is extensive, with boxes of depositions and answers to interrogatories. An appellate court cannot be expected to conduct its own inquiry into the presence or absence of such evidence. The majority is apparently satisfied that it can do so. However, one might question why, if the absence of evidence is as clear as the majority believes, experienced counsel for Aetna failed to raise that issue as an alter*236native basis for its motion. It may be that it recognized there was indeed enough evidence to withstand a motion on that basis.4 I believe that the appropriate procedure would be to remand and permit the parties to argue this issue before the district court, which is in the unique position to make the requisite findings.
By its treatment of the issues in this case, the majority avoids reaching the difficult legal issue which was decided by the district court and argued before us by the parties, i. e., whether a conspiracy by insurance companies to divide markets can be construed as a matter of law to constitute “the business of insurance” within the meaning of *237the McCarran-Ferguson Act. The district court, without specifically referring to the types of market division involved, concluded that it was “the business of insurance,” that it was effectively regulated by New Jersey, and consequently that the alleged market division conspiracy was exempted from the antitrust laws under that Act. Because I believe that there was an inadequate basis for the court to have reached the legal conclusions on which it based its judgment, I would vacate the entry of summary judgment and remand for further proceedings if the legal issue were to be reached.
II.
The district court’s grant of summary judgment on the ground that plaintiff’s market division claim is barred as a matter of law raises a question of first impression. The parties have not cited nor has independent research uncovered any case which considers whether alleged market division by insurance companies and resulting monopolization is exempt from the antitrust laws by virtue of the McCarran-Ferguson provision. If the construction of the statute cannot be derived from its literal language, then it is necessary to analyze the purpose of the legislation as “illumined by any light to be found in the structure of the Act and its legislative history.” Group Life & Health Ins. Co. v. Royal Drug Co. (Royal Drug), 440 U.S. 205, 211, 99 S.Ct. 1067, 1073, 59 L.Ed.2d 261 (1979).
The McCarran-Ferguson Act provides: Sec. 2. (a) The business of insurance, and every person engaged therein, shall be subject to the laws of the several States which relate to the regulation or taxation of such business.
(b) No Act of Congress shall be construed to invalidate, impair, or supersede any law enacted by any State for the purpose of regulating the business of insurance, or which imposes a fee or tax upon such business, unless such Act specifically relates to the business of insurance: Provided, That after June 30,1948, the Act of July 2, 1890, as amended, known as the Sherman Act, and the Act of October 15, 1914, as amended, known as the Clayton Act, and the Act of September 26, 1914, known as the Federal Trade Commission Act, as amended, shall be applicable to the business of insurance to the extent that such business is not regulated by State Law.
******
[Sec. 3.] (b) Nothing contained in this chapter shall render the said Sherman Act inapplicable to any agreement to boycott, coerce, or intimidate, or act of boycott, coercion, or intimidation.
59 Stat. 33-34, as amended, 61 Stat. 448 (codified at 15 U.S.C. §§ 1012-1013 (1976)).
A determination of whether the McCarran-Ferguson exemption applies to particular conduct entails three distinct inquiries:
(1) Does the conduct constitute the business of insurance?
(2) Is that conduct regulated by state law?
(3) Does the conduct constitute boycott, coercion, or intimidation?
In this case, the district court answered the first two questions affirmatively, and the third negatively. The court held, “I am satisfied that the relationship between plaintiff as insurance agent and Aetna as insurance company constitutes the ‘business of insurance’ as it has been defined by the courts.” (emphasis added). The court then held that the State of New Jersey “had effectively regulated the insurance business and has evidenced its intent to occupy the field to the fullest extent of the power granted by the McCarran-Ferguson Act.” The court cited N.J.Stat.Ann. § 17:29B-4 (West Supp.1980), a New Jersey statute which describes unfair methods of competition and unfair or deceptive acts or practices, and specifically referred to subparagraph (11), a catch-all clause, which provides that:
The enumeration of this act of specific unfair methods of competition and unfair' and deceptive acts and practices in the business of insurance is not exclusive or restrictive or intended to limit the powers of the commissioner or any court of re*238view under the provisions of section 9 of this act.
Finally, the court examined plaintiff’s evidence of an alleged boycott and found it wanting, and accordingly found the boycott exception to the McCarran-Ferguson exemption unavailable to Owens. I do not differ with the majority’s conclusion that the boycott exception in section 3(b) of the McCarran-Ferguson Act is inapplicable in this case and therefore I address only whether the alleged division of markets constitutes “the business of insurance” and whether it is regulated by New Jersey law.
A.
It is clear from the Royal Drug decision that the inquiry into whether the challenged conduct constitutes “the business of insurance” must be directed to the conduct or agreement which allegedly violates the antitrust laws, in this case, the agreement to divide the market. See 440 U.S. at 210, 211, 99 S.Ct. at 1073. Thus the district court misperceived the focus of its inquiry by confining it to the relationship “between plaintiff as insurance agent and Aetna as insurance company.”
Although the literal language of the McCarran-Ferguson Act contains no definition of the “business of insurance,” the history and purpose of the statute and the meaning of the phrase were thoroughly explored in the Supreme Court’s recent Royal Drug decision. At the outset, it must be noted “that the statutory language in question here does not exempt the business of insurance companies from the scope of the antitrust laws. The exemption is for the ‘business of insurance,’ not the ‘business of insurers.’” Royal Drug, 440 U.S. at 210-11, 99 S.Ct. at 1072-1073.
For the 75 years preceding 1944, it was assumed that issuance of “a policy of insurance is not a transaction of commerce.” Paul v. Virginia, 75 U.S. 168, 8 Wall. 168, 183, 19 L.Ed. 357 (1869). The insurance industry developed in the belief that it was under the exclusive regulation of the states and beyond the reach of federal law, including the subsequently enacted Sherman Act. In United States v. South-Eastern Underwriters Ass’n, 322 U.S. 533, 64 S.Ct. 1162, 88 L.Ed. 1440 (1944), the Supreme Court held that the Sherman Act could constitutionally reach the business of insurance, thus precipitating a flurry of legislative activity. There was serious concern by the states that their ability to tax and regulate the business of insurance was now uncertain in light of the “precedent-smashing decision in the South-Eastern Underwriters case.” H.R.Rep.No.143, 79th Cong., 1st Sess., 2-3 (1945). Therefore, the “primary purpose” of Congress in enacting the McCarran-Ferguson Act was to “[free] the States to continue to regulate and tax the business of insurance companies, in spite of the Commerce Clause;”5 the “secondary purpose of the McCarran-Ferguson Act [was] to give insurance companies only a limited exemption from the antitrust laws.” Royal Drug, 440 U.S. at 218-19 n.18, 99 S.Ct. at 1077 n.18 (emphasis in original). Significantly, three bills which would have given the insurance industry an absolute immunity from the antitrust laws were introduced, and failed.6
In Royal Drug the Court interpreted this legislative history to require a narrow construction of the McCarran-Ferguson exemption.7 The Court stated:
*239It is true that § 2(b) of the Act does create a partial exemption from [the antitrust laws]. Perhaps more significantly, however, that section, and the Act as a whole, embody a legislative rejection of the concept that the insurance industry is outside the scope of the antitrust laws — a concept that had prevailed before the South-Eastern Underwriters decision.
440 U.S. at 220, 99 S.Ct. at 1077.
The issue in Royal Drug was whether agreements between a Blue Shield Association and participating pharmacies (providers) setting the terms under which those pharmacies would deliver drugs to Blue Shield’s insureds constituted the “business of insurance.” The legality of the agreements was challenged by nonparticipating pharmacies. In holding that the agreements with providers did not constitute the “business of insurance,” the Court concluded that the “primary elements of an insurance contract are the spreading and underwriting of a policyholder’s risk,” elements that were absent from the pharmacy agreements. Id. at 211, 212-13, 99 S.Ct. at 1073-1074. Royal Drug had argued that the pharmacy agreements did underwrite the risk that its policyholders would need drugs. The Court rejected this argument finding that the argument confused Blue Shield’s obligations to its policyholder under its policies, which do underwrite risk, and the pharmacy agreements, which served only to minimize the costs Blue Shield incurred in fulfilling its underwriting obligations. In the Court’s view, the pharmacy agreements were legally indistinguishable from “countless other business arrangements that may be made by insurance companies to keep their costs low and thereby also keep low the level of premiums charged to their policyholders.” Id. at 215, 99 S.Ct. at 1075. Such cost savings agreements may be sound business practice but, the Court held, they are not the business of insurance.
The Court also stated that “[ajnother commonly understood aspect of the business of insurance relates to the contract between the insurer and insured.” Id. The Court quoted the following excerpt from its opinion in SEC v. National Securities, Inc., 393 U.S. 453, 460, 89 S.Ct. 564, 568, 21 L.Ed.2d 668 (1969):
The relationship between insurer and insured, the type of policy which could be issued, its reliability, interpretation, and enforcement — these were the core of the “business of insurance.” Undoubtedly, other activities of insurance companies relate so closely to their status as reliable insurers that they too must be placed in the same class. But whatever the exact scope of the statutory term, it is clear where the focus was — it was on the relationship between the insurance company and the policyholder.
In Royal Drug the pharmacy agreements were not between the insurer and insured. Furthermore, the Court rejected Blue Shield’s argument that the agreements so closely affect the “reliability, interpretation, and enforcement” of the insurance contract and “relate so closely to their status as reliable insurers” as to fall within the exempted area. Such an argument, the Court commented, proves too much since almost every business decision affects the costs of an insurance company and thus has some impact on its reliability and rate-making.
Both the majority and dissent in Royal Drug focused on aspects of the insurance business in reaching their respective, albeit different, conclusions. The realities of that business must also be considered at some length in analyzing whether a division of markets can be considered to be “the business of insurance.” At issue here is the portion of the insurance industry concerned *240with property-liability insurance, which insures individuals and commercial enterprises against loss or damage to the insured’s property caused by such perils as fire, theft and collision, and against losses arising out of the insured’s legal liability for injuries to other persons or damage to their property. See U.S. Department of Justice Study, The Pricing and Marketing of Insurance 7 (1977) (hereafter Dept, of Justice Study).* About two-thirds of property-liability insurance is marketed through independent agents; the remainder is written directly by the insurance company. Id. at 9. See generally R. Riegel, J. Miller, C. Williams Jr., Insurance Principles and Practice: Property and Liability (6th ed. 1976).
Liability insurance companies are able to accept the risk of a large loss, charging only a fraction of their potential liability, because they accept a large number of such risks, only some of which will result in losses, thereby spreading such losses over all the risks accepted. See 1 G. Couch, Couch on Insurance 2d § 1.3 (2d ed. 1959). The company must set its premiums based on its prediction of two cost variables: the probability of a particular risk of loss occurring and the magnitude of the loss if it occurs. See Sullivan & Wiley, Recent Antitrust Developments: Defining the Scope of Exemptions, Expanding Coverage, and Refining the Rule of Reason, 27 U.C.L.A.L.Rev. 265, 282 (1979).
To insure solvency, the prediction of future losses must be accurate. Predictions will be most credible if based on the loss experience of a large homogeneous class of risks over a period of time. Dept, of Justice Study, supra, at 152-154. To this end, individual insurance firms share their information about the frequency and magnitude of various losses in order to develop a reliable statistical base for rates. Sullivan & Wiley, supra, at 269. This information sharing has traditionally been accomplished by industry rating bureaus that typically aggregate statistical information, “trend” past data to make it useful for projecting future losses, and establish standard rates for different risk categories. National Commission for the Review of Antitrust Laws and Procedures, Report to the President and Attorney General, 237 (1979) (hereafter Report to the President); Dept, of Justice Study, supra, at 146-66, 188-221. As the majority emphasizes, these rating bureaus and the rates established are generally subject to state regulatory oversight.8
9 Hanson, The Interplay of the Regimes of Antitrust, Competition and State Insurance Regulation on the Business of Insurance, 28 Drake L.Rev. 767, 803 (1978-79); Report to the President, supra, at 231.
Because the availability of reliable loss statistics for a particular risk is essential to the insurance of that risk where the losses connected with a particular risk cannot be predicted, the risk will not be insured. For example, in the medical malpractice field there are substantial difficulties in predicting future loss experience in part because the losses being underwritten by the current premium may not be determined until several years have elapsed (the so-called long-tail problem), and in part because the small number of insureds does not provide an adequate statistical basis for sophisticated actuarial techniques. Medical Malpractice Insurance Hearing before the Sub-comm. on Health and the Environment of the House Comm, on Interstate and Foreign Commerce on Medical Malpractice Insurance Issue and its Effect on the Delivery of Health Care Services, 94th Cong., 1st Sess. *24144-47 (1975) (Report on the Medical Malpractice Insurance Crisis by the Association of the Bar of the City of New York). As a consequence, many companies selling malpractice insurance experienced net losses and chose to leave the medical malpractice market. Id. at 45. See, e. g., Annie M. Warner Hospital v. Harris, 639 F.2d 961 (3d Cir. 1981).
Some risks are so large or are of such an unusual nature that no one insurance company is willing or able to insure them alone, which has caused insurance companies to band together to share the risk through the mechanisms of pooling, placement and reinsurance. A “pool” is an association of insurers formed to write insurance for specific risks, such as nuclear reactors, aircraft, and railroad rolling stock. Hanson, supra, at 803-804.10 The “placement” of insurance with an ad hoc association of insurers formed to insure a specific risk is also a common method to underwrite large risks that no one company is willing to handle alone. See Dept, of Justice Study, supra, at 201-205. Finally, insurers may attempt to spread the risk of a large loss through the mechanism of reinsurance, whereby the primary insurer cedes a portion of the risk to a reinsurer.11 The benefit these various arrangements provide is that they give each insurer the opportunity to participate in a large number of risks, thereby increasing the probability that its losses will approximate the expected losses.
Obviously, the combinations necessary to accomplish the risk sharing central to these arrangements would raise serious questions as to legality under the antitrust laws. See, e. g., Citizen Publishing Co. v. United States, 394 U.S. 131, 89 S.Ct. 927, 22 L.Ed.2d 148 (1969); United States v. Container Corp. of America, 393 U.S. 333, 89 S.Ct. 510, 21 L.Ed.2d 526 (1969). They are, however, the essence of insurance; the industry could not survive without some or all of them.12 As the Supreme Court noted, “it is very difficult to underwrite risks in an informed and responsible way without intra-industry cooperation, the primary concern of both representatives of the insurance industry and the Congress [in providing] that cooperative ratemaking efforts be exempt from the antitrust laws.” Royal Drug, 440 U.S. at 221, 99 S.Ct. at 1078.
On the other hand, an agreement to divide markets, whether geographically or by line of insurance, with a resultant monopoly of the market for malpractice insurance in New Jersey, does not appear to be comparable to the conduct traditionally assumed to have been exempted by the MeCarran-Fer*242guson Act. That statute was enacted to protect the arrangements necessary to preserve the writing of insurance within and under regulation of the respective states. Whether one adopts the majority or dissenting view in Royal Drug, the scope of the statute can be no broader than protection of “insurance company activities that can rationally be claimed to need anticompetitive regulation.” Sullivan & Wiley, supra at 284.13 In Royal Drug the Court concluded, “It is next to impossible to assume that Congress could have thought that agreements (even by insurance companies) which provide for the purchase of goods and services from third parties at a set price are within the meaning of [“business of insurance”],” id. at 230, 99 S.Ct. at 1082. It appears just as unlikely that Congress thought it was protecting agreements whereby an insurance company would completely withdraw from writing one type of insurance within the state. Aetna’s argument seems to turn protection of the “business of insurance” into the “business of non-insurance.”
I find support for my view that such a withdrawal, if made pursuant to an agreement among insurance companies, does not necessarily constitute the “business of insurance” in the additional following considerations:
(1) An agreement whereby a prior competitor leaves the market entirely entails an avoidance of risk by the departing company rather than a spreading of risk, which the Royal Drug Court held to be a “critical determinant.” In relating the “business of insurance” to risk spreading, the Court stated “there is an important distinction between risk underwriting and risk reduction.” Id. at 214 n.12, 99 S.Ct. at 1074 n.12. It would follow that complete risk avoidance is not encompassed within the exemption.
(2) When the MeCarran-Ferguson Act was originally debated, those who favored broad exemption from the Sherman Act proposed that there should be specific enumeration of the practices which would be exempt from the antitrust laws. One of the congressional proponents of specificity argued that “some legislation should be passed which asserts the right of the States to control the questions of risks, rates, premiums, commissions, policies, investments, reinsurance, capital requirements, and items of that nature.” 90 Cong.Rec. 6561 (1944). See Royal Drug, 440 U.S. at 222 n.29, 99 S.Ct. at 1078 n.29. The bill sponsored by the National Association of Insurance Commissioners enumerated seven specific practices to which the Sherman Act was not to apply.14 Although these propos*243als were defeated in favor of a narrower exemption, the conspicuous absence from such proposals of monopoly, division of markets, and withdrawal from markets suggests that these were not deemed to be activities meriting protection.
(3) In St. Paul Fire & Marine Ins. Co. v. Barry, 438 U.S. 531, 98 S.Ct. 2923, 57 L.Ed.2d 932 (1978), the Court considered the scope of the “boycott” exception in section 3(b) of the McCarran-Ferguson Act, but made some references which may help illume the meaning of the “business of insurance” in the same statute. The complaint in the St. Paul case alleged that four insurance companies writing medical malpractice insurance in Rhode Island engaged in a conspiracy in which three of the four companies refused to deal on any terms with the policyholders of the fourth company in order to compel those policyholders to accept the new policy terms proffered by the fourth company. In holding that such activity would not be protected by the McCarran-Ferguson Act because it constituted a “boycott”, the Court stated:
The agreement binding petitioners erected a barrier between St. Paul’s customers and any alternative source of the desired coverage, effectively foreclosing all possibility of competition anywhere in the relevant market. This concerted refusal to deal went well beyond a private agreement to fix rates and terms of coverage, as it denied policyholders the benefits of competition in vital matters such as claims policy and quality of service. Cf. Continental T.V., Inc. v. GTE Sylvania Inc., 433 U.S. 36, 55, 97 S.Ct. 2549, 2560, 53 L.Ed.2d 568 (1977). St. Paul’s policyholders became the captives of their insurer. In a sense the agreement imposed an even greater restraint on competitive forcés than a horizontal pact not to compete with respect to price, coverage, claims policy, and service, since the refusal to deal in any fashion reduced the likelihood that a competitor might have broken ranks as to one or more of the fixed terms.25 The conduct alleged here is certainly not, in Senator O’Mahoney’s terms, within the category of “agreements which can normally be made in the insurance business,” 91 Cong.Rec. 1444 (1945), or “agreements and combinations in the public interests [sic] which can safely be permitted,” id., at 1486.
Footnote 25 of the Court’s opinion quotes the following excerpt from Professor Sullivan’s Treatise:
25. “[E]ven where prices are rigidly fixed, the members of a cartel will be able to compete with each other with respect to product quality unless a homogeneous product is involved. Indeed, even if the product is homogeneous there will be room for rivalry in such matters as promptness in filling orders and the provision of ancillary services. An effective division of markets, by contrast, might substantially wash out all opportunity for rivalry.” [L. Sullivan, Handbook of the Law of Antitrust] at 224-225.
Id. at 553 (emphasis added).
This language suggests that the Court considers that division of markets by insurance companies are not the type of agreements which the McCarran-Ferguson Act was designed to protect.
(4) Some further insight is provided by the Court’s earlier decision in SEC v. National Securities, Inc., 393 U.S. 453, 89 S.Ct. 564, 21 L.Ed.2d 668 (1969). When the SEC sought to challenge statements made in connection with shareholder approval of a merger of two insurance companies, the companies challenged SEC jurisdiction on the ground that the transaction was exempt under the McCarran-Ferguson Act by virtue of Arizona’s regulation of “the business of insurance.” The Court rejected the view that federal power was restricted because the state had approved the merger, and observed the distinction between state action permitting the companies to consummate the merger and state action ordering them to do so. Id. at 463, 89 S.Ct. at 570. In commenting on the sphere reserved pri*244marily to the states by the McCarran-Ferguson Act, the Court noted:
Insurance companies may do many things which are subject to paramount federal regulation; only when they are engaged in the “business of insurance” does the statute apply. Certainly the fixing of rates is part of this business; that is what South-Eastern Underwriters was all about. The selling and advertising of policies, FTC v. National Casualty Co., 357 U.S. 560, 78 S.Ct. 1260, 2 L.Ed.2d 1540 (1958), and the licensing of companies and their agents, cf. Robertson v. California, 328 U.S. 440, 66 S.Ct. 1160, 90 L.Ed. 1366 (1946), are also within the scope of the statute. Congress was concerned with the type of state regulation that centers around the contract of insurance, the transaction which Paul v. Virginia held was not “commerce.”
Id. at 459-460, 89 S.Ct. at 568.
Following the National Securities decision, the contention that a merger of two multi-state insurance companies was exempted from § 7 of the Clayton Act by virtue of the McCarran-Ferguson Act was rejected, and the court held that the relationship between individual companies seeking to merge is not encompassed within the term “business of insurance.” American General Insurance Co. v. FTC, 359 F.Supp. 887 (S.D.Tex.1973), aff'd on other grounds, 496 F.2d 197 (5th Cir. 1974). The effect of a merger on the market structure is not dissimilar from that of a division of territories or resulting monopoly.
(5) Congressional reluctance to sanction the establishment of monopolies pervades the entire field of regulated industries. See Maryland and Virginia Milk Producers Ass’n v. United States, 362 U.S. 458, 466-67, 80 S.Ct. 847, 853, 4 L.Ed.2d 880 (1960). In the rare instance where establishment of a monopoly may serve important public interests, Congress carefully defined the procedure to be followed and the considerations to be weighed. See Bank Merger Act of 1966, 12 U.S.C. § 1828(c)(5) (1976). See also 49 U.S.C. §§ 1378, 1384 (Supp. Ill 1979) (air carriers). In light of the history and evidence of Congressional concern with the establishment of monopolies, it is unlikely that the limited exemption embodied in the McCarran-Ferguson Act should be construed to permit agreements among insurance companies which result in establishment of a monopoly of a “designated” insurance company to write malpractice insurance coverage in each state.
Based on the foregoing considerations, I believe the district court erroneously concluded that the alleged agreement which resulted in Aetna’s withdrawal from the New Jersey medical malpractice insurance market is the business of insurance. On the other hand, I would be reluctant to suggest that no agreement between insurance companies which may result in withdrawal from a market can ever be the business of insurance, because “[w]e do not know enough of the economic and business stuff out of which these arrangements emerge to be certain.” See White Motor Co. v. United States, 372 U.S. 253, 263, 83 S.Ct. 696, 702, 9 L.Ed.2d 738 (1963). The difficulties faced in trying to make malpractice insurance available to doctors and hospitals at a time when steeply rising losses make such risks unattractive to insurance companies are well known. Although the majority does not reach this legal issue, underlying its entire discussion is its acceptance of the notion that group marketing is the solution to the serious malpractice insurance problems. That may be a reasonable approach, but it does not follow that group marketing must be inevitably accompanied by an agreement to divide such markets. Aetna should have the opportunity to make a convincing showing that the realities of the insurance business support a conclusion that joint action with regard to geographic areas of coverage or types of insurance offered is of the same genre as joint action such as pooling of risks or joint underwriting which are concededly the business of insurance. Aetna may be able to show that because of the special characteristics of the medical malpractice insurance industry, division of markets for such insurance is necessitated by the same considerations that underlie granting an exemption for other joint ac*245tion. Perhaps it can show that these are among the “activities of insurance companies [which] relate so closely to their status as reliable insurers that they too must be placed in the same class.” SEC v. National Securities, Inc., 393 U.S. 453, 460, 89 S.Ct. 564, 568, 21 L.Ed.2d 668 (1969).
It has not, however, made such a showing in this case. Furthermore, the district court did not analyze the legal issue as to the scope of “the business of insurance” along the approach required by the Royal Drug decision. Therefore, I would not affirm its conclusion that the alleged division of markets constitutes “the business of insurance” as a matter of law.
B.
Because the majority treats the state regulation issue, albeit in another context, I believe it appropriate to comment on the district court’s holding that the “State of New Jersey has effectively regulated the insurance business and has evidenced its intent to occupy the field to the fullest extent of the power granted by the McCarran-Ferguson Act.” This holding was based on the court’s finding that, “The provisions of N.J.S.A. 17:29B-4 generally, describing unfair methods of competition and unfair deceptive acts or practices and specifically the subparagraph (11) catch-all clause, attest to the intention of the state to fully exercise its McCarran authority.”
The New Jersey statute referred to by the district court defines specific acts and practices in the business of insurance as unfair methods of competition and unfair and deceptive acts or practices. None of the enumerated acts relates to division of geographic markets or to division of the types of insurance offered by insurance companies. Subparagraph (11), to which the court specifically referred, provides that said enumeration “is not exclusive or restrictive or intended to limit the power of the commissioner or any court of review under the provisions of section 9 [N.J.Stat. Ann. § 17:29B-9 (West 1970)] of this act.” Section 9 gives the insurance commissioner authority to file charges against any person engaged in the business of insurance who is engaging in any unfair method of competition or in any unfair or deceptive act or practice.
It is unclear whether the district court concluded that the alleged division of markets was an unfair method of competition which could be proscribed under section 4 or 9 of the New Jersey statute. There is some authority that such proscription by the state satisfies the requirement of state regulation under the McCarran-Ferguson Act. See, e. g., Dexter v. Equitable Life Assurance Society, 527 F.2d 233 (2d Cir. 1975); Crawford v. American Title Insurance Co., 518 F.2d 217 (5th Cir. 1975). As the district court recognized, the concept that there may be regulation by mere prohibition has been severely criticized. See, e. g., Crawford v. American Title Insurance Co., 518 F.2d 217, 220 (5th Cir. 1975) (Godbold, J., dissenting); Carlson, The Insurance Exemption from the Antitrust Laws, 57 Tex.L. Rev. 1127, 1150-1161 (1979).
As an initial matter, I believe that the record is totally inadequate to support the inference that market division of the type alleged here is clearly one of the activities prohibited by the New Jersey statute. Aetna has cited no New Jersey case to support that proposition. In addition, there is nothing in the record to indicate that the New Jersey insurance commissioner considers division of markets for malpractice insurance to be encompassed within those sections. Indeed, if survival of medical malpractice insurance in New Jersey mandates some joint action to divide the market so that there can be an adequate risk pool, then it would be inconsistent to view such a division of markets as an unfair trade practice prohibited by the New Jersey statute.
The congressional purpose in enacting the McCarran-Ferguson Act was to provide a limited exemption from the antitrust laws only to the extent of state regulation of the business of insurance. See 15 U.S.C. § 1012(b); Seasongood v. K & K Insurance Agency, 548 F.2d 729 (8th Cir. 1977). If Aetna had withdrawn completely from New Jersey as part of an agreement to divide *246the market for all insurance matters, it is doubtful that New Jersey would continue to have any regulatory authority over Aetna. Even were New Jersey to regulate the conditions of withdrawal by an insurance company, a matter not disclosed by this record, its subsequent and inevitable nonregulation of the absent company can hardly be deemed the type of state regulation contemplated by Congress in the McCarranFerguson exemption. As the Supreme Court stated in rejecting the claim that the McCarran-Ferguson Act precluded the Federal Trade Commission from regulating insurance advertising in interstate commerce:
[I]t is clear that Congress viewed state regulation of insurance solely in terms of regulation by the law of the State where occurred the activity sought to be regulated. There was no indication of any thought that a State could regulate activities carried on beyond its own borders.
FTC v. Travelers Health Ass’n, 362 U.S. 293, 300, 80 S.Ct. 717, 721, 4 L.Ed.2d 724 (1960). See also Seasongood v. K & K Insurance Agency, 548 F.2d 729 (8th Cir. 1977); American General Insurance Co. v. FTC, supra, 359 F.Supp. at 894-95.
With regard to the nature of state regulation which satisfies the McCarran-Ferguson Act, more affirmative regulation than a mere general prohibition of unfair trade practices may be required. See Sullivan & Wiley, supra, 27 U.C.L.A.L.Rev. at 288-291. As the Court commented in another context: “This is not a case where a State has decided that regulatory policy requires that certain categories of risks be allocated in a particular fashion among insurers, or where a State authorizes insurers to decline to insure particular risks because the continued provision of that insurance would undermine certain regulatory goals, such as the maintenance of insurer solvency.” St. Paul, 438 U.S. at 554, 98 S.Ct. at 2936. The Court noted that “petitioners do not aver that state law or regulatory policy can be said to have required or authorized the concerted refusal to deal with St. Paul’s customers.” Id. (emphasis added).
Although the district court did not refer to any New Jersey law or policy other than the law proscribing unfair trade practices, there is in fact another relevant statute which may establish the predicate for a finding that New Jersey has determined to fully exercise its McCarran-Ferguson authority with respect to medical malpractice insurance. In 1975, the New Jersey legislature enacted a statute which created the New Jersey Medical Malpractice Association. In general, the statute requires all insurance companies writing liability insurance in New Jersey to join the Association and gives the Association the power to rein-sure medical malpractice policies written by qualified providers and to issue such policies directly. The Association may exercise these powers only after the Commissioner of Insurance makes a determination that medical malpractice insurance is not readily available to state licensed physicians and health care facilities. N.J.Stat.Ann. §§ 17 ¡30D-1-30D-16 (West Supp.1980). The record does not indicate whether such a determination has been made. The ramifications of this statute were not explored by the district court. Before the issue of state regulation can be decided, it would be necessary to consider whether this statute constitutes the type of aggressive state regulation which this court has previously found justifies a finding of state regulation. See Travelers Insurance Co. v. Blue Cross of Western Pennsylvania, 481 F.2d 80, 83 (3d Cir.), cert.. denied, 414 U.S. 1093, 94 S.Ct. 724, 38 L.Ed.2d 550 (1973).
III.
The issue actually before us is the propriety of the district court’s grant of summary judgment on the basis of a legal conclusion that the alleged agreement to divide the market for medical malpractice insurance was exempt from the operation of the antitrust laws because of the McCarran-Ferguson Act. Before a court insulates such potentially anticompetitive arrangements from antitrust inquiry, the party seeking summary judgment must place before the court adequate information about the realities of the marketplace and the operation of *247the insurance business to support its proposed judgment. The tests applied by the Supreme Court in its two recent opinions interpreting the McCarran-Ferguson Act, St Paul and Royal Drug, “are fact-specific rather than categorical in nature; both will usually require full factual development before they can be applied definitively.” Sullivan & Wiley, supra, 27 U.C.L.A.L.Rev. at 288. I believe that the record fails to support the district court’s conclusions that the alleged agreement to divide markets constitutes the business of insurance and that New Jersey has regulated this practice.

. “When / use a word,” Humpty Dumpty said in rather a scornful tone, “it means just what I choose it to mean — neither more nor less.”
“The question is,” said Alice, “whether you can make words mean so many different things.”
“The question is,” said Humpty Dumpty, “which is to be master — that’s all.”
L. Carroll, Through the Looking Glass and What Alice Found There 124, reprinted in Jour*234neys in Wonderland (Derrydale 1979). (emphasis in original).

. Several courts of appeals have been careful to note that they will refrain from affirming the grant of summary judgment on a ground not relied upon by the district court unless the non-moving party has had fair opportunity to contest that ground before the appellate court. E. g., Charbonnages DeFrance v. Smith, 597 F. 2d 406, 416 & n.9 (4th Cir. 1979); Paskaly v. Seale, 506 F.2d 1209, 1211 n.4 (9th Cir. 1974). See also Yale v. National Indemnity Co., 602 F.2d 642, 650 n.18 (4th Cir. 1979); Lee Moore Oil Co. v. Union Oil Co., 599 F.2d 1299, 1307 (4th Cir. 1979).

. The Table of Contents of Aetna’s Memorandum in the District Court serves to summarize its claim. The relevant excerpt is as follows:
IV. PLAINTIFF’S CLAIM IN COUNT ONE OF AN AGREEMENT TO DIVIDE MARKETS FOR INSURANCE CANNOT BE MAINTAINED AS A MATTER OF LAW A. Plaintiffs Claim of division of Markets is Barred by the McCarran-Ferguson Act
1. The challenged conduct involves “the business of insurance”
2. The challenged conduct is regulated by the State of New Jersey
3. Aetna’s alleged action is not a “boycott” and therefore does not come within the exception to the McCarran-Ferguson exemption
B. Plaintiff Lacks Standing to Bring an Antitrust Claim on Allegations of Market Division
1. Plaintiff is not within the “target area” of an agreement to divide markets
2. The incidental injury to plaintiff did not occur “by reason of’ that which makes the alleged conduct (a division of markets) unlawful
3. The circumstances of plaintiffs business establish that any injury to him was remote and indirect.

. Among the materials supporting Owens’ claim of a conspiracy to divide the markets is the deposition testimony of Bruce Mahon, President of the McCay Corporation. Mahon testified regarding a meeting between himself and several Aetna representatives, including Robert Hanson, the Vice President of Aetna:
Q Was any mention made with respect to any other insurance carriers at that meeting?
A Yes, it all got into a long discussion concerning malpractice and Bob Hanson said that really the only way there is no solution they could see to our problem because the only solution in malpractice would be to have the insurance companies — for instance, when you have the State Medical Society, if they would insure them as a group, that is what one company like what’s-its-name does in Jersey that handles the malpractice now.
Q Yes?
A I have a blank on it, but Aetna would say, take Hartford or they would take Texas and somebody would take another State, so that is the only way they could survive in a malpractice business by strictly having one carrier in each State.
Q Did Mr. Hanson or Mr. Shipps or anyone else present at that meeting state that they had ever met with any other insurance company in order to discuss the New Jersey malpractice market?
A Yes, they had met to discuss New Jersey, and I forget, a couple of other States that were having severe problems, too.
Q Who said that?
A Mr. Hanson.
Q Did he say who he met with?
A I am trying to think, and I will think in a minute of the company that handles New Jersey’s Medical Association. Maybe you can help me with the name.
Q Chubb & Son?
A Correct, Chubb & Son.
Q What did he say with respect to Chubb?
A The answer would be Chubb would handle New Jersey because they already have the Medical Society as a group.
Q Did he say there had been meetings between Aetna and Chubb with respect to that?
A They had meetings with respect to malpractice.
Q Chubb and Aetna, representatives of Chubb and Aetna?
A Yes, and other major malpractice carriers.
******
Q Do you recall if Mr. Hanson made any statements to the effect that a number of insurance companies had decided to “whack up” the market?
A I think they had decided — I don’t know if I use those same words, but I think they decided that the only way you can do it is for one carrier to be sponsored by the Medical Society, and they would take that and go out and somebody else in another State take another State. They could not compete and survive in the market.
(JA 221-224). In addition, the record contains an affidavit of Eugene J. Cudworth, a former employee of “The Hartford” group of insurance companies, which states that:
principal insurers of physicians malpractice had decided and planned that the most profitable way of underwriting that line was to maximize state medical society group-sponsored business on a state-by-state basis. One designated carrier would provide the protection in a designated state such as Aetna in Connecticut or Chubb in New Jersey, etc. (emphasis added).
(JA 61)
Summary judgment is appropriate only when, after viewing the evidence in the light most favorable to the non-moving party, the court can conclude that “it is quite clear what the truth is, that no genuine issue remains for trial.” Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 472-73, 82 S.Ct. 486, 490-491, 7 L.Ed.2d 458 (1962); Sartor v. Arkansas Natural Gas Corp., 321 U.S. 620, 627, 64 S.Ct. 724, 728, 88 L.Ed. 967 (1944). The courts have been particularly cautious in granting summary judgment in antitrust cases, such as the instant one, where “motive or intent play leading roles” and “proof is largely in the hands of the alleged conspirators.” Poller, supra, 368 U.S. at 473, 82 S.Ct. at 491. See Larry V. Muko, Inc. v. Southwestern Pennsylvania Building and Construction Trade Council, 609 F.2d 1368 (3d Cir. 1979) (en banc). When the record in its present state is tested against this strict standard, it cannot be said that there is not a genuine dispute as to whether Aetna and Chubb entered into a conspiracy to divide markets.

. It has been suggested that Congress may have overreacted to the South-Eastern Underwriters decision because a business’ engagement in interstate commerce does not cripple the states’ basic ability to tax and regulate. See Sullivan & Wiley, Recent Antitrust Developments: Defining the Scope of Exemptions, Expanding Coverage, and Refining the Rule of Reason, 27 U.C.L.A. L.Rev. 265, 270-72 (1979).

. See generally, Carlson, The Insurance Exemption from the Antitrust Laws, 57 Texas L.Rev. 1127, 1128-39 (1979).

. The dissent relied on the same legislative history to conclude that Congress deliberately chose to phrase the exemption broadly. Royal Drug, 440 U.S. at 234-35, 99 S.Ct. at 1084-1085. (Brennan J., dissenting). The major thrust of the dissent was its disagreement with the majority’s holding that no provider agreement can be considered part of the “business of *239insurance.” The dissent would have held that "[s]ome kind of provider agreement becomes a necessity if a service-benefits insurer is to meet its obligations to the insureds,” id. at 246, 99 S.Ct. at 1090 (emphasis in original), and that the close nexus between the Pharmacy Agreements and both the rates and fiscal reliability of Blue Shield’s plan warranted their inclusion within the “business of insurance.” id. at 250, 99 S.Ct. at 1092. As will be developed in the text, this difference between the majority and dissent is not relevant to the legal issue in this case.

. The other component of the industry writes life and health insurance. See generally U.S. Department of Justice, The Pricing and Marketing of Insurance (1977) (hereafter Dept, of Justice Study); National Commission for the Review of the Antitrust Laws and Procedures, Report to the President and the Attorney General 225-251 (1979) (hereafter Report to the President).

. The information and risk problems faced by life and health insurance companies are apparently less severe than those of the property-liability companies. As a result, life-health insurers have generally not engaged in extensive cooperative activities, such as rating bureaus, but there is cooperation with respect to the formation of mortality tables. Report to the President, supra, at 228; Dept, of Justice Study, supra, at 277.

. Usually the syndicate issues a single policy on a risk in the name of all the members of the pool, with each member sharing in the premiums and losses on a predetermined basis. Liability of the participants may be either several or joint and several. Dept, of Justice Study, supra, at 210-213. Pooling or joint underwriting associations can also result from state legislation, intended to remedy perceived problems in either the availability or price of certain types of insurance. Illustrative are assigned risk plans under which insurers selling auto insurance in the state have been compelled to provide automobile insurance for high risk drivers unable to obtain insurance in the voluntary market. Hanson, supra, at 805. More recently, as a result of the medical malpractice insurance crises many states required all insurers writing liability insurance in the state to be a member of a joint underwriting association which would write malpractice insurance in the event it was no longer available on a voluntary basis. Id. at 805-06. Dept, of Justice Study, supra, at 210.

. The primary insurer (reinsured) may share the risk on a pro rata or “excess of lost” basis. Under the pro rata method, the reinsurer agrees to accept a fixed percentage of the gross writings of the reinsured. Under the “excess of loss” basis the reinsurer agrees to indemnify the reinsured for any losses in excess of some specified amount. A reinsurance arrangement differs from a placement in that in a placement there are separate contracts between the insured and insurer, while in a reinsurance arrangement the contract is between the primary insurer and the reinsurer. Dept, of Justice Study, supra, at 205-209.

. Sullivan and Wiley suggest that the need for price-fixing through rating bureaus may be overrated, and point to the action of sixteen states which “have replaced the older, cartel-protecting regulatory regimes with so-called ‘open competition’ laws that prohibit industry agreements to enforce bureau rates and give individual companies freedom to set their own prices.” Sullivan & Wiley, supra, 27 U.C.L.A. L.Rev. at 272.

. See note 7 supra. Justice Brennan, dissenting in Royal Drug, contended that the “business of insurance” must be interpreted to connote not only risk underwriting but also contracts closely related thereto, which would include “agreements [which] themselves perform an important insurance function.” 440 U.S. at 251, 99 S.Ct. at 1093. The majority appeared to have rejected this functional approach when it stated that “it does not follow that because an agreement is necessary to provide insurance, it is also the ‘business of insurance.’ ” Id. at 213-14 n.9, 99 S.Ct. at 1074 n.9.

. The NAIC proposal provided:
On and after July 1, 1948, the said Sherman Act shall not apply (1) to any agreement or concerted or cooperative action which prescribes the use of rates for insurance, insurance policy or bond forms or underwriting rules or plans if such rates, forms, rules, or plans are required, by the law of the State in which they are to be used, either to be approved by the supervisory official or agency of such State having authority with respect thereto, or to be filed subject to disapproval by such official or agency; (2) to the use of any such rates, forms, rules, or plans which have been so approved or filed; (3) to any cooperative or joint service, adjustment, investigation, or inspection agreement relating to insurance, or to acts under such agreements; (4) to any agreement or concerted or cooperative action among two or more insurers to insure, reinsure, or otherwise apportion the risks taken by the parties to such agreement or any of them, or to issue policies or bonds with joint or several liability; (5) to any agreement or concerted or cooperative action with respect to the payment of insurance agents’ or brokers’ commissions; (6) to any agreement or concerted or cooperative action with respect to the collection and use of statistics or with respect to policy or bond forms; or (7) to any agreement or concerted or cooperative action providing for the cooperative making of insurance rates, rules, or *243plans, if such agreement does not require the use of such rates, rules, or plans. 90 Cong.Rec. A4406 (1944).