Court Opinion

ID: 9481846
Source: CourtListenerOpinion
Date Created: 2023-08-05 08:33:36.144213+00
Date Added: 2024-06-11T17:48:36.971454
License: Public Domain

EDGAR, District Judge,
concurring:
I concur that the application of the three-part Pireno test to Ohio Rev.Code § 3903.42 requires that it not be superseded by the federal superpriority statute, 31 U.S.C. § 3713(a)(1)(A). I also believe that the result reached by Judge Martin is compelled for other reasons.
The states have always presided over the liquidation of insolvent companies. The states did this for many years prior to the Supreme Court’s decision in United States v. South-Eastern Underwriters Ass’n, 322 U.S. 533, 64 S.Ct. 1162, 88 L.Ed. 1440 (1944). See Motlow v. Southern Holding & Securities Corp., 95 F.2d 721, 725-26 (8th Cir.), cert. denied, 305 U.S. 609, 59 S.Ct. 68, 83 L.Ed. 388 (1938); In re Peoria Life Ins. Co., 75 F.2d 777, 778 (7th Cir.), cert. denied, 296 U.S. 594, 56 S.Ct. 110, 80 L.Ed. 421 (1935). The states have continued to play this role. The federal Bankruptcy Code has never attempted to invade the province of the states in handling the liquidation of insurance companies.
Although Judge Martin has reached a different conclusion, I believe the purpose of McCarran-Ferguson was to restore the law to its status prior to South-Eastern Underwriters. As Justice Stewart said in Group Life & Health Ins. Co. ¶. Royal Drug Co., 440 U.S. 205, 99 S.Ct. 1067, 59 L.Ed.2d 261 (1979), “There is no question that the primary purpose of the McCarran-Ferguson Act was to preserve state regulation of the activities of insurance companies, as it existed before the SouthEastern Underwriters case.” 440 U.S. at 218 n. 18, 99 S.Ct. at 1077 n. 18 (emphasis in original). See Securities and Exchange Comm’n v. National Securities, Inc., 393 U.S. 453, 459, 89 S.Ct. 564, 568, 21 L.Ed.2d 668 (1969). It may reasonably be inferred, therefore, that Congress intended that long standing, traditional state regulation of insurance company liquidations continue unmodified by federal statute after the enactment of McCarran-Ferguson. Certainly there is no language in either McCarran-Ferguson or the federal superpriority statute which indicates otherwise.
In National Securities the “business of insurance,” which was re-subjected to state regulation by McCarran-Ferguson, was described by the Supreme Court as follows:
Congress was concerned with the type of state regulation that centers around the contract of insurance, the transaction which Paul v. Virginia[, 75 U.S. [8 Wall.] 168, 19 L.Ed. 357 (1869),] held was not “commerce.” 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. Statutes aimed as protecting or regulating this relationship, directly or indirectly, are laws regulating the “business of insurance.”
393 U.S. 453 at 460, 89 S.Ct. at 568 (emphasis added).
*353The Ohio liquidation statute prefers the claims of policyholders over those asserted by the United States government under the superpriority statute. The statute is thus aimed directly at the reliability of insurance policies purchased from Ohio insurance companies and with the enforceability of those policies. Even though the payment and adjustment of claims occurs after the insurance company is in the hands of a liquidator, this does not mean that the company is no longer in the “business of insurance.” The Ohio statute is quintessentially a state law that relates to the regulation of the business of insurance.