Court Opinion

ID: 9479442
Source: CourtListenerOpinion
Date Created: 2023-08-05 07:18:46.680121+00
Date Added: 2024-06-11T17:47:02.825766
License: Public Domain

*1464FERGUSON, Circuit Judge,
dissenting:
I disagree with the majority’s conclusion that the Oregon State Bar’s insurance-related activities need not satisfy the active supervision requirement for state action antitrust immunity, and respectfully dissent. Furthermore, as there is no active supervision of the Bar’s administration of the Professional Liability Fund, and because the Fund is outside the reach of the McCarran-Ferguson exemption to the antitrust laws, I would reverse the district court judgment.
I.
Grounded in the principles of federalism and state sovereignty, Parker v. Brown, 317 U.S. 341, 351, 63 S.Ct. 307, 314, 87 L.Ed. 315 (1943), held that the Sherman Act was not intended “to restrain state action or official action directed by the state.” Thus, when a state directly regulates its domestic commerce in a sovereign capacity, any resulting anticompetitive effects receive state action immunity from federal antitrust liability. See, e.g., Hoover v. Ronwin, 466 U.S. 558, 572-73, 104 S.Ct. 1989, 1997-98, 80 L.Ed.2d 590 (1984) (state supreme court acting as sovereign when acting in a legislative capacity); Bates v. State Bar of Arizona, 433 U.S. 350, 360, 97 S.Ct. 2691, 2697, 53 L.Ed.2d 810 (1977) (same); Parker, 317 U.S. at 350-52, 63 S.Ct. at 313-15 (state legislature as sovereign). Parker also emphasized, however, that “a state does not give immunity to those who violate the Sherman Act by authorizing them to violate it, or by declaring that their action is lawful.” Id. at 351, 63 S.Ct. at 314. While a state remains free to delegate regulatory authority to nonsover-eign entities, “closer analysis is required” to ensure that such organizations receive state action immunity only when their anti-competitive actions further a demonstrated state commitment to supplant competition with regulation. Hoover, 466 U.S. at 568, 104 S.Ct. at 1995. Toward this end, the Supreme Court established the “clear articulation” and “active supervision” requirements for Parker immunity to determine whether the anticompetitive conduct of nonsovereigns should be adjudged state action and thus shielded from federal antitrust liability. See California Retail Liquor Dealers Ass’n v. Midcal Aluminum, Inc., 445 U.S. 97, 105, 100 S.Ct. 937, 943, 63 L.Ed.2d 233 (1980).
Since the majority concludes, as they must, that the Oregon State Bar (Bar) does not enjoy sovereign status, whether the Bar’s insurance-related activities can be immunized from antitrust liability turns on the extent to which their activities comport with the dual requirements for Parker immunity. The Bar’s creation and operation of the Professional Liability Fund (Fund) meets the “clear articulation” requirement. Analysis of the legislative history of Or. Rev.Stat. (ORS) § 9.080 shows that the Oregon state legislature clearly sanctioned the creation of a mandatory malpractice liability fund when it delegated rulemaking authority to the Bar. See Hearings on S. 190 Before the Senate Judiciary Comm., April 6, 1977 (statement of Paul J. O’Hollaren, Oregon State Bar) [hereinafter Senate Hearings ]; Hearings on S. 190 Before the House Comm, on Business & Consumer Affairs, May 19, 1977 (statements of Senator Jernstedt and O’Hollaren).
Just as clearly, however, the Bar’s operation of the Fund is not actively supervised by state authorities. The majority glosses over this lack of Fund supervision by holding that the Bar, by virtue of its status as a “state agency,” need not satisfy this second requirement for Parker immunity. Because such a holding not only fails to address the nature of the organized bar, but also undermines the federalism principles embodied in Parker, I would hold that the Bar’s operation of the Fund must be actively supervised by the state in order to invoke state action immunity from federal antitrust liability.
A.
At the heart of the active supervision requirement lies a concern for the political sufficiency of state economic regulatory decisions. Based largely on the presumption that governmental bodies such as branches of state government, see, e.g., Hoover, 466 U.S. at 573, 104 S.Ct. at 1998 *1465(state supreme court); Parker, 317 U.S. at 351, 63 S.Ct. at 314 (state legislature), and political subdivisions, Hallie v. Eau Claire, 471 U.S. 34, 46, 105 S.Ct. 1713, 1719, 85 L.Ed.2d 24 (1985) (municipalities), regulate in the public interest, federalism counsels deference to their anticompetitive decisions. We justify this deference to a state’s economic choices, however anticom-petitive their effects, with the understanding that they were made by publicly accountable state officials. See Hallie, 471 U.S. at 45 & n. 9, 105 S.Ct. at 1721 n. 9 (municipal sewage regulations not required to meet active supervision requirement because actions of municipal officers checked by mandatory disclosure regulations and electoral process); Hoover, 466 U.S. at 599, 104 S.Ct. at 2011 (Stevens, J., dissenting) (antitrust laws “simply require that decisions to displace the free market be made overtly by public officials subject to public accountability”); see also New Motor Vehicle Bd. v. Orrin W. Fox Co., 439 U.S. 96, 109, 99 S.Ct. 403, 411, 58 L.Ed.2d 361 (1978) (state restrictions on location of automobile dealerships accorded state action immunity since program included public hearings when automobile franchisees protested placement of competing dealerships); Parker, 317 U.S. at 352, 63 S.Ct. at 315 (state agricultural commission approval of collective pricing by raisin cartels preceded by public hearings); Jorde, Antitrust and the New State Action Doctrine: A Return to Deferential Economic Federalism, 75 Cal.L.Rev. 227, 249-250 (1987) (active state supervision requirement promotes citizen participation value of federalism).
The same aura of public accountability does not accompany the regulatory decisions of private parties. Unlike a public actor, “there is a real danger that ... [a private party] is acting to further his own interests, rather than the governmental interests of the State.” Hallie, 471 U.S. at 47, 105 S.Ct. at 1720; accord Patrick v. Burget, 486 U.S. 94, 108 S.Ct. 1658, 1663, 100 L.Ed.2d 83 (1988). Thus, the active supervision requirement ensures that those exercising private delegations of regulatory authority do not forsake the public goals of a state’s economic policy in favor of their own private regulatory agendas. See Patrick, 108 S.Ct. at 1663 (absent supervision “there is no realistic assurance that a private party’s anticompetitive conduct promotes state policy, rather than merely the party’s individual interests”). State supervision of delegated authority prevents states from frustrating the national policy of marketplace competition by casting a “gauzy cloak of state involvement” over what are essentially private restraints on competition. Midcal, 445 U.S a at 106, 100 S.Ct. at 944; see also 324 Liquor Corp. v. Duffy, 479 U.S. 335, 107 S.Ct. 720, 726, 93 L.Ed.2d 667 (1987); Southern Motor Carriers Rate Conference, Inc. v. United States, 471 U.S. 48, 57, 105 S.Ct. 1721, 1726, 85 L.Ed.2d 36 (1985).
The majority’s conclusion that the Bar need not satisfy the active supervision requirements blurs, if not eliminates, this logical distinction between public and private economic regulation. While the majority appears content to paint the Bar as a state agency or other form of public body “akin to a municipality for purposes of the state action exemption,” 1 it offers only a partially completed portrait. The Bar’s private interests in the very field in which it regulates — professional malpractice insurance — coupled with the lack of public accountability for its Fund-related activities, reveals that the Bar presents a poor candidate for exemption from the active supervision requirement.
Conspicuously absent from the majority’s discussion is any acknowledgment of the potential for abuse when a state delegates regulatory authority to an organization, such as the Bar, which brings its own set of economic interests to bear on the *1466regulated field. Experience has shown that, best intentions aside, the organized bar may seek to protect the interests of its members despite arguably conflicting public interests. Dissenting in Hoover, 466 U.S. at 585, 104 S.Ct. at 2004, Justice Stevens voiced this concern: “When [state] ... authority is delegated to those with a stake in the competitive conditions within the market, there is a real risk that public power will be exercised for private benefit.”
Perhaps in recognition of this economic reality, the Supreme Court has never authorized a state bar to exercise independent authority over regulation of the legal profession. In Goldfarb v. Virginia State Bar, 421 U.S. 773, 95 S.Ct. 2004, 44 L.Ed.2d 572 (1975), the Court refused to extend Parker state action immunity to fee schedules enforced by the Virginia State Bar, an administrative agency by state law, when the state’s Supreme Court Rules did not require such anticompetitive fee restraints. “The fact that the State Bar is a state agency for some limited purposes does not create an antitrust shield that allows it to foster anticompetitive practices for the benefit of its members.” Id. at 791, 95 S.Ct. at 2015 (citation and footnote omitted).
While the two remaining Supreme Court decisions addressing the authority of state bar organizations to regulate the legal profession ultimately held that the challenged conduct was immune from antitrust attack, each based this holding on the state bar’s lack of independent regulatory authority. In affirming the disputed disciplinary rules restricting legal advertising in Bates v. State Bar of Arizona, 433 U.S. 350, 361, 97 S.Ct. 2691, 2698, 53 L.Ed.2d 810 (1977), the Court noted that the state bar’s role in disciplinary enforcement consisted solely of acting “as the agent of the [state supreme] court under its continuous supervision.” Given the extensive official oversight over the state bar’s enforcement responsibilities, the Bates Court had no reason to fear aggrandizement of private economic interests: Moreover ... the [disciplinary] rules are subject to pointed re-examination by the policymaker — the Arizona Supreme Court — in enforcement proceedings. Our concern that federal policy is being unnecessarily and inappropriately subordinated to state policy is reduced in such a situation; we deem it significant that the state policy is so clearly and affirmatively expressed and that the State’s supervision is so active. Id. at 362, 97 S.Ct. at 2698.
Finally, in Hoover v. Ronwin, 466 U.S. 558, 104 S.Ct. 1989, 80 L.Ed.2d 590 (1984), the Supreme Court upheld Arizona’s bar admission procedures which permitted a state bar committee to compile and grade bar examinations, but reserved the final admission decision for the Arizona Supreme Court. Applying Bates, the Hoover Court found it persuasive that while the Arizona Supreme Court delegated some discretionary authority to the committee, it nevertheless “retained strict supervisory powers and ultimate full authority over [the committee’s] ... actions.” Id. at 572, 104 S.Ct. at 1997. Taken together, Goldfarb, Bates, and Hoover thus reinforce the proposition that when independent regulatory authority is delegated to a state bar, particular care must be taken to ensure that public authority is not being used to further private economic agendas.
While the potential for self-interested economic behavior may not be sufficient in and of itself to trigger the active supervision requirement, when viewed in light of the Bar’s lack of publicly accountable deci-sionmaking, there is a need for state oversight. The majority likens the Bar to a municipality or state agency in terms of providing opportunities for public participation in regulatory decisions, but closer analysis reveals the flaws in both of these analogies.
Acknowledging the public nature of municipalities, Hallie v. Eau Claire, 471 U.S. 34, 105 S.Ct. 1713, 85 L.Ed.2d 24 (1985), concluded that the active supervision requirement should not be imposed when the regulatory actor was a municipality. Hallie premised this conclusion on the common sense view that a municipality’s position in the public eye provides some protection against antitrust abuses. Id. at 45 & n. 9, 105 S.Ct. at 1719 & n. 9. Yet few of the “public” features the Court found persuasive in Hallie are present in this case. *1467While municipal regulatory decisionmaking is usually preceded by public hearings or other mechanisms for airing opinions or concerns, see ORS § 221.420 (contested rate filings by municipally regulated public utilities subject to voter ratification), the Bar’s operation of the Fund is subject to neither mandatory disclosure regulations, ORS § 9.010(1); ORS §§ 244.050-244.201, nor rate hearings for aggrieved parties, ORS § 9.080(2)(a); ORS § 737.340. Moreover, the actions of the Bar’s Board of Governors cannot be checked by the electoral process, as no Board positions are filled by public election. See ORS § 9.025(1). In short, rather than being characterized by accessibility and openness, the Bar’s operation of the Fund suggests insularity. Under such circumstances, Hallie’s presumption of conduct in the public interest does not apply to the Bar.
The majority’s attempt to characterize the Bar as a “state agency” proves no more persuasive in furthering its position that the public aspects of the Bar’s activities make the active supervision requirement inapplicable.2 The Bar’s regulatory authority is simply not constrained by the same degree of public scrutiny typically governing other state agencies. While state agencies may not operate as democratically as municipal governments, they usually provide some opportunity for public participation in regulatory decisions. See, e.g., Southern Motor Carriers, 471 U.S. at 50-51, 105 S.Ct. at 1723-24; New Motor Vehicle Bd., 439 U.S. at 103, 99 S.Ct. at 408; Parker, 317 U.S. at 346-47, 63 S.Ct. at 311-12. To ensure public accountability for regulatory decisions, many state administrative agencies, including those in Oregon, allow for public input on proposed rules, provide hearings for interested parties, and undergo regular budgetary review. See, e.g., ORS §§ 182.010-182.105 (general rules governing state agencies), 183.310-183.550 (administrative procedure of state agencies), 291.015-291.028 (budgetary review of state agencies). The Bar, however, is not required to submit any of its Fund decisions for public scrutiny. Requiring active supervision of the Bar would serve the salutary purpose of ensuring that the public, either directly or through publicly accountable state officials, would have an opportunity to participate in a delegated regulatory decisionmaking process of significant public importance.
While the majority purports to narrow its holding by basing it on the “characteristics of the Oregon State Bar and the particular statutory scheme at issue in the present case,” the majority alludes to no particular organizational aspects of the Bar that are not shared by other integrated state bars. In fact, the scope of authority enjoyed by many state bars bears a striking resemblance to that found in the Oregon bar scheme prior to the creation of the Fund. See, e.g., Ala. Code § 34-3-40 to 34-3-43 (1988); Alaska Stat. § 08.08.010-.100 (1987); Cal.Bus. & Prof.Code §§ 6000-6076 (1974 & Supp.1989); Idaho Code § 3-401 to 3-420 (1979 & Supp.1988); Mich.Stat.Ann. § 27A.901-27A.910, M.C.L.A. §§ 600.901-600.910 (1986); Nev.Sup.Ct.R. 49-75 (1988); Tex.Gov’t Code Ann., title 2, subtitle G, app. arts. I-XIII (1988). Accordingly, notwithstanding the majority’s best efforts to limit the scope of its holding, there is little doubt that, under its approach, more state bars than simply Oregon’s will be clothed in state action immunity.
B.
Having concluded that the Bar need not satisfy the active supervision requirement to qualify for state action immunity from federal antitrust liability, the majority specifically declined to reach the issue of “whether, or to what extent, the Bar’s administration of the [Fund] ... is overseen by either the state legislature or the state supreme court.” Only a brief review of the statutory scheme at issue is necessary, however, to conclude that no state actor supervises the Bar’s operation of the Fund. ORS § 9.080 provides no avenues for the Oregon state legislature or supreme court, *1468acting in their sovereign capacities, to “have and exercise power to review [the Bar’s] particular anticompetitive acts ... and disapprove those that fail to accord with state policy.” Patrick, 108 S.Ct. at 1663; see also 324 Liquor Corp., 107 S.Ct. at 725-26. Nor does the Director of the Oregon Department of Insurance possess any regulatory authority over the Fund. See ORS § 9.080(2)(a). While active members of the Bar may generally modify or rescind Bar decisions, they carry no such authority with respect to Fund assessments. Compare ORS § 9.130(1) with ORS § 9.130(5). Rather, like the state wine pricing system denounced in Midcal, “the State simply authorizes price setting and enforces the [established] prices ... it does not monitor market conditions or engage in any ‘pointed reexamination’ of the program.” Id. 445 U.S. at 105-06, 100 S.Ct. at 943-44 (footnote omitted).
Indeed, the only two entities with direct authority over Fund operations are the Bar’s Board of Governors and the Board of Directors of the Fund, see ORS § 9.080(1); Resolution of the Oregon State Bar Board of Governors (effective July 1,1978), ¶¶ 4-6 [hereinafter Board of Governors’ Resolution], each of whose individual board members consist largely, if not entirely, of attorneys.3 While active state supervision may include oversight by a regulatory authority such as a state administrative agency, see, e.g., Southern Motor Carriers, 471 U.S. at 66, 105 S.Ct. at 1731 (1985), it would be a case of fox-watching-the-henhouse to conclude that these two Boards could provide meaningful supervision over the Fund. Thus, because no state actor in Oregon actively supervises the Bar’s operation of the Fund, I would hold that Parker’s state action doctrine does not protect the insurance-related activities challenged in this case from the federal antitrust laws.
II.
The Bar claims that even if it does not qualify for state action immunity from the antitrust laws, Hass’ suit still must be dismissed as the Fund falls within the McCar-ran-Ferguson Act’s exemption to the Sherman and Clayton Acts. This contention also lacks merit.
The McCarran-Ferguson Act (the Act) was enacted in 1945 in response 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), which held that insurance transactions were subject to congressional regulation in general, and the strictures of the anti-trust laws in particular. The Act was designed to turn the clock back to the state of insurance regulation before South-Eastern Underwriters, to assure that to activities of insurance companies in dealing with their policyholders would remain subject to state regulation. See S.E.C. v. National Securities, Inc., 393 U.S. 453, 458-59, 89 S.Ct. 564, 567-68, 21 L.Ed.2d 668 (1969). Congress, convinced that intra-industry cooperation was essential to maintain the financial stability of the insurance industry, was particularly concerned with protecting the rate-making regulatory schemes of the individual states from the federal antitrust laws’ prohibitions. See Group Life & Health Insurance Co. v. Royal Drug Co., 440 U.S. 205, 221, 99 S.Ct. 1067, 1078, 59 L.Ed.2d 261 (1979).
Under the Act a practice is exempt from the federal anti-trust laws if it is (1) the “business of insurance,” (2) regulated by state law, and (3) does not involve coercion, intimidation, or boycott.4 Feinstein v. Net-*1469tleship Co. of Los Angeles, 714 F.2d 928, 931 (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 Service Bureau, 701 F.2d 1276, 1284 (9th Cir.), cert. denied, 464 U.S. 822,104 S.Ct. 88, 78 L.Ed.2d 96 (1983).
While a persuasive argument exists that the operation of the Fund qualifies as the business of insurance under the Act, we need not reach a conclusion on the issue.5 Even assuming the administration of the Fund does constitute the business of insurance, the Bar cannot invoke the McCarran-Ferguson exemption as the Bar’s insurance-related activities are not “regulated” by state law under § 2(b) of the Act and the Bar’s rules concerning the operation of the Fund involve “coercion” within the meaning of § 3(b) of the Act.
A.
The regulation requirement of the Act is contained in § 2(b); this section, in relevant part, provides that the Sherman Act “shall be applicable to the business of insurance to the extent that such business is not regulated by state law.” 15 U.S.C. § 1012(b).
This circuit, along with a majority of other circuits, has held that as long as a general state regulatory scheme exists which possesses jurisdiction over the challenged practice, then the practice is regulated by state law within the meaning of the Act. See Feinstein, 714 F.2d at 933; Addrisi v. Equitable Life Assurance Society of the United States, 503 F.2d 725, 728 (9th Cir.), cert. denied, 420 U.S. 929, 95 S.Ct. 1129, 43 L.Ed.2d 400, reh’g denied, 421 U.S. 922, 95 S.Ct. 1590, 43 L.Ed.2d 790 (1975). While the Oregon Insurance Code is precisely the type of state regulatory scheme that would satisfy the Act’s regulation requirement, the Fund, as noted above, is expressly exempt from all requirements of the Insurance Code. See ORS § 9.080(2)(a) (“any fund so established shall not be subject to the Insurance Code of the State of Oregon”). Since the Insurance Code does not possess jurisdiction over the Bar’s challenged practice, it cannot satisfy the regulation requirement under the Act.
The Bar attempts to bring the Fund within the state regulation requirement by arguing that ORS § 9.080, the statute which authorizes the creation of the Fund, constitutes state regulation within the meaning of the Act. To support its proposition, the Bar cites California League of Independent Insurance Producers v. Aetna Casualty & Surety Co., 175 F.Supp. 857 (N.D.Cal.1959), which held that when a state statute “generally permits or authorizes *1470certain conduct on the part of the insurance companies,” it regulates the business of insurance within the meaning of § 2(b). Id. at 860. The district court reasoned that this interpretation of § 2(b) followed naturally from the Supreme Court’s holding in F.T.C. v. National Casualty Co., 357 U.S. 560, 78 S.Ct. 1260, 2 L.Ed.2d 1540 (1958). In National Casualty, the Court determined that a state statute which generally prohibited unfair advertising within the insurance industry and authorized enforcement through a scheme of administrative supervision satisfied the proviso in § 2(b). Id. In so holding, the Court rejected the F.T.C.’s contention that because the general prohibitory legislation at issue had not “crystallized into administrative elaboration of [the] standards and applications in individual cases” it was too inchoate to constitute “regulation” within the meaning of the Act. Id. at 564-65, 78 S.Ct. at 1262.
While the Court’s narrow holding in National Casualty is somewhat ambiguous, the district court in California League clearly erred in holding that general statutory authorization or permission constitutes state regulation under the Act. First, contrary to California League’s logic, the fact that a general prohibitory statute like the legislation at issue in National Casualty satisfies the regulation requirement in no way suggests that mere statutory authorization of a particular anticom-petitive practice also constitutes “regulation.” Second, and more importantly, California League’s pronouncement is contrary to the legislative history of § 2(b). Senate debate on § 2(b)’s regulation requirement is replete with commentary suggesting that the states could not, by enacting statutes authorizing or permitting certain practices, render such activity immune to the federal antitrust laws.6 See Crawford v. American Title Insurance Co., 518 F.2d 217, 224 (5th Cir.), reh’g denied, 521 F.2d 814 (5th Cir.1975) (Godbold, J., dissenting); see also Carlson, Insurance Exemption at 1156.
Finally, it is worth noting that while other courts have cited the California League language at issue to support a finding that § 2(b)’s regulation requirement had been met, all such cases have in fact involved either some general regulatory insurance scheme or prohibitory legislation. See e.g., Commander Leasing Co. v. Transamerica Title Insurance Co., 477 F.2d 77, 83 (10th Cir.1973); Ohio v. AFL-CIO v. The Insurance Rating Board, 451 F.2d 1178, 1182-83 (6th Cir.1971), cert. denied, 409 U.S. 917, 93 S.Ct. 215, 34 L.Ed.2d 180 (1972); Crawford v. American Title Insurance Co., 518 F.2d at 219. Thus, there is no case authority to support the Bar’s contention that ORS § 9.080 satisfies the Act's *1471regulation requirement. Given that the Bar has not drawn our attention to any other statute or regulatory scheme which could satisfy the state regulation requirement, the Bar has failed to show that the Fund is regulated by state law as required by § 2(b) of the Act.
B.
The Bar is also precluded from invoking the McCarran-Ferguson exemption on the grounds that the operation of the Fund amounts to coercion, and is thus outside the scope of this limited immunity to the antitrust laws.
Section 3(b) of the Act specifies that the antitrust exemption will not extend to “any agreement to boycott, coerce, or intimidate, or act of boycott, coercion or intimidation.” 15 U.S.C. § 1013(b). This provision applies to boycotts and coercive practices against policyholders as well as among insurance companies and agents. See St. Paul Fire & Marine Ins. Co. v. Barry, 438 U.S. 531, 98 S.Ct. 2923, 57 L.Ed.2d 932 (1978); Feinstein v. Nettleship Co. of Los Angeles, 714 F.2d at 931. Pursuant to the Bar’s regulations, all active members in the private practice of law, with the exception of patent attorneys, are required (1) to carry professional liability insurance and (2) to purchase such insurance from the Bar. See Board of Governors’ Resolution, ¶¶ 1-2. In other words, in order to practice law in the State of Oregon, private attorneys, including Hass, are not only compelled to carry insurance, but are forced to take their insurance business to one particular insurer — the Bar. The plain meaning of the term “coercion” is clearly implicated where, as here, an individual’s ability to pursue her livelihood is conditioned upon her willingness to deal with one particular insurer, to the exclusion of all other potential insurers. Indeed, it is difficult to envision a more coercive practice than the one at issue in this case.
This court’s analysis in Feinstein v. Nettleship Co. of Los Angeles, 714 F.2d 928 (9th Cir.1983), lends considerable support to a finding that the Bar’s regulations amount to coercion under § 3(b). In Fein-stein, a county medical association had entered into a contract with an insurance company to provide medical malpractice insurance to all of its members who desired to purchase such insurance. Plaintiff doctors claimed that the agreement between the association and the insurance company amounted to “boycott and coercion” under the Act since a doctor had to become a member of the county medical association in order to purchase insurance from the association’s designated insurance company. Feinstein, 714 F.2d at 933. The court rejected the doctors’ claim, relying almost entirely on the fact that the association was not forcing them to buy association-sponsored insurance, nor was it preventing them from dealing with other insurers. Indeed, as the court pointed out, several doctors in the association were insured by other companies. The court concluded that because the agreement “in no way limited the doctors’ ability to deal with third parties, the agreement itself is not an agreement to boycott or coerce the plaintiffs to purchase defendant’s insurance.” Id.
Unlike the agreement in Feinstein, the Bar’s insurance scheme does limit the insured’s ability to deal with third-parties. By finding this lack of compulsion within the medical association’s agreement dispos-itive, the Feinstein court implicitly recognized that an agreement or practice which does impose such a limitation on policyholders likely constitutes coercion within the meaning of the Act. It thus seems apparent that the requirement that attorneys purchase malpractice insurance from the Fund amounts to coercion under § 3(b) and thus places the operation of the Fund beyond the reach of the McCarran-Ferguson exemption.
In light of the fact that the Bar can invoke neither the state action immunity doctrine nor the McCarran-Ferguson exemption for the business of insurance, I would reverse the district court’s dismissal of Hass’ action.

. Apparently the majority cannot decide on the institutional pedigree of the Bar under Oregon law as it alternatively characterizes the Bar as "an instrumentality of the judicial department of the State of Oregon,” “a public body[ ] akin to a municipality," “a state agency,” and "an agent of the legislature for the purposes of administering [the Fund].” The majority’s inability to concretely define the organizational nature of the Bar highlights its hybrid nature, and, thus, serves to underscore the need for closer review of the majority’s portrayal of the character of the Bar.

. At no point does the Oregon statutory scheme identify the Bar as a state agency. However, for the purposes of argument, I accept the majority’s characterization of the Bar as a state agency. In the final analysis, however, I do not believe that this or any other organizational label proves dispositive on the issue of the Bar’s antitrust liability.

. Twelve of the fifteen members of the Board of Governors must be active members of the Oregon State Bar, ORS § 9.025(1), while all seven of the Fund's Board of Director positions are restricted to active members of the Bar. Board of Governors' Resolution, ¶ 4.

. Section 2 of the McCarran-Ferguson Act provides that:
(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 regulation the business of insurance.... Provided, that ... the Sherman Act, and ... the Clayton Act, and ... the Federal Trade Commission Act ... shall be applicable to the business of insurance to the extent that such business is not regulated by state law.
15 U.S.C. § 1012.
Section 3 of the Act provides, in pertinent part, that:
*1469Nothing contained in this act shall render the said Sherman Act inapplicable to any agreement to boycott, coerce, or intimidate, or act of boycott, coercion, or intimidation.
15 U.S.C. § 1013.

. The Supreme Court has set forth three factors to consider in determining whether a challenged practice constitutes the business of insurance: (1) whether the practice has the effect of transferring or spreading a policyholder’s risk; (2) whether the practice is an integral part of the policy relationship between the insurer and insured; and (3) whether the practice is limited to entities within the insurance industry. United States Labor Life Ins. Co. v. Pireno, 458 U.S. 119, 129, 102 S.Ct. 3002, 3008, 73 L.Ed.2d 647 (1982). While the Supreme Court stated that "none of the criteria is determinative in itself,” the Ninth Circuit’s discussion of the factors has emphasized that the primary characteristic of the business of insurance is the transferring or spreading of risk. See Feinstein, 714 F.2d at 931; Klamath-Lake, 701 F.2d at 1285.
Applying these criteria to this case, it seems fairly clear that the Fund satisfies the first two factors. The legislative history of ORS § 9.080 strongly suggests that one of the primary objectives in authorizing the Bar to require participation in the Fund was the minimization and spreading of risk. See Senate Hearings (testimony of Paul J. O’Hallaren). Additionally, the focus of Hass’ challenge is the nature of the relationship between the insurer, the Bar, and the insured, Oregon attorneys. As for the third criterion, it is somewhat difficult to apply to this case since we are not faced with the insurer-third-party arrangements that the court was contemplating when it articulated this factor. See Royal Drug, 440 U.S. at 224, 99 S.Ct. at 1080; Pireno, 458 U.S. at 129, 102 S.Ct. at 3009. While one could argue that this factor should be interpreted as limiting the McCarran Act exemption to traditional entities in the insurance industry, such a proposition finds no support in the case law. As this court stated in Klamath-Lake, ”[i]t is the business of insurance, not merely the business of traditional insurers, that activates the exemption.” Klamath-Lake, 701 F.2d at 1286.

. Since the regulation proviso in § 2(b) originated in conference, the Conference Committee Report on the McCarran-Ferguson Act did not address the issue, and the House of Representatives approved the bill without debate; the Senate debate is the only source of congressional intent concerning the term “regulated”. See Carlson, The Insurance Exemption from the Antitrust Laws, 57 Tex.L.Rev. 1127, 1156 (1979) [hereinafter Carlson, Insurance Exemption'].
On the first day of the debate, Senators McCarran and O'Mahoney repeatedly emphasized that only state legislation regulating insurance, not simply permissive state legislation, would satisfy § 2(b). See 91 Cong.Rec. 1443-1444 (1945). At one point, Senator McCarran stated:
During the 3-year moratorium, the States may, if they see fit to do so, enact legislation for the purpose of regulation. If they do enact such legislation, to the extent that they regulate they will have taken the business of insurance ... out from under the Sherman ..., the Clayton ..., and the other acts.
Id. at 1443 (emphasis added).
Later in the debate, Senator O’Mahoney, in response to Senator Pepper's concerns that § 2(b)’s language was too generous to the states in that it provided an easy means to evade federal power over the insurance industry, asserted:
I interpret ... [“to the extent not regulated by state law”] to be a clear statement that if the States do not regulate, the power of Congress to regulate is clearly enunciated. I do not conceive this to be a grant of power to the States to authorize by permissive legislation obviously adverse combinations which would be against the public interest.
Id. at 1444 (emphasis added).
Senator O’Mahoney’s comments on the second day of the Senate debate that the bill only authorized the states to permit what would otherwise be Sherman Act violations if they created regulatory schemes akin to public-utility rate-setting mechanisms is yet another piece of evidence that Congress had more in mind than simply permissive legislation when it enacted § 2(b). See id. at 1483.