Justia Insurance Law Opinion Summaries

Appellant, an African-American resident of Texas, sued appellees alleging that their credit-scoring systems employed several undisclosed factors which resulted in disparate impacts for minorities and violated the federal Fair Housing Act ("FHA"), 42 U.S.C. 3601, 3619. At issue, in a certified question, was whether Texas law permitted an insurance company to price insurance by using a credit-score factor that had a racially disparate impact that, were it not for the McCarran-Ferguson Act, 15 U.S.C. 1012(b), would violate the FHA, absent a legally sufficient nondiscriminatory reason, or would using such a credit-score factor violate Texas Insurance Code ("Code") sections 544.002(a), 559.051, 559.052, or some other provision of Texas law. The court answered the certified question by holding that Texas law did not prohibit an insurer from using race-neutral factors in credit-scoring to price insurance, even if doing so created a racially disparate impact.

Defendants, the chairman and chief executive officer of Lunde Electric Company ("company"), appealed convictions stemming from the misappropriation of employee 401(k) contributions to pay the company's operating expenses. At issue was whether there was sufficient evidence to support defendants' convictions under 18 U.S.C. 664, for embezzlement or conversion of elective deferrals, and 18 U.S.C. 1027, for false or misleading statements in a required Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C 1001 et seq., document. The court held that there was sufficient evidence to support defendants' convictions on Counts 17 and 18 under section 664 where there was sufficient evidence for the jury to conclude that the 1991 Profit Sharing Plan had been restated before defendants retained their employees' elective deferrals in the company's general account; where defendants commingled their employees' contributions with the company's assets to prop up their failing business and therefore, intentionally used their employees' assets for an unauthorized purpose; where they sent participants account statements showing 401(k) balances which were in fact non-existent; where defendants' decision to deviate was the wilful criminal misappropriation punished by section 664; and where defendants were alerted repeatedly about their obligation to remit the deferrals and defendants hid their actions from employees. The court also held that there was sufficient evidence to support defendants' convictions on Count 21 under section 1027 where defendants' initial decision to mislead their own employees about the solvency of their retirement plans by filing false account statements and false Form 5500s were the behaviors targeted by section 1027.

Anthem Health Plans of Maine, Inc., appealed a judgment that affirmed a decision by the Superintendent of Insurance. The Superintendent determined that Anthemâs proposed average rate increase of 18.5% applicable to its individual health insurance products containing a built-in 3% profit margin was excessive and discriminatory. The Superintendent then indicated that an average 10.9% rate increase containing a 0% projected profit margin would be approved by his agency. Anthem contends that in setting a profit margin at 0%, the Superintendentâs decision eliminated Anthemâs opportunity to earn a reasonable profit. Anthem brought suit alleging the superintendentâs decision violates state law and the U.S. Constitution. The Supreme Court held (1) that because the year in which the challenged rates were effective has passed and new rates went into effect; (2) a favorable decision on the merits would not give Anthem any relief; and (3) because federal and state laws are in transition, there is no basis for the Court to address Anthemâs appeal from the Superintendent. The Court dismissed Anthemâs appeal as moot.

Respondent Enterprise Leasing Company leased a motor vehicle to Elizabeth Price for less than a year. Her son crashed the leased vehicle into a vehicle owned by Petitioner Rafael Vargas. Vargas filed suit against Price and Enterprise. The only count of the complaint directed at Enterprise claimed that the company was vicariously liable as the owner of the vehicle, pursuant to state law section 324.021(9)(b)2. Vargas did not contend that Enterprise was negligent, that its lease to Price was improper, or that it was in any way at fault for the accident. Enterprise filed an Answer and affirmative defenses, asserting that pursuant to 49 U.S.C. §30106, or the "Graves Amendment," it had no liability. The circuit court granted Enterprise's motion for summary judgment, ruling that the Graves Amendment preempted state law, holding that the state law was a vicarious liability provision and not a financial responsibility one. The court entered a final judgment consistent with Enterprise's consent to judgment, and Vargas appealed. The appellate court affirmed the lower court's decision and held one issue for review by the Supreme Court: whether the Graves Amendment as enacted by Congress preempted state law involving short term leases of motor vehicles. Florida had eliminated vicarious liability for a certain category of owner/lessors; Congress, through the Graves Amendment, sought to eliminate vicarious liability for that category of owners/lessors in which the state law left exposed to liability. On analysis, the Supreme Court found that the savings clause of the Graves Amendment does not supersede state laws that impose financial responsibility on the owner of a vehicle or that impose liability on businesses who rent or lease vehicles for failure to meet financial responsibility requirements under state law, and affirmed the decision of the circuit court.