upported its holding, it "need not consider whether [its decision to apply federal law when it was clearly intended to displace all state law] is in conflict with the holding in [Stephens v.] American [International Insurance Co.]."The Fourth Circuit agreed with the Fifth Circuit on this point in ESAB Group.All of the foregoing points, and assuredly more from the detailed discussions in the decisions of the First, Fourth, Fifth and Ninth Circuits, will undoubtedly be made in the event of an appeal from 3131 Veterans Blvd LLC. If there is an appeal, the states that prohibit or restrict the arbitration of insurance disputes will be watching closely and, so too, insurers and reinsurers in the United States and the world-over should be watching closely.Edward K. Lenci, “Drafting an Enforceable Arbitral Provision” in “Invoking a Policy’s Arbhttps://www.hinshawlaw.com/professionals-edward-lenci.htmlitral Provisions When a Third Party Sues the Insurer,” ARIAS-U.S. Quarterly, Q3-2021, at 6-10.15 U.S.C. §§ 1011-15.15 U.S.C. § 1012(b), titled “Federal regulation,” states that, “[n]o 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.…” 9 U.S.C. §§ 201-208.Reverse-preemption occurs when a state statute supersedes a federal statute.Edward K. Lenci, “Another Circuit Court Holds That the New York Convention Pre-empts State Laws Prohibiting Arbitration of Insurance Disputes” in “The Continued Rise Of The New York Convention And The Fall Of The ‘Bellefonte Cap,’” Arbitrate.com, September 8, 2021, https://arbitrate.com/the-continued-rise-of-the-new-york-convention-and-the-fall-of-the-bellefonte-cap/. Since publication of this article, the First Circuit has sided with the Fourth, Fifth, and Ninth Circuits. Green Enters., LLC v. Hiscox Syndicates Ltd., 68 F.4th 662 (1st Cir. 2023).Certain Underwriters at Lloyds, et al. v. 3131 Veterans Blvd LLC, No. 22-CV-9849 (LAP), 2023 U.S. Dist. LEXIS 144956 (S.D.N.Y

ow provides a brief overview of the applicable law. Of course, this Article does not contain an exhaustive discussion of the subject, and compliance personnel should consult with regulatory counsel on the specific circumstances and applicable jurisdictions.Among other things, the Fair Credit Reporting Act (15 U.S.C. §§ 1681-1681x; the “FCRA”) includes requirements relating to consumer notification in the event of an adverse action. Adverse action is defined, in relevant part, to mean “a denial or cancellation of, an increase in any charge for, or a reduction or other adverse or unfavorable change in the terms of coverage or amount of, any insurance, existing or applied for, in connection with the underwriting of insurance." If any person takes an adverse action with respect to any consumer that is based in whole or in part on any information contained in a “consumer report” the person must, among other things, provide an adverse action notice to the consumer.The McCarran-Ferguson Act (15 U.S.C. §§1011-1015; the “McCarran-Ferguson Act”), generally exempts the business of insurance from federal regulation. Enacted in 1945, in response to Supreme Court rulings extending federal regulation to the transaction of insurance under the Commerce Clause, the McCarran-Ferguson Act states, “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,” and “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.” 15 U.S.C. §1012. The McCarran-Ferguson Act also includes certain exceptions. 15 U.S.C. Section 1012(b) states that “the Sherman Act . . . Clayton Act, and . . . Federal Trade Commission Act . . .shall be applicable to the business of insurance to the extent that su

yer’s financial connections and maneuvers through the petitioners’ bank records intended to “help” in the goal of collecting the $2 million? Yes. Implicit in this conclusion is a requirement that there is some evidence that third parties have a financial connection with the taxpayer, as opposed to the IRS randomly picking bank accounts. However, the Court declined to opine on any such requirement as that question was not specifically argued. It did note the Government’s admission that some financial connection must exist to establish “aid” in the collection of the assessment.United States v. State of Delaware Dept. of InsuranceThis case centers on the intersection between the broad statutory authority granted to the IRS to collect tax and the scope of “reverse preemption” in the context of state regulation of insurance companies. In general, the IRS’s audit and collection authority preempts state laws that might otherwise prevent IRS investigations. However, the McCarran-Ferguson Act, 15 U.S.C. §§ 1011 et seq. (the MFA), broadly prohibits Congressional regulation of “the business of insurance,” leaving the states free to so regulate. What happens when the IRS collection machine is opposed by a state citing the MFA?In this case, the IRS issued a summons directly to the Delaware Department of Insurance (the Department) in connection with the IRS’s audit of a firm and its wholly owned LLC which the IRS believed promoted micro-captive structures.The IRS had previously obtained emails relating to (1) the issuance of certificates of authority by the Department to one of the firm’s insurance clients and (2) one of the Department’s directors accepting a breakfast invitation from the firm. The IRS had also determined that the Department had issued certificates of authority to 191 insurance companies which the firm helped create. As a result, the IRS wanted to know more about the communications between the Department and the firm and so issued the summons for testimony and records, including

he Third Circuit dismissed the Department’s concerns that providing testimony and documents to the IRS would undermine its regulatory scheme as applicants would be less forthcoming with the Department.ConclusionWe do not know whether the Department will choose to appeal or if the U.S. Supreme Court would accept certiorari. Presuming that this case ends here, this case establishes federal precedent applicable in the Third Circuit which consists of Delaware, New Jersey, and Pennsylvania. Delaware is one of the largest domestic venues for forming captive insurance companies. Dozens of captive managers are authorized in Delaware. If the IRS is feeling confident it may seek to establish similar precedent in the Second and Fourth Circuits which include other large captive forming states such as Connecticut, North Carolina, South Carolina, and Vermont, each of which has similar confidentiality provisions in its insurance law.---U.S. v. Del. Dept. of Ins., No. 21-3008 (3d Cir. April 21, 2023).15 U.S.C. § 1011 et seq. Notice 2016-66, 2016-47 I.R.B. 745 (2016). REG-109309-22; 88 F.R. 21547-21564; 2023-17 IRB 770 (April 10, 2023)See, e.g., Avrahami v. Comm’r of Internal Revenue, 149 T.C. 144 (T.C. 2017) and Syzygy Ins. Co. v. Comm’r of Internal Revenue, T.C. Memo. 2019-34 (U.S.T.C. Apr. 10, 2019). U.S. Const. art. VI, cl. 2.U.S. Dept. of Treasury v. Fabe, 508 U.S. 491 at 505 (1993). “All portions of license applications reasonably designated confidential by or on behalf of an applicant captive insurance company, all information and documents, and any copies of the foregoing, produced or obtained by or submitted or disclosed to the Commissioner pursuant to subchapter III of this chapter of this title that are reasonably designated confidential by or on behalf of a special purpose financial captive insurance company, and all examination reports, preliminary examination reports, working papers, recorded information, other documents, and any copies of any of the foregoing, produced or obtained b

Additionally, Goodwill contended that because Oklahoma accepts the “reasonable expectation” of the insured doctrine, the lower court erred when it deemed the insured’s interpretation of the policy contract unreasonable. Goodwill also argued that the holding was a violation of Erie R. Co. v. Tompkins, 304 U.S. 64 (1938), which, among other things, held that a federal court may not create common law on state law issues.Goodwill framed the issue as whether federal courts are violating principles of federalism in uniformly refusing to seek guidance from a state’s highest court on state law questions relating to COVID-related insurance coverage. The Supreme Court, unconvinced by the insured’s arguments, declined to review the 10th Circuit opinion holding that Goodwill did not “suffer a direct physical loss of property when it suspended operation in compliance with state and local shutdown orders during the Covid-19 pandemic,” and denied certiorari consistent with the McCarran-Ferguson Act (15 U.S.C. § 1011) (Providing that the laws of the states should control the insurance business.)Likewise, in Bel Air Auto Auction, Inc. v. Great Northern Ins. Co., 142 S. Ct. 635 (2021), the Court declined to hear an auto auctions prayer for review of a 4th Circuit decision not to send the case to the state's top court. In Bel Air, the lower court held that bodily injury claims based on the COVID-19 shutdown generally are not the result of direct physical loss and, therefore, are not covered as business interruption loss. See, e.g., Bel Air Auto Auction, Inc. v. Great Northern Ins. Co., 534 F.Supp. 3d 492 (D. Md. 2021) (granting insurer’s motion for judgment on the pleadings in COVID-19–related insurance coverage case and rejecting plaintiff’s argument that absence of virus exclusion indicated there was coverage).If the current decisions from the Wisconsin, Massachusetts, and Iowa Supreme Courts are indicators of what state courts will decide in the absence of a Supreme Court opinion reversing the tre

…The federal district court granted the motion to compel arbitration.This was a case of first impression for the Ninth Circuit. The court recognized at the outset that "[t]his appeal presents an issue that … lies at the intersection of international, federal, and state law: whether the McCarran-Ferguson Act, 15 U.S.C. §§ 1011-15, allows a Washington statute to reverse-preempt the [New York Convention], a multilateral treaty." The McCarran-Ferguson Act, a federal statute, gives states the authority to regulate the business of insurance.

Other steps that should be considered by health insurers, in light of CHIRA, include the review and possible updating of antitrust compliance policies, providing training to employees on the modified regulatory environment, and reviewing contracts formerly exempt from antitrust scrutiny that now may be subject to investigation or litigation.Footnotes:15 U.S.C. §§ 1011 15.Union Labor Life Ins. Co. v. Pireno, 458 U.S. 119, 129 (1982).

8 Experienced counsel can assist in navigating the newly heightened regulation and potential antitrust liabilities insurers are now exposed to with the repeal of the McCarren-Ferguson exemption.1 See 15 U.S.C. §§ 1011-1015; McCray v. Fidelity Nat. Title Ins. Co., 682 F.3d 229 (3d Cir. 2012), cert. denied, 2013 WL 598864 (U.S. 2013).2See Federal Trade Com'n v. National Casualty Co., 357 U.S. 560, 564, 78 S. Ct. 1260, 2 L. Ed. 2d 1540 (1958); Ohio AFL-CIO v. Insurance Rating Bd., 451 F.2d 1178, 1183 (6th Cir. 1971); Commander Leasing Co. v. Transamerica Title Ins. Co., 477 F.2d 77, 83-84 (10th Cir. 1973).

Signed into law by President Trump on January 13, 2021, the Competitive Health Insurance Reform Act of 2020 constitutes a major change by removing that immunity for the health insurance business.The McCarran-Ferguson Act (15 USC 1011-1013), enacted in 1945, authorized the states to regulate the business of insurance and provided immunity from federal antitrust laws for the “business of insurance” (15 USC 1013 ), with exceptions for agreements or acts to boycott, coerce or intimidate.The scope and extent of the insurance antitrust exemption evolved significantly over time. Numerous court decisions have interpreted key terms of the exemption, especially what constitutes the “business of insurance.”

These market reforms include, but are not limited to, requirements that plans must accept each applicant that agrees to the terms and conditions of the health insurance (guaranteed issue), prohibitions on plans basing eligibility or coverage on health status (nondiscrimination), prohibitions on retroactive cancellation of medical coverage (prohibitions on rescissions), requiring the use of adjusted or modified community rating rules to determine premiums (ratings restrictions ), and plans must cover certain benefits categories (essential health benefits). 15 U.S.C. §§ 1011-1015. Office of the Ass’t Sec’y for Planning and Eval, HHS, Essential Health Benefits: Individual Market Coverage (Dec. 16, 2011).Id.