NRRA Again Instrumental in Major RRG Industry Decision(s)
Los Angeles, May 8, 2018.
The anxiously awaited decision in Reis et al v. OOIDA, RRG was issued on May 7, 2018 by the Georgia Supreme Court, as yet another major judicial venue has now affirmed in a unanimous decision what NRRA has been advocating for years – – that the Liability Risk Retention Act (LRRA) preempts state insurance laws that regulate the business of foreign RRGs in that state. The statute in question allows “direct action” litigation against any insurers of motor carriers under Georgia state law. The Supreme Court heard oral argument on the case on March 5, 2018.
Chief Justice P. Harris Hines of the Court wrote the opinion, concisely summarizing that “The direct action statutes subject insurers of motor carriers to lawsuits as parties, and thus, exposes them directly to liability and any consequent damages. As such, direct action statutes both directly and indirectly regulate the operations of insurers of motor carriers in Georgia. While this type of regulating may be permissible with respect to traditional insurance carriers, it is not allowed in the case of a foreign risk retention group by the express act of Congress in the LRRA. 15 USC § 3902 (a)(1). And, we cannot disregard Congress’s command.”
After the trial court ruled in favor of OOIDA RRG on summary judgment, the plaintiffs appealed but the Georgia Court of Appeals transferred the case to the Supreme Court because in that state “preemption cases invoke (its) constitutional question jurisdiction.”
While the transfer precluded additional briefing by the parties, NRRA was able to submit its Amicus Curiae (“friend of the court”) brief on behalf of OOIDA, during a very narrow three-week window between the transfer and the March 5th date for oral argument. In that brief, NRRA provided a legal analysis covering the historical key judicial rulings on the many cases in which it assisted in obtaining decisions upholding LRRA preemption involving various state insurance laws. “Imposing Georgia’s Direct Action Statutes on foreign RRGs like OOIDA would improperly regulate their business operations,” it argued, and “the harmful economic impact on OOIDA, as well as on the 109 other foreign RRGs doing business in Georgia, would undermine the intent of the LRRA by threatening the existence of affordable liability insurance coverage….”
We are on a roll…
As usual, the Reis/OOIDA decision relies heavily upon Wadsworth v. Allied Professionals Ins. Co., (Federal 2d Circuit 2014). Coincidentally, on May 4, 2018, in another case in New York citing to Wadsworth, a New York appellate court in Nadkos, Inc. v. Preferred Contractors Insurance Company, RRG (PCIC), upheld a decision by the trial court that PCIC had not violated a state insurance law mandating a timely notice of disclaimer of coverage, on the specific grounds that the statute would have the effect of regulating the business of PCIC, a foreign risk retention group.
Michael Schroeder, NRRA Board Chair and the Chairman of Allied Professionals Insurance Company RRG, the NRRA member which incurred the expense of pursuing the Wadsworth case to victory and to its present status as a lead decision in the field, describes Wadsworth as “the gift that keeps on giving!” “I encourage all companies which haven’t already done so, to join and stay as members to continue with the support of this great Association which has created so many benefits to this entire industry.” he said.