NRRA Member Continuing Care RRG Prevails in Arizona District Court

Decision Upholds “Claims-Paid” Policy Provisions


  • NRRA member Continuing Care RRG wins in Arizona federal district court.
  • Legal issues strongly supported by NRRA-written amicus curiae
  • Significant implications for “claims-paid” policies nationwide.
  • Sends important message about RRGs doing business in multiple states.

The Case: Benson v. Continuing Care RRG

Continuing Care Risk Retention Group (CCRRG), a member of the National Risk Retention Association, has prevailed in a case heard in the federal District (trial) Court in Arizona.

The underlying insured in the case filed for bankruptcy, stopped paying on its CCRRG policy, and coverage was terminated. The insurer withdrew its defense. The plaintiffs in the case secured a $1.5 million judgment against the bankrupt insured.

The plaintiffs then pursued a “garnishment” proceeding against CCRRG to avoid the “arbitration” clause in the policy, claiming among other things that by withdrawing its defense, CCRRG violated public policy in Arizona.

“Claims-Paid” Insurance Policy

The case uniquely involved a Continuing Care RRG “claims-paid” insurance policy — meaning that if an insured ceased to be a member of CCRRG and stopped paying on the policy, CCRRG could cancel the coverage and withdraw its defense, even if a case was pending against the now former insured.  

The court dismissed the entire case against CCRRG without submitting the controversy to arbitration, meaning that the plaintiffs would either have to appeal by the end of August 2019 or initiate arbitration. The decision relied on well-settled law governing arbitration matters and the rights of the RRG under the law.

The decision undoubtedly was an unwritten acknowledgement of the potency of the Liability Risk Retention Act’s (LRRA) preemption of any law or order that would have the effect of regulating the business of the risk retention group.

Amicus Curiae Brief

NRRA’s amicus curiae brief provided the trial court with a virtual primer on the large body of favorable law that NRRA has created on LRRA preemption. The brief pointed out that Arizona law and public policy regarding this type of legal action had the practical effect of regulating the business of the involved risk retention group.

The brief further contended that the legal action should be preempted by provisions in the LRRA. NRRA urged the court to make a finding that CCRRG was entitled to win on the overarching issue that state laws cannot be used to rearrange or rewrite the provisions of an RRG’s policy.

NRRA’s Broad Impact

The National Risk Retention Association’s amicus curiae program haschanged the judicial landscape for risk retention groups.

NRRA’s successes in federal and state courts demonstrate that the Liability Risk Retention Act enables RRGs to conduct business in various states simultaneously with minimal state regulation.

Indeed, NRRA successes indicate that the risk retention group structure is an ideal fit for many businesses that operate in a number of different states.

Attend the NRRA National Conference (October 2-4, 2019) to learn more about what our association does to benefit members.