The Louisiana Supreme Court has refused to hear a case against risk retention group Allied Professionals Insurance Company (APIC), leaving the lower court’s favourable decision intact.
A Louisiana court of appeal ruled earlier this year that the Direct Action Statute, a state law that allows a third-party to sue an insurance company, would pre-empt the federal Liability Risk Retention Act (LRRA).
Plaintiff Ronald Courville brought the case against his chiropractor, Thomas Rathmann, and named his insurance company, APIC, under Louisiana’s Direct Action Statute.
APIC moved for arbitration under the Federal Arbitration Act and the LRRA, which the court of appeal eventually backed.
The court of appeal also followed a 2014 decision in New York state court, which held in favour of APIC that New York’s Direct Action Statute couldn’t pre-empt the LRRA.
APIC chairman and general counsel Mike Schroeder commented: “This case follows a series of favourable decisions so far overruling direct action statutes and anti-arbitration statues.”
"When certain state laws unfavourably attempt to regulate the business of insurance for risk retention groups, those statutes are pre-empted by the federal law, as demonstrated by this and other recent decisions.”
The Louisiana and New York rulings will help in another case concerning pre-emption of the LRRA, according Joe Deems, executive director of the NRRA, which has been intervening in the litigation.
“We are also hopeful that this will inspire a similar result in our other pending petition in Ziegler & Inspeq Services v the Housing Authority of New Orleans, where CPA Mutual Insurance, a risk retention group, named as the liability insurance carrier for one of the defendants, was similarly dismissed by the trial court on almost identical issues to those of Courville v APIC and Rathman.”
