The Nebraska Supreme Court has ruled that the Liability Risk Retention Act (LRRA) preempts a state law that prohibits arbitration provisions in insurance policies.
In 2012, chiropractor Dr Brett Speece was audited by the Nebraska Department of Health and Human Services with regard to his billing for Medicaid reimbursements, and in January 2013, the State of Nebraska filed a civil suit against Speece for violations of law regarding false Medicaid claims.
Speece sued Allied Professionals Insurance Company (APIC), a risk retention group, claiming that an arbitration provision in the Allied policy was illegal under state law.
Allied appealed the district court ruling in favour of the chiropractor. The Supreme Court overruled the district court in an unqualified opinion that the federal LRRA preempts the state law.
“I am very pleased by this sweeping ruling in favour of the risk retention industry on the preemption of state laws regulating risk retention groups,” said Michael Schroeder, chairman of Allied.
He pointed out that the Nebraska Supreme Court decision follows recent favourable decisions in similar cases by federal circuit courts of appeal in the Second and Eleventh Circuits.
Executive director of the National Risk Retention Association (NRRA), Joseph Deems, called the decision an “important precedent that reinforces the preemption provisions of the LRRA in cases that involve state statutes and is one more in a series of court decisions upholding the right of risk retention groups to operate free of most regulation in all 50 states when licensed in a single state.”
