Thursday, May 9, 2002
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Lawyer for Insurance Commissioner Urges Ninth Circuit Panel to Reinstate Holocaust-Victims Disclosure Law
By a MetNews Staff Writer
California’s law requiring insurers to report information on policies issued in Europe between 1920 and 1945 does not deny insurers due process, and the state should be allowed to enforce it, an attorney for Insurance Commissioner Harry Low told a Ninth U.S. Circuit Court of Appeals panel yesterday.
Frank Kaplan of Alschuler Grossman Stein & Kahan said the Holocaust Victim Insurance Relief Act was a legitimate solution to “55 years of stonewalling” by insurers who do not want to pay benefits owed to those who perished under the Nazis. The act, he told the judges, is a legitimate exercise of the state’s authority to regulate the insurance business.
But a trio of insurance lawyers, led by former FBI and CIA director—and ex-federal judge—William Webster said the law deprives insurers of due process by threatening the loss of their licenses based on transactions that occurred in foreign countries to which they are only tangentially related.
The statute requires all insurers doing business in California to file reports with the insurance commissioner concerning all policies issued in Europe between 1920 and 1945 by themselves or by any company that they are “affiliated with” or “related to” under the statute.
The reports must indicate which policies have been paid and must indicate whether a search has been made for beneficiaries who have not been paid or their heirs.
Chief U.S. District Judge William Shubb of the Eastern District of California ruled last year that the law violates due process because insurers who do not file reports meeting statutory criteria can have their licenses suspended even if they have attempted to comply in good faith.
Most of the plaintiffs in the suit are American insurers who are subject to the act but claim they are prevented by their corporate structures or by foreign privacy laws from disclosing the information required by the law.
Webster, who has worked on the claims mechanism for Holocaust-era insurance victims overseen by former Secretary of State Lawrence Eagleburger, said the California law “has real potential for future problems” because it will require insurers to choose between doing business in this state or risking prosecution and/or loss of licensure in other countries.
Another Washington lawyer representing insurers, Kenneth S. Geller, said his clients were “being held hostage” by California.
But Kaplan argued on rebuttal that the statute meets the rational basis test for due process. The economic relationships between the plaintiffs and the European insurers, he said, make it reasonable for California to require the disclosures.
HIVRA is part of broader Holocaust-era insurance legislation sponsored by former Assemblyman Wally Knox. The Los Angeles Democrat was an interested observer at yesterday’s argument.
Two other features of the legislation were an extended statute of limitations for claims based on policies issued in Europe during the relevant period and potential revocation of licenses if insurers failed to pay claims. Insurers’ challenges to those features were rejected by Shubb on technical grounds, leaving the constitutional issues unresolved, and the plaintiffs did not appeal.
The case is Gerling Global Reinsurance Corp. of America v. Low.
Copyright 2002, Metropolitan News Company