HASSETT'S OBJECTIONS - The Filed Rate Doctrine: A Love Story

Insurance Reinsurance Managed Healthcare Review - Spring 2012

Because many states have statutes barring or restricting the enforcement of arbitration clauses in insurance contracts, the U.S. Supreme Court's decision last year in AT&T Mobility, LLC v. Concepcion, Case No. 09-893 (U.S. April 27, 2011) (upholding class arbitration waivers) has been of limited benefit to insurers. See Ga. Code Ann. § 9-9-2(c) (arbitration clauses in insurance contracts unenforceable); Miss. Code Ann. § 83-11-109 (disallowing arbitration clauses in uninsured motorist coverage); Neb. Rev. St. § 25-2602.01; S.C. Code Ann. § 15-48-10; Ark. Code Ann. § 16-108-230; Nev. Rev. St. § 689B.067 (group health insurance); United Ins. Co. of Am. v. Fla. Office of Ins. Regulation, 985 So. 2d 665 (Fla. App. 2008) (upholding insurance department's denial of application to include arbitration clause in life insurance contracts); Appleton Papers, Inc. v. Home Indemn. Co., 612 N.W.2d 760 (Wis. App. 2000) (arbitration clause unenforceable where form not approved by commissioner of insurance). The majority of decisions uphold insurance-specific restrictions on arbitrability based upon the McCarran-Ferguson Act, which allows state law to control the insurance industry unless Congress expressly provides otherwise. See Am. Bankers Ins. Co. of Fla. v Inman, 436 F.3d 490 (5th Cir. 2006); McKnight v. Chicago Title Ins. Co., 358 F.3d 854 (11th Cir. 2004).

Just in time for insurers, the filed rate doctrine has gained momentum. Most recently, in Armour v. Transamerica Life Ins. Co., Case No. 11-2034 (D. Kan. January 25, 2012), the court dismissed a putative class action as barred by the filed rate doctrine. The plaintiff alleged that Transamerica had sold long-term care policies under an unreasonable actuarial assumption which, unknown to the plaintiff but known to Transamerica, would and did result in subsequent rate increases. Based on that premise, the plaintiff asserted purported causes of action for fraud, negligent misrepresentation, breach of duty of good faith and fair dealing, breach of contract and unjust enrichment. Id. at 2. Transamerica moved to dismiss the case under the filed rate doctrine. Specifically, because it had filed its rates with the Kansas Department of Insurance, Transamerica claimed those rates could not be altered collaterally via litigation. The court agreed and dismissed the case.

The essence of the filed rate doctrine is that a rate that is filed or approved...