A New York and New Jersey Lawyer Who Represents Policyholders and Beneficiaries in Life Insurance Denial Cases

For those of us who toil in the fields of the civil justice system, one of the most deadly pestilents endangering consumer rights is the business lobby’s efforts to impose mandatory arbitration. A New York state judge, however, has rejected an insurance company’s bid to enforce a mandatory arbitration clause.

The case involved a workers’ compensation policy that National Union Fire Insurance Company sold to Source One, a staffing agency. The insurer asserted that the Federal Arbitration Act (FAA) mandated that effect be given to the arbitration clause at issue.

Judge Eileen Bransten held that because, under the McCarran-Ferguson Act, the states regulate the business of insurance, the FAA did not have preemptive effect. The FAA and the California Insurance Code were at odds with one another, and the Court did not believe that the FAA compelled it to disregard the Insurance Code. In short, if the Court gave preemptive effect to the FAA, it would supercede the McCarran-Ferguson Act which explicitly provides that insurance companies are regulated by the states.

You can read an article about the decision here.

Leave a Reply