McCarran-Ferguson Act Bars Antitrust Claims Brought by Ohio Title Insurance Purchasers

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

The McCarran-Ferguson Act, along with Title XXXIX of the Ohio Revised Code, prevented Ohio title insurance purchasers from maintaining antitrust claims against title insurance companies and the Ohio Title Insurance Rating Bureau for conspiring to charge inflated rates through title insurance rate filings, the U.S. Court of Appeals in Cincinnati has decided. Dismissal of the purchasers’ complaint with prejudice was affirmed.

The McCarran-Ferguson Act provides:

“The business of insurance, and every person engaged therein, shall be subject to the laws of the several States which relate to the regulation or taxation of such business.” However, “the Sherman Act … shall be applicable to the business of insurance to the extent that such business is not regulated by State law.”

The federal antitrust claims were barred because title insurance rate-making was “the business of insurance” within the meaning of the McCarran-Ferguson Act, and Ohio law regulated title insurance, the court decided. Title insurance rate-setting had the effect of transferring or spreading at least some policyholder risk, was a foundational piece of the policy relationship between the insurer and the insured, and had no application outside the context of insurance. The court rejected the purchasers' argument that the conduct was outside the business of insurance because risk-spreading was not the “true nature” of title insurance.

Further, cooperation among insurers in rate-making activities was permissible under Title XXXIX of the Ohio Revised Code, which regulates insurance. Thus, the alleged conduct did not violate the Valentine Act.

Filed Rate Doctrine

The court acknowledged that the parties briefed and argued whether the filed rate doctrine eliminated the purchasers’ damages claims and injunctive claims that would interfere with an already-filed rate. However, the appellate court did not consider the issue, which was relied upon by the lower court in dismissing the action. The doctrine also was relied upon by most other courts that had addressed title-insurance rate-setting, including the U.S. Court of Appeals in Philadelphia in two recent decisions: McCray v. Fidelity Nat’l Title Ins. Co., 682 F.3d 229, 2012-1 Trade Cases ¶77,922, and In re New Jersey Title Ins. Litig., 2012-1 Trade Cases ¶77,921.

The filed rate doctrine prevents private parties from recovering antitrust damages based on a rate properly filed with, and approved by, an appropriate regulatory body, according to the court. However, the doctrine did not remove actors from all antitrust scrutiny. By contrast, the McCarran-Ferguson Act barred all federal antitrust actions involving the business of insurance, unless the alleged antitrust violation was an “agreement to boycott, coerce, or intimidate, or [an] act of boycott, coercion, or intimidation.”

Because the McCarran-Ferguson Act and Title XXXIX of the Ohio Revised Code were complete bars to the purchasers’ federal and state antitrust claims, the filed-rate doctrine’s limitation on remedy was irrelevant.

The July 17 decision is Katz v. Fidelity National Title Insurance Co., 2012-1 Trade Cases ¶77,972.