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IIABA Asks Supreme Court to Resolve Conflicting Rulings on Insurance Consumer Protection Laws

High Court Urged to Overturn 4th Circuit Opinion on West Virginia Statute

WASHINGTON, D.C., May 7 - The Independent Insurance Agents & Brokers of America (IIABA) is asking the U.S. Supreme Court to hear an appeal of the Fourth Circuit Court of Appeals decision in which the lower court ruled that West Virginia insurance consumer protection laws are preempted by regulatory interpretation of federal statutes.

IIABA’s petition asks the high court to review the case of the State of West Virginia vs. the Office of the Comptroller of the Currency (OCC) because there are conflicting decisions by appeals courts and the future of functional regulation is in question. In its decision entered last November, the appeals court upheld an OCC opinion letter stating that West Virginia consumer protection laws are preempted by the Gramm-Leach-Bliley Act (GLBA).

In making its case for an appeal, IIABA says that “the judgment by the Fourth Circuit is squarely in conflict with the judgment entered by the First Circuit in a similar case (Bowler vs. Hawke)” and thus requires the Supreme Court to resolve the disparity between the two decisions.

“These conflicting decisions result in a fundamental inequity,” explains the petition. “The ultimate arbiter of the appropriate level of consumer protection is determined by the state in the First Circuit, as Congress intended.  In West Virginia, however, the OCC’s view of the appropriate level of protection for insurance consumers is paramount, and national banks are excused from compliance with validly enacted state consumer protection laws to which all other financial institutions in the State must adhere. In contrast, in Maine, Massachusetts, New Hampshire, and Rhode Island—all of which have laws in place that share some similarities to those in West Virginia—they have express judicial authorization to enforce the same laws that West Virginia can no longer enforce. And the 14 other States with such laws in place lack guidance as to whether their own laws remain enforceable.”

“If unresolved, this conflict also threatens to disrupt in several significant respects the bedrock principle of ‘functional regulation’ on which the GLBA is grounded,” continues IIABA’s petition. “First, the GLBA’s ‘functional regulation’ regime is intended to ensure that all persons or entities engaged in insurance sales, solicitation and cross-marketing activities are subject to the same panoply of state insurance regulation. Second, this conflict threatens to undermine the States’ role as the GLBA functional regulator for insurance sales activities and their concomitant ability to promulgate and enforce laws regulating the manner in which the insurance business is conducted within their borders. Congress’ commitment in the GLBA to continued regulation of insurance agency activities by the States, however, could not have been more clear.”

The petition notes that the Fourth Circuit’s opinion fundamentally undermines the functional regulation mandate incorporated into the landmark Gramm-Leach-Bliley Act and creates confusion with respect to the appropriate roles of state and federal regulators vested with authority under that statute.

“Resolution of the conflict between the Fourth Circuit’s decision and Barnett (Barnett Bank vs. Nelson) is vital to the future functioning of the regulatory regime that Congress worked so hard to create. As the decision on review is the first and only post-GLBA case to address the parameters of the Section 104(d)(2)(A) significant interference inquiry, that decision also could have long-lasting precedential effect,” asserts IIABA.

IIABA also argues that the lower court failed to conduct a required independent judicial review of the deference accorded the OCC opinion letter.

“Before it can judge the ultimate ‘persuasiveness’ of an agency interpretation under Skidmore, a court must assess [that] interpretation against multiple factors and determine what weight they should be given. The court conducted no analysis whatsoever of the parameters of the Section 104(d)(2)(A) preemption standard or of the structure of the GLBA, its legislative history, or its purpose,” explains the petition. “By deferring in this manner, the court did nothing more than rubberstamp the OCC’s conclusions and, in so doing, abdicated its own judicial responsibility under Skidmore.”

The Supreme Court is expected to announce later this year whether it will accept the case.

Founded in 1896, IIABA is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of more than 300,000 agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life and health—as well as employee benefit plans and retirement products. Web address:


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