Sandy River Nursing Care v. Aetna Cas.

• Decision Date: 09 December 1992
• Docket Number: No. 92-1856,92-1856
• Citation: 985 F.2d 1138
• Parties: 1993-1 Trade Cases P 70,136 SANDY RIVER NURSING CARE, et al., Plaintiffs, Appellants, v. AETNA CASUALTY, et al., Defendants, Appellees. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 1138

985 F.2d 1138

1993-1 Trade Cases P 70,136

SANDY RIVER NURSING CARE, et al., Plaintiffs, Appellants, v. AETNA CASUALTY, et al., Defendants, Appellees.

No. 92-1856.

United States Court of Appeals, First Circuit.

Heard Dec. 9, 1992.

Decided Feb. 25, 1993.

K. Craig Wildfang with whom Wood R. Foster, Jr., Anne K. Weinhardt, Minneapolis, MN, Sidney St. F. Thaxter, John D. Gleason, Portland, ME, Vance K. Opperman, Robert J. Schmit, Minneapolis, MN, Patrick N. McTeague, Topsham, ME, and Barnet D. Skolnik, Portland, ME, were on brief, for plaintiffs, appellants.

Richard G. Parker, Washington, DC, with whom Paul W. Chaiken, Bangor, ME, James E. Kaplan, Bath, ME, Mark F. Horning, Washington, DC, Paul Macri, Lewiston, ME, Fredric W. Yerman, New York City, Michael L. McCluggage, Chicago, IL, Harold J. Friedman, Portland, ME, Carl F. Rella, Bangor, ME, Stanley B. Block, Chicago, IL, Robert S. Frank, Robert F. Hanson, Portland, ME, William A. Montgomery, Deerfield, IL, Michael A. Nelson, Portland, ME, James van R. Springer, Washington, DC, George Z. Singal, Bangor, ME, Joseph E. Coughlin, Chicago, IL, Paul H. Friedman, Washington, DC, Randall B. Weill, Portland, ME, Alfred C. Frawley, Lewiston, ME, Peter J. Rubin, Portland, ME, Lewis V. Vafiades, Bangor, ME, and Lewis A. Noonberg, Washington, DC, were on brief, for defendants, appellees.

Stephen L. Wessler, Deputy Atty. Gen., Francis E. Ackerman, Asst. Atty. Gen., and Thomas D. Warren, Deputy Atty. Gen., on brief for the State of Me., amicus curiae.

Before SELYA, Circuit Judge, COFFIN, Senior Circuit Judge, and STAHL, Circuit Judge.

COFFIN, Senior Circuit Judge.

Plaintiffs are a group of Maine employers who claim that the defendant insurance companies illegally conspired to fix prices and conduct a boycott in a successful effort to coerce the state legislature into permitting higher rates for workers' compensation insurance. ¹ The district court granted summary judgment for defendants based on the doctrines established in Parker v. Brown, 317 U.S. 341, 63 S.Ct. 307, 87 L.Ed. 315 (1943), and Eastern R.R. Presidents Conference v. Noerr Motor Freight, 365 U.S. 127, 81 S.Ct. 523, 5 L.Ed.2d 464 (1961). ² 798 F.Supp. 810. The court concluded that plaintiffs' claimed damage--the additional cost of their insurance--was attributable to the legislation rather than to the alleged conspiracy, and that, consequently, federal antitrust laws provide no relief.

On appeal, plaintiffs contend that the court erred both in construing their claims and in immunizing defendants' actions. After carefully reviewing the record and pertinent caselaw, we conclude that the district court properly granted summary judgment for defendants. Although we depart somewhat from the court's analysis--finding that the alleged conspiracy constituted a per se violation of the Sherman Act, 15 U.S.C. § 1--we affirm the court's holding that the Parker doctrine bars plaintiffs' requested relief. ³

I. ⁴

Workers' compensation insurance has long been an extremely sensitive issue in Maine. Regulation is strict. All employers who do not self-insure are required to purchase such insurance. Insurers are "required by Maine Law to charge only those rates for workers' compensation insurance which have been filed with, and approved by, the Maine Superintendent of Insurance in conformance with Maine Law." Complt. p 32. The businesses and the insurers both have been dissatisfied with the system.

At least since 1981, NCCI and its members have taken affirmative steps to challenge the allowable rates as unfairly low. They have sought review of the Superintendent's rate decisions in court, see, e.g., National Council on Compensation Ins. v. Superintendent of Ins., 481 A.2d 775 (Me.1984) (affirming Superintendent's disapproval of a requested rate increase of 27.5%; NCCI had claimed that statistical evidence showed that a 110% increase was warranted), and consistently have lobbied for legislation that would reduce statutory benefits and permit insurers to charge higher rates. Neither their litigation nor lobbying proved successful during the period relevant to this litigation.

Indeed, to the contrary, the Maine legislature in 1985 enacted the "Workers' Compensation Competitive Rating Act," which directed that workers' compensation insurance rates be rolled back at least 8% and frozen at that level until 1987. Me.Rev.Stat.Ann. tit. 24-A, §§ 2331-2357 (1985) (repealed). Under the Act, insurers were prohibited from requesting rate increases exceeding 10% in 1987, 1988 and 1989. Id. at § 2355. In addition, the 1985 Act declared that it was intended, inter alia:

1. ... To prohibit price fixing agreements and other anticompetitive behavior by insurers.

...

3. ... To promote price competition among insurers....

Id. at § 2332.

The insurers challenged the 1985 act in court. Although the Maine Superior Court determined that the rate ceilings were so low that they were confiscatory, the court held that the ceilings were not unconstitutional because insurers were free to withdraw from the market for workers' compensation insurance in Maine. National Council on Compensation Ins. v. Superintendent of Ins., CV-85-459 (Sup.Ct. May 14, 1987) (Alexander, J.), appeal dismissed, 538 A.2d 759 (Me.1988) (dismissed as moot because 1987 legislation repealed 1985 Act).

In this lawsuit, plaintiffs assert that defendants, unable to achieve their goals legally, resorted to improper means. Plaintiffs contend that defendants allegedly conspired to fix prices at a higher-than-lawful rate and to conduct a boycott of the Maine workers' compensation market to induce legislation authorizing rate increases. As early as 1986, plaintiffs claim, defendants jointly began refusing to insure employers voluntarily, requiring them to obtain workers' compensation coverage through the "residual" or "involuntary" system. Every insurer authorized to write workers' compensation policies in Maine is required by state law to participate in the "involuntary market" and, thus, to share the underwriting responsibility for employers otherwise unable to obtain coverage. ⁵ The conspirators allegedly increased the pressure on the Maine legislature to act when, between late summer and October 1987, virtually all workers' compensation insurers in Maine prepared to withdraw from the state.

To avert the crisis that would occur if all workers' compensation insurers left, Governor John McKernan convened a special session of the legislature devoted exclusively to reviewing and reforming Maine's workers' compensation system. In short order, the legislature approved the "Workers' Compensation Rating Act" (deleting the word "competitive" that had been in the title of the 1985 Act), Me.Rev.St.Ann. tit. 24-A, §§ 2361-2374 (West 1990 and 1992 Supp.). The 1987 Act removed the limitations on rate increases contained in the 1985 Act. It authorized NCCI to act as agent for its member insurance companies by submitting joint rate proposals on their behalf to the Superintendent of Insurance, who is the ultimate decisionmaker on the rates insurers may charge. Insurers are permitted, however, to deviate below the rate approved by the Superintendent.

In 1988, 1989 and 1990, the insurers collectively applied for rates beyond the limits allowed in the 1985 Act. Each year, the Superintendent rejected the requested rate increases, but authorized lower increases that still exceeded the 10% caps set by the 1985 legislation. Plaintiffs contend that, as part of the insurers' continuing price-fixing conspiracy, defendants unlawfully agreed to charge only the maximum rates allowed by the Superintendent.

Through this lawsuit, plaintiffs seek recovery of damages in the amount of the increased premiums they have paid since the 1987 Act was passed and defendants began charging higher rates. The district court concluded that this relief was barred because the alleged harm was directly traceable to the 1987 legislation and the approval of rate increases by the Maine Superintendent of Insurance. The court relied on the well-established Parker principle, see 317 U.S. at 350-52, 63 S.Ct. at 313-14, that injury caused by anticompetitive state action is not compensable under the antitrust laws. The court further believed that defendants' actions were protected by the Noerr doctrine, see 365 U.S. at 136-40, 81 S.Ct. at 528-31, which exempts from antitrust liability the collective efforts of private actors to promote anticompetitive legislation.

Plaintiffs argue on appeal that the district court erred because it mistakenly attributed their asserted injury to state action. They contend that they were harmed not by the legislation itself but by defendants' ongoing conspiracy to obtain and charge higher rates. Parker, they insist, is therefore inapplicable. They further assert that Noerr provides no immunity for defendants because the alleged conspiracy involved classic anticompetitive economic conduct--a boycott and price-fixing--rather than political activity such as lobbying or petitioning.

Defendants respond that, regardless of the nature of the conspiracy, which they admitted solely for purposes of the summary judgment proceedings, they cannot be assessed damages based on the premium increases authorized by state law. Because that is the only injury for which plaintiffs seek relief, defendants maintain that the district court correctly granted summary judgment.

II.

The issues we face on this appeal are matters of law, and our standard of review is therefore de novo. Liberty Mutual Ins. Co. v. Commercial Union Ins. Co., 978 F.2d 750, 757 (1st Cir.1992). Although plaintiffs repeated at oral argument a complaint earlier made to the district court that they had had inadequate time to develop the facts through discovery, we do not see how additional investigation could have affected the summary judgment decision. Defendants have admitted, for purposes of their motion, that they conspired to withdraw from...