Humana v. Forsyth, 97303

CourtUnited States Supreme Court
Writing for the CourtGinsburg
Citation119 S.Ct. 710,525 U.S. 299,142 L.Ed.2d 753
Parties114 F.3d 1467, affirmed. SUPREME COURT OF THE UNITED STATES 119 S.Ct. 710 142 L.Ed.2d 753303 HUMANA INC., et al., PETITIONERS v. MARY FORSYTH et al. ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT [
Decision Date20 January 1999
Docket Number97303

525 U.S. 299
119 S.Ct. 710
142 L.Ed.2d 753

114 F.3d 1467, affirmed.

SUPREME COURT OF THE UNITED STATES

119 S.Ct. 710

142 L.Ed.2d 753

No. 97 303

HUMANA INC., et al., PETITIONERS v. MARY FORSYTH et al.

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

[January 20, 1999]

Justice Ginsburg delivered the opinion of the Court.

This case concerns regulation of the business of insurance by the States, as secured by the McCarran-Ferguson Act, 59 Stat. 33, as amended, 15 U.S.C. § 1011 et seq., and the extent to which federal legislation, specifically, the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1961 et seq., is compatible with state regulation. The controversy before us stems from a scheme employed by petitioner Humana Health Insurance of Nevada, Inc. (Humana Insurance), a group health insurer, to gain discounts for hospital services which the insurer did not disclose and pass on to its policy beneficiaries. The scheme is alleged to violate both Nevada law and RICO. Under the McCarran-Ferguson Act, the federal legislation may be applied if it does not "invalidate, impair, or supersede" the State's regulation. 15 U.S.C. § 1012(b).

The federal law at issue, RICO, does not proscribe conduct that the State's laws governing insurance permit. But the federal and state remedial regimes differ. Both provide a private right of action. RICO authorizes treble damages; Nevada law permits recovery of compensatory and punitive damages. We hold that RICO can be applied in this case in harmony with the State's regulation. When federal law is applied in aid or enhancement of state regulation, and does not frustrate any declared state policy or disturb the State's administrative regime, the McCarran-Ferguson Act does not bar the federal action.

I

Plaintiffs in the District Court, respondents in this Court, are beneficiaries of group health insurance policies issued by Humana Insurance. Between 1985 and 1988, plaintiffs-respondents received medical care from the Humana Hospital-Sunrise, an acute care facility owned by codefendant (now copetitioner) Humana Inc. Humana Insurance agreed to pay 80% of the policy beneficiaries' hospital charges over a designated deductible. The beneficiaries bore responsibility for payment of the remaining 20%. But pursuant to a concealed agreement, the complaint in this action alleged, the hospital gave Humana Insurance large discounts on the insurer's portion of the hospital's charges for care provided to the policy beneficiaries.1 As a result, Humana Insurance paid significantly less than 80% of the hospital's actual charges for the care that policy beneficiaries received, and the beneficiaries paid significantly more than 20% of those charges.2

The employee beneficiaries brought suit in the United States District Court for the District of Nevada,3 alleging that Humana Insurance and Humana Inc. violated RICO through a pattern of racketeering activity consisting of mail, wire, radio, and television fraud.4 Defendants Humana Insurance and Humana Inc. moved for summary judgment, citing §2(b) of the McCarran-Ferguson Act, which provides:

"No Act of Congress shall be construed to invalidate, impair, or supersede any law enacted by any State for the purpose of regulating the business of insurance, or which imposes a fee or tax upon such business, unless such Act specifically relates to the business of insurance." 15 U.S.C. § 1012(b).

The District Court granted the motion. In that court's view, RICO's private remedies, including the federal statute's treble damages provision, 18 U.S.C. § 1964(c), so exceeded Nevada's administrative penalties for insurance fraud, see infra, at 10 11, that applying RICO to the alleged conduct would have been "tantamount to allowing Congress to intercede in an area expressly left to the states under the McCarran-Ferguson Act," 827 F. Supp. 1498, 1521 1522 (Nev. 1993).5

The Ninth Circuit reversed in relevant part. See 114 F.3d 1467, 1482 (1997). In Merchants Home Delivery Serv., Inc. v. Frank B. Hall & Co., 50 F.3d 1486 (1995), a decision handed down after the District Court rejected the policy beneficiaries' right to sue under RICO in this case, the Court of Appeals adopted a "direct conflict" test for determining when a federal law "invalidate[s], impair[s], or supersede[s]" a state law governing insurance. As declared in Merchants Home, the McCarran-Ferguson Act does not preclude "application of a federal statute prohibiting acts which are also prohibited under a state's insurance laws." Id., at 1492. Guided by Merchants Home, and assuming that Nevada law provided for administrative remedies only, the Ninth Circuit held that the McCarran-Ferguson Act did not bar suit under RICO by the Humana Insurance policy beneficiaries. See 114 F.3d, at 1480. Circuit courts have divided on the question presented: Does a federal law, which proscribes the same conduct as state law, but provides materially different remedies, "impair" state law under the McCarran-Ferguson Act? 6 We granted certiorari to address that question. 523 U.S. ___ (1998).

II

Prior to our decision in United States v. South-Eastern Underwriters Assn., 322 U.S. 533 (1944), we had consistently held that the business of insurance was not commerce. See, e.g., Paul v. Virginia, 8 Wall. 168, 183 (1869) ("Issuing a policy of insurance is not a transaction of commerce."); see also South-Eastern, 322 U.S., at 544, n. 18 (collecting cases relying on the Paul generalization). The business of insurance, in consequence, was largely immune from federal regulation. See St. Paul Fire & Marine Ins. Co. v. Barry, 438 U.S. 531, 539 (1978) ("[T]he States enjoyed a virtually exclusive domain over the insurance industry."). In South-Eastern, we held for...

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209 practice notes
  • Black Radio Network, Inc. v. Nynex Corp., No. 96 CIV. 4138(DC).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • April 14, 1999
    ...against all actions based in state law." Id. at 1966-67. Another recent Supreme Court case, Humana Inc. v. Forsyth, ___ U.S. ___, 119 S.Ct. 710, 142 L.Ed.2d 753 (1999), does not involve the filed rate doctrine, but nonetheless undermines defendants' assertion that plaintiffs' RICO clai......
  • State v. United States Dep't of Health, Nos. 11–11021
    • United States
    • United States Courts of Appeals. United States Court of Appeals (11th Circuit)
    • August 12, 2011
    ...the Commerce Clause. What's more, Congress has hardly abdicated its role in regulating the insurance business. See Humana Inc. v. Forsyth, 525 U.S. 299, 311, 314, 119 S.Ct. 710, 142 L.Ed.2d 753 (1999) (holding that federal RICO statute—which is itself grounded in the Commerce Clause—may be ......
  • In Re Title Insurance Antitrust Cases., Case No. 1:08CV677.
    • United States
    • United States District Courts. 6th Circuit. United States District Court of Northern District of Ohio
    • March 31, 2010
    ...claim would “invalidate, impair, or supersede” the relevant Ohio insurance laws. (Plaintiffs' Objections at 21, quoting Humana v. Forsyth, 525 U.S. 299, 307, 119 S.Ct. 710, 142 L.Ed.2d 753 (1999) (internal citation omitted)). Defendants insist that such a consideration was not necessary, su......
  • Prop. Cas. Insurers Ass'n of Am. v. Donovan, No. 13 C 8564
    • United States
    • United States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)
    • September 3, 2014
    ...the court answers all three inquiries in the affirmative, the federal statute must give way to state law. Id. In Humana Inc. v. Forsyth, 525 U.S. 299, 119 S.Ct. 710, 142 L.Ed.2d 753 (1999), the Supreme Court rejected the view that the McCarran–Ferguson Act created “any sort of field preempt......
  • Request a trial to view additional results
208 cases
  • In Re Title Insurance Antitrust Cases., Case No. 1:08CV677.
    • United States
    • United States District Courts. 6th Circuit. United States District Court of Northern District of Ohio
    • March 31, 2010
    ...claim would “invalidate, impair, or supersede” the relevant Ohio insurance laws. (Plaintiffs' Objections at 21, quoting Humana v. Forsyth, 525 U.S. 299, 307, 119 S.Ct. 710, 142 L.Ed.2d 753 (1999) (internal citation omitted)). Defendants insist that such a consideration was not necessary, su......
  • Ojo v. Farmers Group, Inc., No. 06-55522.
    • United States
    • U.S. Court of Appeals — Ninth Circuit
    • May 12, 2009
    ...tax upon such business, unless such Act specifically relates to the business of insurance." Id. § 1012(b); see als Humana Inc. v. Forsyth, 525 U.S. 299, 306-07, 119 S.Ct. 710, 142 L.Ed.2d 753 (1999). In sum, the Act "establishes a form of inverse preemption" which prevents a federal law of ......
  • Ames Dep't Stores, Inc. v. Lumbermens Mut. Cas. Co. (In re Ames Dep't Stores, Inc.), Case No. 01–42217 (REG) Jointly Administered
    • United States
    • United States Bankruptcy Courts. Second Circuit. U.S. Bankruptcy Court — Southern District of New York
    • December 7, 2015
    ...interests.").103 In re MF Global Holdings Ltd., 469 B.R. 177, 194 n. 17 (Bankr.S.D.N.Y.2012) (J. Glenn); see also Humana Inc. v. Forsyth, 525 U.S. 299, 307, 119 S.Ct. 710, 142 L.Ed.2d 753 (1999) ("Humana ").104 See, e.g., Lawski v. Frontier Insurance Grp., LLC (In re Frontier Insurance Grp.......
  • Mullinax v. Radian Guar. Inc., No. 1:00CV01247.
    • United States
    • United States District Courts. 4th Circuit. Middle District of North Carolina
    • January 25, 2002
    ...the Act prevents the application of a federal law, thus allowing state law preemption, in certain circumstances. Humana Inc. v. Forsyth, 525 U.S. 299, 306-07, 119 S.Ct. 710, 716, 142 L.Ed.2d 753 (1999). Initially, the party seeking to invoke the Act must identify a state law that affects "t......
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1 books & journal articles
  • RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS
    • United States
    • American Criminal Law Review Nbr. 58-3, July 2021
    • July 1, 2021
    ...proceedings before State Public Service Commission, where action was tried solely on federal claims); see also Humana, Inc. v. Forsyth, 525 U.S. 299, 313–14 (1999) (holding private suit under federal RICO against medical insurer does not frustrate state policies and, therefore, is not block......

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