Miley v. John Hancock Mutual Life Insurance Co., Civ. A. No. 56-682.
| Decision Date | 11 April 1957 |
| Docket Number | Civ. A. No. 56-682. |
| Citation | 148 F. Supp. 299 |
| Parties | J. Thomas MILEY v. JOHN HANCOCK MUTUAL LIFE INSURANCE COMPANY, Boston Mutual Life Insurance Company, Columbian National Life Insurance Company, Loyal Protective Life Insurance Company, Monarch Life Insurance Company, New England Mutual Life Insurance Company, Paul Revere Life Insurance Company, State Mutual Life Assurance Company of Worcester, Clarence W. Wyatt, Edward A. Green, Alan R. Willison, John Hill, Theodore W. Fabisak, Joseph A. Humphreys, John M. Deely, Horace Gooch, Jr. and Carl A. Sheridan. |
| Court | U.S. District Court — District of Massachusetts |
Devine, York & Volpe, Boston, Mass., for plaintiff.
Charles K. Dunn, Boston, Mass., for defendant Fabisak.
Choate, Hall & Stewart, Boston, Mass., for defendants New England Mut. Life Ins. Co., Paul Revere Life Ins. Co., Monarch Life Ins. Co., and John Hill.
Ropes, Gray, Best, Coolidge & Rugg, Boston, Mass., for defendants State Mut. Life Assur. Co. and Alan R. Willison.
Lyne, Woodworth & Evarts, Boston, Mass., for defendants John Hancock, Monarch Life Ins. Co., Boston Mut. Life Ins. Co., Clarence W. Wyatt, Edward A. Green.
Withington, Cross, Park & McCann, Boston, Mass., for defendant Columbian Nat. Life Ins. Co. and Loyal Protective Life Ins. Co.
George Fingold, Atty. Gen., Joseph H. Elcock, Jr., Asst. Atty. Gen., for defendants Theo. W. Fabisak, Joseph A. Humphreys, J. A. Deely, Horace Gooch, Carl A. Sheridan.
Warren C. Lane, Jr., Worcester, Mass., for defendant Horace Gooch, Jr.
Order Affirmed April 11, 1957. See 242 F.2d 758.
This is an action brought under the Sherman Antitrust Act, §§ 1, 7, 15 U.S. C.A. §§ 1 and 15 note. Plaintiff is an insurance broker licensed in Massachusetts. Defendants are eight Massachusetts insurance companies, four individual officers of such companies, and the five members of the state employees' group insurance commission established by Mass.G.L. Ch. 32A ().
The allegations of the complaint may be summarized as follows. The members of the commission invited life insurance companies doing business in Massachusetts to submit by December 1, 1955, bids or proposals for group life, accidental death and dismemberment insurance, and group hospital, surgical and medical coverage for employees of the Commonwealth in accordance with specifications established by the commission. Miley arranged for submission of a joint bid by Minnesota Mutual Life Insurance Company (hereinafter called Minnesota), a Minnesota corporation licensed to do business in Massachusetts, and Blue Cross and Blue Shield. Minnesota under this proposal offered a rate of 90 cents per month per thousand dollars on the life, accidental death and dismemberment portions of the plan. Among the other proposals submitted was a joint bid by the insurance company defendants (except Boston Mutual Life Insurance Company hereinafter called Boston), which included a rate of $1.20 for that portion of the insurance covered by Minnesota's 90 cent rate.
It is alleged that thereupon the members of the commission ascertained that Blue Cross and Blue Shield would provide the same medical, surgical and hospital coverage included in its offer with Minnesota in conjunction with any insurance company offering a rate as low as Minnesota's for the life, accidental death and dismemberment coverage. It is then charged that the defendants (except Boston) entered into a combination or conspiracy to equal or better Minnesota's offer and deprive Minnesota of the contract, that the various insurance companies involved could not offer a rate below the $1.20 rate they had filed with the insurance commissioner of New York without jeopardizing their right to do business in that state, that thereupon Boston, which did not do business in New York, was brought into the combination, that Boston submitted an offer at the 90 cent rate and was awarded the contract by the members of the commission, and thereupon allotted 95 per cent of the insurance to the other defendant companies by way of reinsurance.
Plaintiff alleges that he suffered injury because as a result of this combination or conspiracy Minnesota failed to receive the contract and as a result plaintiff was deprived of compensation he would have received for servicing this contract and of commissions and service fees for new business which would have resulted had said contract been awarded to Minnesota.
Defendants move to dismiss, urging several grounds in support of their contention that complaint fails to state a claim upon which relief may be granted under the Sherman Act.
The first issue is as to the effect of the McCarran-Ferguson Act, 15 U.S.C.A. §§ 1011-1015, providing for continued regulation and taxation of the insurance business by the states. Under § 1012(b) it is provided that the Sherman Act "shall be applicable to the business of insurance to the extent that such business is not regulated by State law."
Mass.G.L. Ch. 32A establishes a program of group insurance for the benefit of employees of the Commonwealth. It establishes the state employees group insurance commission with authority to establish such reasonable rules and regulations as may be necessary for the administration of the act. The chapter provided that the state commissioner of insurance, the official charged by statute with the administration of the state laws regulating the insurance business, shall be one of the five members of this commission. It provides in § 4 that the commission shall negotiate with and purchase, on such terms as it deems in the best interest of the Commonwealth and its employees, from one or more insurers a policy or policies for the insurance coverages provided by the chapter. This chapter thus provides a statutory scheme of regulation covering the very transaction complained of here. The commission was not required to invite bids or to...
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