Sandy River Nursing Care Center v. Nat. Council, Civ. No. 91-0210-B.
| Decision Date | 18 June 1992 |
| Docket Number | Civ. No. 91-0210-B. |
| Citation | 798 F. Supp. 810 |
| Parties | SANDY RIVER NURSING CARE CENTER, et al., Plaintiffs, v. NATIONAL COUNCIL ON COMPENSATION INSURANCE, et al., Defendants. |
| Court | U.S. District Court — District of Maine |
Sidney St. F. Thaxter, Curtis, Thaxter, Stevens, Broder & Micoleau, Portland, Me., for plaintiffs.
Peter J. Rubin, Bernstein, Shur, Sawyer & Nelson, Portland, Me., for defendants.
This antitrust action is before the Court on Defendants' motion for summary judgment. The Plaintiffs allege that they were injured by workers' compensation rate increases approved by the Maine Superintendent of Insurance after the Maine legislature enacted a law in 1987 permitting insurers to apply for rate hikes exceeding ceilings allowed under prior law. The Plaintiffs complain that the 1987 legislation was enacted because insurers successfully conspired to pressure the Maine legislature by threatening to withdraw from the workers' compensation insurance market. The Plaintiffs seek to recover damages for the increased premiums they have paid since the 1987 legislation was passed and higher workers' compensation insurance rates were approved. Plaintiffs acknowledge that the premiums charged by the insurers were lawful, at least insofar as they were authorized by the legislature and approved by the Superintendent of Insurance. Because federal antitrust laws generally neither prohibit private actors from collectively seeking favorable rate legislation from States nor provide relief to persons proximately injured by legislation passed by States, Defendants' motion is GRANTED.
Thirteen Maine businesses filed this class action1 on September 12, 1991, against the National Council on Compensation Insurance ("NCCI"), an insurance rating organization, and fourteen named insurance companies together with their subsidiaries and affiliates.2 The Plaintiffs' four count complaint alleges that "the defendants entered into a conspiracy to fix the price of workers' compensation insurance sold in Maine Count I; and to effectuate that conspiracy by acting and agreeing to boycott, coerce and intimidate Maine employers Count II and Maine insurers Count III" in violation of federal antitrust law. Plaintiffs' Memorandum in Opposition to Defendants' Joint Motion for Summary Judgment at 2. Count IV of the complaint, which the Plaintiffs discussed in neither of their memoranda nor at oral argument, charges that Defendants' conduct violated Maine antitrust law as well.
Plaintiffs indicate that the true object of the suit is "Defendants' private, unsupervised conspiracy to extract higher prices from Maine employers by utilizing their i.e., Defendants' collective economic power to ... coerce and intimidate ... the State of Maine." Id. at 2-3. According to the Plaintiffs, "Defendants entered into the conspiracy ... with the objective of coercing the enactment of favorable legislation to permit these Defendants to charge the higher prices they had agreed upon." Id. at 3.
Workers' compensation insurance has long been—and remains—an extremely sensitive political issue in Maine. Regulation is strict. All employers who do not self-insure are required to purchase workers' compensation 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." Cmplt. ¶ 32.
Neither the insurers nor the insureds are happy with the regulatory regime. Businesses believe that rates are too high. Insurers believe that rates are too low. Consequently, workers' compensation is a perennial political battleground.
According to the Plaintiffs, NCCI and the insurance industry's dissatisfaction with the rates insurers were permitted to charge dates at least back to 1981. Plaintiffs' Memo at 5 (). NCCI and its members have consistently lobbied for legislation permitting them to charge higher rates and lowering statutory benefits. Between 1981 and 1985, their efforts were unsuccessful.
In 1985, the Maine legislature enacted the "Workers' Compensation Competitive Rating Act," 1985 Me.Laws Ch. 372 ("1985 Act"), rolling back workers' compensation insurance rates 8% and freezing rates at that level until 1987. Under the 1985 Act, insurers were prohibited from requesting rate increases exceeding 10% in 1987, 1988, or 1989. 24-A M.R.S.A. § 2355 (1985). In addition, the 1985 Act declared that it was intended, inter alia:
24-A M.R.S.A. § 2332 (1985).
The rate reduction and caps on future increases greatly displeased the insurance industry. The insurers attacked the 1985 Act in court, but their litigation efforts were no more successful than their lobby efforts. Although the Maine Superior Court determined that the rate ceilings were so low 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 et seq. (Alexander, J.), appeal dismissed, 538 A.2d 759 (Me.1988) ().
According to the Plaintiffs, "beginning in the late summer of 1987 and continuing through October, 1987 `virtually all insurers in the Maine Workers' Compensation Market'" prepared to withdraw from Maine. Plaintiffs' Memo at 9 (quoting affidavit of Sidney St.F Thaxter, Exhibit A). Significantly injured, insurers responsible for writing over 90% of workers' compensation in Maine filed plans for withdrawal from the state that were approved by the Superintendent of Insurance.
In the fall of 1987, facing a "potential crisis," 1987 Me.Laws 2585, Governor John McKernan convened a special session of the legislature devoted exclusively to reviewing and reforming Maine's workers' compensation system. With the State's attention focused on this issue, the legislature approved an Act to Improve the Maine Workers' Compensation System, 1987 Me. Laws Ch. 559 ("1987 Act"). The insurers recovered ground they had lost in 1985. The 1987 Act removed the limitations on rate increases contained in the 1985 Act. The 1987 Act also permitted NCCI to act as an agent for its members by submitting joint rate proposals on behalf of insurers, deemphasizing the role price competition played under the 1985 Act.
Under the 1987 Act, as under prior law, rates require state approval. Maine AFL-CIO v. Superintendent of Ins., 595 A.2d 424, 426 (Me.1991) (Brody, J.). Testimony is taken, and interested parties are permitted to participate. The Superintendent of Insurance may accept the rates proposed or set them at a "just and reasonable level." Id. There is no "negative option" permitting new rates to go into effect if the Superintendent fails to act.
In 1988, 1989, and 1990, workers' compensation insurers applied for rate hikes exceeding the limits set by the 1985 Act and repealed by the 1987 Act. Each year, the Superintendent of Insurance rejected the rate increases requested by the insurers, but authorized lower increases. Affidavit of Joseph A. Edwards at ¶¶ 19, 29.
The Plaintiffs do not allege that the insurers charged unlawful rates. See Cmplt. ¶ 32. Nor do the Plaintiffs contend that the insurers refused to sell them insurance. The Plaintiffs do not allege that they were directly injured by the Defendants' alleged conspiracy. And the Plaintiffs do not allege that they were injured before the legislature repealed the 1985 Act and the Superintendent of Insurance approved higher rates. Rather, the Plaintiffs complain that they were injured because they have been required to pay "workers' compensation insurance premiums and charges which were substantially higher than they would have been in the absence of Defendants' unlawful conspiracy." Cmplt. ¶ 55. Plaintiffs' alleged injury is directly traceable to the 1987 legislation and to the approval of rate increases by the Maine Superintendent of Insurance.
The applicable standard is familiar. Summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c).
We need not linger long over Plaintiffs' arguments that this is an inappropriate case for summary judgment. The Plaintiffs made no serious effort in their memoranda of law to identify any controverted issues of material fact. Indeed, at oral argument, Plaintiffs conceded that there are no material facts in dispute. Transcript of Hearing on Motion for Summary Judgment at 21 (April 23, 1992). In the absence of any disputed issues of material fact, this Court turns to the legal issues raised by this case.3
The dispositive issues are whether federal antitrust law provides a remedy to plaintiffs who allege that they...
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