Justice Antonin Scalia and Insurance

Associate Justice Antonin G. Scalia, 1936 - 2016

U.S. Supreme Court Associate Justice Antonin G. Scalia passed away unexpectedly last Saturday. My condolences go out to his family and loved ones. Love him or hate him (and it appears plenty of people did both,) Justice Scalia had an immense influence on this country’s legal system. He was devoted to the idea that judges should interpret the U.S. Constitution the way its authors intended. His sometimes colorful opinions disdained the idea of the Constitution as a document that should adapt to the times.

As we remember this larger-than-life jurist, it’s interesting to survey his opinions on cases that affected the insurance industry. From his appointment in 1986 until last week, the court considered 1,830 cases that included the word “insurance” (according to Google Scholar.) Trust me; I didn’t look at all of them. What follows are a handful of cases on which he wrote majority or dissenting opinions. This survey does not include insurance-related cases in which he concurred or dissented but did not write opinions.

• Writing for a unanimous court in 2003, Justice Scalia held in Kentucky Association of Health Plans, Inc. v. Miller that the federal Employee Retirement Income Security Act (ERISA) does not pre-empt certain state laws. However, the exception applies only to laws that 1) are specifically directed toward entities engaged in insurance; and 2) substantially affect the risk pooling arrangement between the insurer and the insured.
• In a major 1993 decision, Hartford Fire Ins. Co. v. California, he sided with the majority. They held that the McCarran-Ferguson Act’s exemption from anti-trust laws did not protect domestic insurers who acted together with foreign reinsurers. However, he disagreed with the majority’s conclusion that the insurers’ actions amounted to a boycott, as McCarran-Ferguson uses that term. He also dissented from the decision to apply U.S. anti-trust law to those reinsurers.
• In 2002, he wrote for the majority in Great-West Life & Annuity Ins. Co. v. Knudson that ERISA does not authorize court-ordered reimbursement to an insurance plan for its payments when the claimant wins damages from a third party.
• In 2003, he dissented from a decision that threw out a $145 million punitive damages award against State Farm. He argued that the Constitution does not protect against excessive or unreasonable awards of such damages.
• In 2000, he wrote for a unanimous court on a bankruptcy case. The bankrupt business owed its insurer $50,000 in delinquent Workers’ Compensation premium. The business’s bank was the secured creditor in the case, so the insurer went after the bank for the premiums. Justice Scalia ruled that the federal bankruptcy law does not permit a third-party creditor to recover that way.
• In 1998, he wrote again for a unanimous court, siding with the Internal Revenue Service in a dispute with Atlantic Mutual over the meaning of the term “reserve strengthening.”

Justice Scalia used some of his sharpest words in opinions related to the Affordable Care Act. I think it’s reasonable to conclude that he was not a fan:

“The dissent treats the Constitution as though it is an enumeration of those problems that the Federal Government can address — among which, it finds, is ‘the Nation's course in the economic and social welfare realm,’ ..., and more specifically ‘the problem of the uninsured,’ ... The Constitution is not that. It enumerates not federally soluble problems, but federally available powers. The Federal Government can address whatever problems it wants but can bring to their solution only those powers that the Constitution confers, among which is the power to regulate commerce. None of our cases say anything else. Article I contains no whatever-it-takes-to-solve-a-national-problem power.” (National Federation of Independent Business v. Sebelius, 2012, pertaining to the Act’s so-called individual mandate)

“Words no longer have meaning if an Exchange that is not established by a State is ‘established by the State.’ … Under all the usual rules of interpretation, in short, the Government should lose this case. But normal rules of interpretation seem always to yield to the overriding principle of the present Court: The Affordable Care Act must be saved…The Court's next bit of interpretive jiggery-pokery involves other parts of the Act that purportedly presuppose the availability of tax credits on both federal and state Exchanges… The Court claims that the Act must equate federal and state establishment of Exchanges when it defines a qualified individual as someone who (among other things) lives in the ‘State that established the Exchange,’ ... Otherwise, the Court says, there would be no qualified individuals on federal Exchanges, contradicting (for example) the provision requiring every Exchange to take the ‘`interests of qualified individuals'’ into account when selecting health plans. ... Pure applesauce… For its next defense of the indefensible, the Court turns to the Affordable Care Act's design and purposes…The Court's decision reflects the philosophy that judges should endure whatever interpretive distortions it takes in order to correct a supposed flaw in the statutory machinery…This Court, however, concludes that (a) limitation would prevent the rest of the Act from working as well as hoped. So it rewrites the law to make tax credits available everywhere. We should start calling this law SCOTUScare…And the (NFIB and King cases) will publish forever the discouraging truth that the Supreme Court of the United States favors some laws over others, and is prepared to do whatever it takes to uphold and assist its favorites.” (King v. Burwell, 2015, which held that health insurance premium tax credits are available to taxpayers who live in states that did not establish their own health benefit exchanges)

I disagreed with many of Justice Scalia’s legal opinions on a wide variety of issues. Regardless, his was one of the great legal minds of our time. He left an indelible mark on American law and society. I’ll leave it to others to argue over whether that mark was for good or ill. Rather, I’ll salute his intellect and his devotion to public service. May he rest in peace.

Comments

[Insurance]

Nice article,Thanks for the information.

[Benjamin]

Can't believe he's dead. I wonder if the Republicans will be able to stop a new judge from being placed.

[Tim Dodge]

The Senate will have to confirm a new justice eventually, though it may not be until after the election.