Recent decisions in insurance cases have permitted the introduction of an affirmative defense as a reason for dismissal of a complaint. The decisions have come principally if not exclusively in lender force-placed insurance ("LFPI") cases. The arguments in these cases spotlight many of the reasons that the filed rate doctrine does not belong in insurance cases of any kind.
A recent illustration was previously commented on November 12, 2015: Trevathan v. Select Portfolio Servicing, Inc., No. 15-61175-CIV-DIMITROULEAS/SNOW, 2015 WL 6913144 (S.D. Fla. November 6, 2015). A few more comments are in order here.
It will be recalled that as posted here on November 12, the holding in this recent LFPI case was that since the premium "rate" charged by the insurance company defendant in that case for lender force-placed insurance was previously "filed" and approved by the Florida Office of Insurance Regulation ("OIR," the equivalent of a Florida Insurance Commissioner), then the filed rate doctrine applied and barred all of the plaintiff's claims involving "inflated premiums," i.e., premiums charged as part of a kickback scheme.
That might be a valid holding on a motion for summary judgment after a fully developed record of fact. That is not this case. The November 6th holding was on motions to dismiss. The District Judge apparently did not like any of the plaintiff's claims; the Court dismissed all of them. The plaintiff's "inflated premium" claims were dismissed with prejudice. (After a review of the dismissed complaint on PACER, "Public Access to [Federal] Court Electronic Records," I have to admit that I am at a loss as to which of the alleged claims is an "inflated premium" claim since I did not find any claims that were alleged as such.)
The Court's decision to dismiss with prejudice under the filed rate doctrine was based on an Eleventh Circuit decision in a utilities regulation case. The Eleventh Circuit said in that case:
As it applies in the telecommunications industry, the filed rate doctrine dictates that the rates a carrier charges its customers, once filed with and approved by the FCC, become “the law” and exclusively govern the rights and liabilities of the carrier to the customer:
Not only is a carrier forbidden from charging rates other than as set out in its filed tariff, but customers are also charged with notice of the terms and rates set out in that filed tariff and may not bring an action against a carrier that would invalidate, alter or add to the terms of the filed tariff.
Evanns v. AT&T Corp., 229 F.3d 837, 840 (9th Cir.2000) (internal footnotes omitted).
Therefore, causes of action in which the plaintiff attempts to challenge the terms of a filed tariff are barred by the filed rate doctrine.
Hill v. Bellsouth Telecommunications, Inc., 364 F.3d 1308, 1315 (11th Cir. 2004). [Emphasis added.] It is clear under the cited authorities that the filed rate doctrine can only bar claims when the plaintiff making those claims is also the regulated utility's customer. This is not the case with LFPI claims. Even if some providers of insurance policies to lenders for forced placement may sometimes call homeowners their "customers," that is clearly not plausible. Lenders are the customers of insurance companies offering policies for forced placement by lenders, not homeowners.
Immediately after the observation cited by the District Court in this recent LFPI case that the filed rate doctrine operates to prevent discrimination among customers, the Eleventh Circuit made clear that this reference was to the protection afforded by the filed rate doctrine to prevent "carriers from negotiating a lower rate with some customers and then charging others the rate filed with the FCC." Hill v. Bellsouth Telecommunications, Inc., 364 F.3d 1308, 1316 (11th Cir. 2004). [Emphasis added.] No case is known in which any insurance carrier providing insurance for forced placement by lenders ever attempted to negotiate a lower rate with a homeowner for the premium placed on the homeowner by force.
Further, the District Judge in this recent LFPI case relied on "documents" attached to ASIC's motion to dismiss. In fact, the District Judge took judicial notice of them. The documents were a declaration with three exhibits. See them for yourself via PACER: Trevathan v. Select Portfolio Servicing, Inc., Docket No. 18-1, filed July 2, 2015 (S.D. Fla. Case No. 15-cv-61175). They total 17 pages inclusive of 4 pages of cover sheets with nothing but exhibit stickers on them. If this was the proof of ASIC's "filed rate doctrine" defense, it does not appear in the least to be legally sufficient.
Parenthetically, ASIC also filed a second declaration with exhibits on July 2, 2015. The District Judge in this recent LFPI case did not mention that one in his opinion. However, we will mention it in a future article most likely. You can access PACER in the meantime if you want to see this second declaration with exhibits filed on July 2, 2015 at Trevathan v. Select Portfolio Servicing, Inc., Docket No. 18-2, filed July 2, 2015 (S.D. Fla. Case No. 15-cv-61175).
To ASIC's and the declarant's credit, they did not attempt to say that 10 pages of exhibits in Docket No. 18-1 with text on them constituted ASIC's rate filing. But that is the point in a way. In Florida, a lot more goes into a rate filing with the Florida Office of Insurance Regulation than the 10 pages in the Electronic Court File here. Among many other things, each homeowner's insurance rate filing and each "dwelling insurance" rate filing shall include "expense factors" such as "[c]ommissions and brokerage," for starters under the Florida Administrative Code. See Rule 69O-170.014, F.A.C. concerning ratemaking and rate filing procedures for homeowners insurance; Rule 69O-170.141, F.A.C. concerns the same things as to dwelling insurance. Both of them in turn depend on compliance also with Rule 69O-170.013(3), F.A.C., as do many of the Florida's insurance ratemaking and rate filing procedures. That Rule is not brief, as you can see for yourself here:
(3) Filing Submittal Requirements.
(a) Complete rate, rule, underwriting guidelines for both new and renewal business, and form filings shall be submitted with the following information:
Form OIR-B1-582, “Universal Standardized Data Letter,” as adopted in Rule 69O-170.015, F.A.C.
Cover letter that shall include, at a minimum:
The purpose of the filing;
For rate and rule filings, an identification as to whether the filing is made under “file and use” or “use and file”, including the proposed effective date of the rates or the date the rates were implemented;
If this is a resubmission of a previous file, a brief explanation of the prior filing, including reference to the corresponding Florida filing log number shall be provided;
For a rate filing for which a form is also being filed, identification of the corresponding filing log number for the form or when the form will be submitted;
Explanatory memorandum which shall:
Explain the organization of the components of the filing;
Identify and highlight the changes from the current situation;
Include any explanation required by Rule 69O-170.006, F.A.C.;
If there is no rate effect, a detailed explanation of how it was so determined or why it is believed that there is no rate effect.
For filings with a rate effect, an actuarial opinion and supporting memorandum prepared pursuant to Rule 69O-170.0135, F.A.C.
Filing procedures and content required for specific lines of business as delineated in the following rules:
Rule 69O-170.014, F.A.C., (Homeowners and Mobile Homes);
Rule 69O-175.003, F.A.C., (Private Passenger Auto);
Rule 69O-170.0141, F.A.C., (Dwelling);
Rule 69O-170.0142, F.A.C., (Commercial Residential/All Other Property & Casualty);
Rule 69O-170.0143, F.A.C. (Professional Liability for Medical Malpractice); and
Manual pages formatted in compliance with Rule 69O-170.006(2), F.A.C. Subsequent to the initial filing, the insurer may defer submitting final amended manual pages until the Office concludes its analysis. Final approval will not occur until final manual pages have been submitted.
(b) All filings shall:
Be separated into either rate/rule only or form only filings; and
Be separated by line of business in accordance with Rule 69O-170.006, F.A.C.
(c) Group Filings. Insurers may submit a filing on behalf of any combination of insurers within the insurers' group, provided the effective dates are identical for every insurer and the program is identified in the filing.
But the documents filed with the Court in this recent LFPI case were brief. They did not constitute ASIC's rate filing by any stretch of the imagination. There was no rate filing for homeowner's insurance in the record of this case when the Court ruled that the "filed rate doctrine" applied in this recent LFPI case and there is no rate filing in the Electronic Court Record now either.
Unless the current "plausibility" standard to state a claim upon which relief can be granted in Federal Courts has somehow abolished the following rule, it had been the rule that in order to justify dismissal of a complaint based on an affirmative defense that application of the affirmative defense must appear from the face of the complaint. Assuming that that rule somehow survives, including in the U.S. District Court for the Southern District of Florida, it is difficult at best to see how the filed rate doctrine defense was made to appear from the face of the complaint in the Electronic Court File of this recent LFPI case.
Much more could be said. But the time has come to be content with one final observation here: Parties and Courts accepting the filed rate doctrine as a bar to any insurance-related claim are really saying that the Florida Office of Insurance Regulation approves premium rates that include the kickbacks alleged in LFPI cases including this one. The Florida OIR would certainly be surprised by that assertion.
That the filed rate argument is even raised and accepted in such cases says more perhaps about LFPI litigation than about the filed rate doctrine.
Please Read The Disclaimer. ©2015 by Dennis J. Wall, author of Litigation and Prevention of Insurer Bad Faith (3d ed. Thomson Reuters West in 2 Volumes, with 2015 Supplements). For a special podcast of "Litigation and Prevention of Insurer Bad Faith" on the subject of Lender Force-Placed Insurance Practices, visit the West Legal Current Podcast here. All rights reserved.
Comments