The Department of Justice is weighing in on a landmark California case, arguing federal law doesn’t shield 16 insurers accused of allegedly conspiring to cancel homeowners’ fire coverage and push customers onto a state-run plan.
“The last thing the fire victims need is the improper use of certain legal doctrines to deprive Angelenos of their day in court,” Deputy Assistant Attorney General Charlie Beller of the Justice Department’s Antitrust Division said in a statement. “The DOJ Antitrust Division is monitoring insurer conduct across the country to ensure that an improper understanding of federal law does not preclude state or federal antitrust claims.”
The DOJ is not taking sides on the merits of the case, but rather filed a statement of interest on Monday in an effort to make sure the judge properly understands the law.
Last year, 60 homeowners filed a lawsuit in the state Superior Court of Los Angeles County alleging the homeowner insurance companies jointly conspired to cancel their fire insurance in the years leading up to the Palisades and Eaton fire, resulting in the residents having to obtain coverage under the California Fair Plan with with much less protective coverage and higher out-of-pocket costs to rebuild their homes.
While the case of Ferrier v. State Farm Fire and Casualty Company was brought under California state antitrust law, the insurance companies argue the homeowners claims should be dismissed under the Noer-Pennington doctrine — a federal legal principle that shields individuals and companies from antitrust liability when petitioning the government
“What we’re saying is, ‘No, what the plaintiffs say is not that it was illegal to set up FAIR, but that it was illegal for the insurers to work together to exclude them from certain plans under the FAIR plan,’” a senior justice department official told The California Post. “So, in its reasoning, essentially every time the government set up a FAIR like program anything the insurers did would be protected.”
“We want to make sure that this doesn’t get dismissed particularly on a legal issue that we feel strongly about,” the senior justice department official said.
Federal officials say the move is intended to deter insurers from pursuing similar strategies in other states.
“Our hope would be across the board, insurance companies are just thinking about what the legal risk is and then acting responsibly across the country,” the senior DOJ official said.
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