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Friday June 16, 2000

Holocaust-era insurers win latest round in legal battle

ANDY ALTMAN-OHR
Bulletin Staff

In issuing a temporary injunction last Friday in Sacramento, U.S. District Judge William Shubb gave indication he will declare the law unconstitutional when he makes a final ruling, said one attorney.

Frank Kaplan, a lawyer representing the state Department of Insurance, admitted Monday that, based on Shubb's ruling, "there's a probability for success" for the companies that filed the lawsuit.

Lawyers for the department countered by filing an appeal in the 9th U.S. Circuit Court of Appeals this week.

If the law winds up being declared unconstitutional, "that would be horrible and unfair," said San Francisco's William J. Lowenberg, a Holocaust survivor and longtime survivors' advocate.

As it is, the temporary injunction is "sad and unfair," he said.

In a 34-page order, Shubb wrote that the California law "is meddling in foreign commerce entirely outside its borders."

He also asserted that the law "has great potential for disruption or embarrassment" and that a Washington, D.C.-based international commission on Holocaust-era insurance matters "should be regarded as the exclusive remedy."

Kaplan, reached by phone in his Los Angeles office, said, "While we have great respect for the court, we believe the court's decision was legally erroneous."

A decision on the appeal could take "three or four months," he added. It will likely be heard in San Francisco.

Until that time, California's Holocaust Victim Insurance Relief Act and its accompanying regulations will not be enforceable by Quackenbush and his department.

The 1999 law mandates that the insurance commissioner revoke the state licenses of any firm that fails to submit lists of its 1920-to-1945 European policy-holder lists to California officials.

The state wants to use those lists to help get compensation on unpaid claims for many of California's estimated 20,000 Holocaust survivors as well as the heirs of deceased policy-holders.

The deadline for submissions was April 7, but a handful of insurers filed lawsuits before that date, arguing the law was unconstitutional and that Quackenbush had no authority to regulate European firms.

A spokesperson for the American Insurance Association, which filed a lawsuit on behalf of European insurers and their U.S. affiliates, praised the preliminary injunction.

"We were gratified with the judge's ruling and we look forward to having our day in court," Paula Nowakowski said Monday.

Lowenberg contends that the current court battle is just the latest in a long line of stall tactics used by the European insurance companies.

"Most survivors are 80 and 90 years old now, and they're dying by the thousands," said Lowenberg, a 73-year-old native of Holland.

He blasted the insurance companies for denying claims in an unfair fashion, such as demanding that beneficiaries show death certificates for relatives who were killed in concentration camps.

"The audacity to make statements like that is unbelievable," he said.

Kaplan said the insurance companies' general unwillingness to act in good faith is the main reason why California needed to enact a law in the first place.

"We don't think that the federal government [in this situation] has the exclusive authority to deal with Holocaust insurance matters. We feel that survivors won't get the information they need without statutes like the California statute."

Kaplan said the June 6 hearing wasn't a complete loss for the Department of Insurance.

Shubb dismissed two insurance company lawsuits. One sought to stop California from extending the statute of limitations to file Holocaust-era claims; the other sought to deny California the right to suspend the licenses of companies that don't pay claims.

In ruling on the state law, however, Shubb felt it could interfere with the federal government's control over foreign policy and commerce.

None of the companies "deny that the Holocaust was a terrible atrocity," the judge wrote. "And none of [them] deny that the victims and their heirs and beneficiaries should be compensated."

However, he added, "this goal may not be achieved through unconstitutional means."

He ruled that the California law conflicts with the cooperative spirit of the International Commission on Holocaust Era Insurance Claims.

That group, led by former Secretary of State Lawrence Eagleburger, was formed to investigate European insurers and help settle claims, but it has been criticized by many Jews as being slow and ineffective.

Additionally, Shubb said California was out of bounds in demanding complete pre-World War II policy-holder lists from the insurers.

"The required records are not in any way tailored toward California citizens," he wrote.

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