Printer Friendly

Email to A Friend

Friday July 19, 2002

Federal court validates state Holocaust insurance policy

JOE ESKENAZI
Bulletin Staff

Despite a resounding affirmation in federal court this week, it may be years before any survivors benefit from California's Holocaust Victims Insurance Relief Act -- if ever.

The hotly contested 1999 statute was declared constitutional by the 9th Circuit Court Monday via a strongly-worded 34-page decision which systematically dismantled each of the many arguments put forward by insurance company lawyers.

The decision by a three-judge panel "dealt with every claim in the case. The court disposed of them all. It's a complete victory," said Frank Kaplan, outside counsel for the state's Department of Insurance.

The consortium of insurance companies contesting the statute has until July 29 to submit a petition for an en banc -- a review by the full 9th Circuit. If the court rejects the petition or decides against the insurance companies once more, the next option is the U.S. Supreme Court. Contesting the case all the way to the nation's highest court could potentially take years.

The HVIRA requires any insurer "related" to a company that sold Holocaust-era insurance policies to report its list of European policyholders from 1920 to 1945 to the state or suffer the revocation of its insurance license.

"Until now, California has not been able to enforce the bill and this ruling, unless a higher court weighs in, is the final say. It says California has the right to require insurance companies operating within the state to turn over honest, truthful information about the histories of these effected families, information people have been searching for 55 or 60 years," said David Lash, executive director of Bet Tzedik Legal Services, which filed an amicus brief in support of the Department of Insurance.

"Access to this information died with family members who perished in the camps. The only other party that has information other than the people who died at the hands of the Nazis are the insurance companies who sold them policies."

An injunction was placed on the statute last year after a district court judge ruled it violated the U.S. constitution's foreign affairs power and its commerce and due process clauses.

The 9th Circuit Court ruled in February 2001 that HVIRA did not violate the commerce clause or foreign affairs power, and remanded the case back to district court for a ruling on the due process clause. A district court judge again ruled against the statute on the due process clause, but, on Monday, the 9th reversed that decision and vacated the injunction.

The decision penned by Judge Susan Graber reiterated the 9th's earlier position that, unlike more intrusive statutes contested in other states, the HVIRA is not an attempt to regulate foreign businesses, but "seeks only to obtain information about conduct in another jurisdiction, without effecting directly any of that conduct...a request for information is simply not equivalent to a direct regulation of out-of-state transactions."

In addition to compelling insurance companies to pay their Holocaust-era claims, the court noted it was "also likely that California's legislature simply intended to protect its residents from insurance companies that have not paid valid insurance claims." The HVIRA can also be utilized to "assure the corporate good character and financial viability of companies doing business within the state."

In response to the insurance companies' claim that the statute unfairly sought to punish them for past conduct without a judicial trial, the court responded harshly.

"Being asked to account for potentially valid insurance claims is not punishment, even if it proves embarrassing to some insurers," wrote Graber.

Gov. Gray Davis issued a statement praising the court's decision, calling upon insurers to "do the right and responsible thing."

An estimated 20,000 Holocaust survivors reside in California, with roughly 10 percent dying each year.

"The ball is in their court and we will vigorously oppose any attempt to have the injunction reinstated," said Kaplan. "It's time for these survivors to finally get the information they've been asking for. These people are elderly and they're dying."

Did you find this article interesting? Subscribe to our FREE newsletter and you'll be notified each week when "J." goes online. We'll tell you about the most important stories of the week and give you a link to each one.

This page contains a BETA version of Amazon contextual links. They are marked by the dashed underline.  Your purchases support our site. At times they point to items which are not related to the actual link. Please alert us by email if you discover objectionable links.