St. Paul Fire & Marine Insurance Company v. Barry

PETITIONER: St. Paul Fire & Marine Insurance Company
RESPONDENT: Barry
LOCATION: Allied Structural Steel Company: Industrial Construction Division

DOCKET NO.: 77-240
DECIDED BY: Burger Court (1975-1981)
LOWER COURT: United States Court of Appeals for the First Circuit

CITATION: 438 US 531 (1978)
ARGUED: Mar 27, 1978
DECIDED: Jun 29, 1978

ADVOCATES:
Daniel M. Friedman - for the United States, as amicus curiae, by special leave of Court
Leonard Decof - for respondents
Sidney S. Rosdeitcher - for petitioners

Facts of the case

Question

Media for St. Paul Fire & Marine Insurance Company v. Barry

Audio Transcription for Oral Argument - March 27, 1978 in St. Paul Fire & Marine Insurance Company v. Barry

Audio Transcription for Opinion Announcement - June 29, 1978 in St. Paul Fire & Marine Insurance Company v. Barry

Warren E. Burger:

The judgment and the opinion of the Court in 77-240 St. Paul Fire & Marine Insurance Company against Barry will be announced by Mr. Justice Powell.

Lewis F. Powell, Jr.:

The respondents in this case are licensed physicians who practice in Rhode Island and some of their patients.

Petitioners are the only four insurance companies that write medical malpractice insurance in that state.

Reacting to what has been termed the medical malpractice crisis.

Petitioner St. Paul Fire and Marine Insurance company, the largest of these four insurers announce that it would not renew medical malpractice coverage on an occurrence basis.

It would write this insurance but only on a “claims made” basis.

This basis affords substantially less coverage.

It protects a position only against claims actually filed during the life of the policy.

The physicians charge in this case that the other three insurance companies, the only ones that wrote malpractice insurance in Rhode Island other than St. Paul agreed not to accept applications for any type of insurance from physicians and other medical personnel who were policy holders at St. Paul's.

It was aware that this was an illegal boycott intended to force these policy holders to accept the new limited coverage offered by St. Paul.

Under the McCarran-Ferguson Act, the federal antitrust laws are wisely preempted by State Regulation of the business of insurance, but the Sherman Act remains applicable, “to any agreement by insurance companies to boycott, coerce, or intimidate.

The district court dismissed the complaint on the basis of the McCarran-Ferguson Act.

The Court of Appeals for the first circuit reversed.

It held that the boycott clause provides a measure of protection to policy holders when they are victimized by private conspiracies of insurance companies where these occur outside of any regulatory or co-operative arrangement established under the laws of the state.

For the reason stated in the opinion file with the clerk today, we affirm the judgment of the Court of Appeals.

We hold that the policy holders may be victims of practices falling within the reach of the boycott exception and that the complaint in this case does alleged a boycott but our opinion states that there are limits to today's decision.

We do not hold that the Sherman Act is applicable to all private agreements in the insurance business and we emphasize that this is not a case where the State has decided that regulatory policy, in the public interest, requires a particular allocation of risk among insurers or authorized insurers to decline to accept particular risks.

Mr. Justice Stewart has filed the dissenting opinion in which Mr. Justice Rehnquist has joined.

Warren E. Burger:

Thank you, Mr. Justice Powell.