The Fifth Circuit Court of Appeals affirmed a District Court ruling in "concluding that a sham arbitration cannot be used as a device to bring about an unlawful (structured settlement) transfer." The Court rejected yet another attempt by Rapid Settlements to invoke the Federal Arbitration Act by invoking McCarran Ferguson Act, which relates to the business of insurance. The Fifth Circuit concluded " we are loathe to read the Federal Arbitration Act to provide an end around this dually secured line of protection"
"Fifth Circuit Turns Rapid Settlements into Roadkill?"
The fact that the Fifth Circuit invokes McCarran-Ferguson raises an interesting issue that deserves further exploration, but first some background:
According to Wikipedia, the McCarran-Ferguson Act does not itself regulate insurance, nor does it mandate that states regulate insurance. However, it does empower Congress to pass laws in the future that will have the effect of regulating the "business of insurance." However, federal acts that do not expressly purport to regulate the "business of insurance" will not preempt state laws or regulations that regulate the "business of insurance."
The Act also provides that federal anti-trust laws will not apply to the "business of insurance" as long as the state regulates in that area, but federal anti-trust laws will apply in cases of boycott, coercion, and intimidation.
If the 5th Circuit, by invoking McCarran -Ferguson has concluded that structured settlement transfers are "the business of insurance" then why the heck don't state insurance departments in the Fifth Circuit require that companies such as Rapid Settlements possess licenses to operate in states within the circuit and be subject to truth in advertising laws like the rest of us who engage in the "business of insurance". Following the same logic, what about the other states or circuits which have draw the same conclusion in denying Rapid's attempts to use arbitration to do an "end around" state structured settlement protection acts.