California Court of Appeal Adopts Filed Rate Doctrine for Insurance Rate Filings


In MacKay v. Superior Court (21st Century Insurance Company), B220469 & B223772, the Second Appellate District of the California Court of Appeal, Division 3, held that the "filed rate" doctrine is applicable to California rate filings under Proposition 103. The doctrine precludes civil actions challenging rates and rating factors approved by the Department of Insurance. MacKay provides insurers doing business in California with much needed protection from civil actions challenging rates and rating plans. Such lawsuits typically are class actions seeking refunds of premiums alleged to be unlawful, notwithstanding regulatory approval.

The court's opinion in MacKay is based on statutory construction of the rate regulatory statutes applicable to property/casualty rates, so it applies directly only to Proposition 103 lines. The opinion, however, relies on authorities from other states that adopted the filed rate doctrine as a common law doctrine.

The MacKay decision expressly disagrees with a 2008 opinion by a different division of the same appellate district – Fogel v. Farmers, 160 Cal.App.4th 1403 – which held that the filed rate doctrine does not apply in California.

The MacKay opinion distinguishes several decisions frequently relied on by plaintiffs in challenges to rates and rating plans. The Donabedian v. Mercury opinion ((2004) 116 Cal.App.4th 968) recites - and appears to support - several arguments in favor of allowing civil actions challenging approved rates. The court in MacKay distinguished Donabedian on the grounds that, in the posture in which Donabedian was presented, it was not clear that the action challenged an approved rating factor, rather than the insurer's use of a different rating factor not approved by the insurance commissioner. The filed rate doctrine would not apply to a practice of using an unapproved rating factor. The MacKay court rejected the argument that the controlling statute (Insurance Code section 1860.1) has only a limited application to specific concerted activity allowed by the rate statutes. That is a proposition for which Donabedian is frequently cited.

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