Judges: GREG ABBOTT, Attorney General of Texas
Filed Date: 10/20/2003
Status: Precedential
Modified Date: 7/6/2016
The Honorable Rodney Ellis Chair, Government Organization Committee Texas State Senate P.O. Box 12068 Austin, Texas 78711-2068
Mr. José Montemayor Commissioner of Insurance Texas Department of Insurance P.O. Box 149104 Austin, Texas 78714-9104
Re: Constitutionality of sections 2A and 2B of article
Dear Senator Ellis and Commissioner Montemayor:
You ask about the constitutionality of article 21.74, sections 2A and 2B of the Texas Insurance Code. Those provisions establish a "Holocaust Registry" within the Texas Department of Insurance (the "Department"); require certain insurers to file particular information with the Department; and authorize the imposition of sanctions for failure to do so.
In 2001, the legislature enacted article
an insurance company or other entity engaged in the business of insurance or reinsurance in this state. The term includes:
(A) a capital stock company, a mutual company, or a Lloyd's plan; and
(B) any parent, subsidiary, or affiliated company, at least 50 percent of the stock of which is in common ownership with an insurer engaged in the business of insurance in this state.
Id. § 1, sec. 1(2).
The statute further provided that "[a]n action brought under Subsection (a) of [section 2] may not be dismissed for failure to comply with any applicable limitations period if the action is brought before December 31, 2012." Tex. Ins. Code Ann. art.
Chapter 82 permits the commissioner, "[a]fter notice and opportunity for a hearing," to "cancel or revoke an authorization if the holder of the authorization is found to be in violation of, or to have failed to comply with, this code or a rule of the commissioner." Tex. Ins. Code Ann. §
Sec. 2A. Filings And Certificates Of Insurance. (a) This section applies to each insurer engaging in business in the state that, directly or through a related company, sold to persons in Europe insurance policies described by Section 1 of this article or dowry or educational insurance policies that were in effect during the period of 1920 to 1945, whether the sale occurred before or after the insurer and the related company became related.
(b) Each insurer shall file or cause to be filed with the commissioner the following information:
(1) the number of insurance policies described by Subsection (a) of this section sold by the insurer or a related company;
(2) the holder, beneficiary, and current status of the policies; and
(3) the city of origin, domicile, or address for each policyholder listed in the policies.
(c) Each insurer shall certify:
(1) that the proceeds of the policies described by Subsection (a) of this section have been paid to the designated beneficiaries or their heirs in circumstances in which that person or those persons, after diligent search, could be located and identified;
(2) that the proceeds of the policies, in circumstances in which the beneficiaries or heirs could not, after diligent search, be located or identified, have been distributed to Holocaust survivors or to qualified charitable nonprofit organizations for the purpose of assisting Holocaust survivors;
(3) that a court of law has certified in a legal proceeding resolving the rights of unpaid policyholders and their heirs and beneficiaries a plan for the distribution of the proceeds; or
(4) that the proceeds have not been distributed and the amount of those proceeds.
(d) The commissioner by rule shall require that insurers update the information submitted to the commissioner under this section at reasonable intervals.
Sec. 2B. Establishment And Maintenance Of Registry; Public Access. (a) The commissioner shall establish and maintain within the department a central registry containing records and information relating to insurance policies described by Section 2A(a) of this article of Holocaust victims, living and deceased. The registry shall be known as the Holocaust Era Insurance Registry.
(b) The commissioner by rule shall establish appropriate mechanisms to ensure public access to the registry.
(c) Information contained in the registry:
(1) is public information;
(2) is not subject to any exceptions to disclosure under Chapter 552, Government Code; and
(3) cannot be withheld from disclosure under any other law.
Id. § 12.05 (to be codified at Tex. Ins. Code Ann. art.
By virtue of the enforcement provisions of article 21.74 enacted in 2001, the commissioner may now impose sanctions under chapter 82 against any insurer who fails to file with the Department the information required under section 2A of article 21.74, including cancellation or revocation of a license to do business in this state. Section 12.07 of Senate Bill 14 provides that "[n]ot later than the 180th day after the effective date" of Senate Bill 14, "an insurer subject to Article
The California statute, enacted in 1999, permitted state residents "to sue in state court on insurance claims based on acts perpetrated in the Holocaust and extended the governing statute of limitations to December 31, 2010." Am. Ins. Ass'n v.Garamendi,
In considering the constitutionality of the California statute, the Court first noted that, "given the `concern for uniformity in this country's dealings with foreign nations,'" "an exercise of state power that touches on foreign relations must yield to the National Government's policy." Id. at 2386. "Nor," the Court said, "is there any question generally that there is executive authority to decide what that policy should be." Id. "[O]ur cases have recognized that the President has authority to make `executive agreements' with other countries, requiring no ratification by the Senate or approval by Congress." Id. "Given the fact that the practice goes back over 200 years to the first Presidential administration, and has received congressional acquiescence throughout its history, the conclusion '[t]hat the President's control of foreign relations includes the settlement of claims is indisputable.'" Id. at 2387.
With regard to insurance claims by Holocaust victims, President Clinton and German Chancellor Schröder, in July 2000, entered into the "German Foundation Agreement . . . in which Germany agreed to enact legislation establishing a foundation funded with 10 billion deutsch marks contributed equally by the German Government and German companies, to be used to compensate all those `who suffered at the hands of German companies during the National Socialist era.'" Id. at 2381. President Clinton "put his weight behind two specific measures" to guarantee to the German government and to German corporations "some expectation of security from lawsuits in United States courts." Id. at 2382. The Court continued:
First, the Government agreed that whenever a German company was sued on a Holocaust-era claim in an American court, the Government of the United States would submit a statement that "it would be in the foreign policy interests of the United States for the [German] Foundation to be the exclusive forum and remedy for the resolution of all asserted claims against German companies arising from their involvement in the National Socialist era and World War II." . . . Though unwilling to guarantee that its foreign policy interests would "in themselves provide an independent legal basis for dismissal," that being an issue for the courts, the Government agreed to tell courts "that U.S. policy interests favor dismissal on any valid legal ground." . . . On top of that undertaking, the Government promised to use its "best efforts, in a manner it considers appropriate," to get state and local governments to respect the foundation as the exclusive mechanism. . . .
As for insurance claims specifically, both countries agreed that the German Foundation would work with the International Commission on Holocaust Era Insurance Claims (ICHEIC), a voluntary organization formed in 1998 by several European insurance companies, the State of Israel, Jewish and Holocaust survivor associations, and the National Association of Insurance Commissioners, the organization of American state insurance commissioners. The job of the ICHEIC . . . includes negotiation with European insurers to provide information about unpaid insurance policies issued to Holocaust victims and settlement of claims brought under them. It has thus set up procedures for handling demands against participating insurers, including "a reasonable review . . . of the participating companies' files" for production of unpaid policies, "an investigatory process to determine the current status" of insurance policies for which claims are filed, and a "claims and valuation process to settle and pay individual claims," employing "relaxed standards of proof."
Id. (citations omitted) (footnotes omitted). Although the Court acknowledged that "[t]he executive agreements at issue here do differ in one respect" from earlier executive agreements, "insofar as they address claims associated with formerly belligerent states, but against corporations, not the foreign governments," it found that "the distinction does not matter."Id. at 2387.
The Court summarized its findings as follows:
[R]esolving Holocaust-era insurance claims that may be held by residents of this country is a matter well within the Executive's responsibility for foreign affairs. Since claims remaining in the aftermath of hostilities may be "sources of friction" acting as an "impediment to resumption of friendly relations" between the countries involved, . . . there is a "longstanding practice" of the national Executive to settle them in discharging its responsibility to maintain the Nation's relationships with other countries. . . . The issue of restitution for Nazi crimes has in fact been addressed in Executive Branch diplomacy and formalized in treaties and executive agreements over the last half century, and although resolution of private claims was postponed by the Cold War, securing private interests is an express object of diplomacy today, just as it was addressed in agreements soon after the Second World War. Vindicating victims injured by acts and omissions of enemy corporations in wartime is thus within the traditional subject matter of foreign policy in which national, not state, interests are overriding, and which the National Government has addressed.
Id. at 2390 (citations omitted). As a result, "[t]he exercise of the federal executive authority means that state law must give way where, as here, there is evidence of clear conflict between the policies adopted by the two. The foregoing account of negotiations toward the three settlement agreements is enough to illustrate that the consistent Presidential foreign policy has been to encourage European governments and companies to volunteer settlement funds in preference to litigation or coercive sanctions." Id.
The Court concluded that the California statute's
compulsion to make public disclosure, of far more information about far more policies than ICHEIC rules require, employs a "different, state system of economic pressure," and in doing so undercuts the President's diplomatic discretion and the choice he has made exercising it. . . . Whereas the President's authority to provide for settling claims in winding up international hostilities requires flexibility in wielding "the coercive power of the national economy" as a tool of diplomacy, . . . [the California statute] denies this, by making exclusion from a large sector of the American insurance market the automatic sanction for noncompliance with the State's own policies on disclosure. . . . The law thus "compromise[s] the very capacity of the President to speak for the Nation with one voice in dealing with other governments" to resolve claims against European companies arising out of World War II.
Id. at 2391-92 (citations omitted) (footnote omitted). Thus, the California statute, by authorizing unconstitutional interference with the President's conduct of foreign affairs, was preempted by federal law.
In view of the virtually identical provisions of the California and Texas statutes, we conclude that, on the basis of Garamendi, article
Very truly yours,
GREG ABBOTT Attorney General of Texas
BARRY R. McBEE First Assistant Attorney General
DON R. WILLETT Deputy Attorney General — General Counsel
NANCY S. FULLER Chair, Opinion Committee
Rick Gilpin Assistant Attorney General, Opinion Committee