On September 3, 2014, Judge Amy J. St. Eve of the U.S. District Court for the Northern District of Illinois ruled on the parties’ cross motions for summary judgment in Property Casualty Insurers Association of America v. Castro (PCIA). The case involves a challenge by an insurance industry trade association, pursuant to the Administrative Procedure Act, to the application of the U.S. Department of Housing & Urban Development’s (HUD) Discriminatory Effects regulation to the insurance industry. The plaintiff also challenged the burden shifting framework that HUD set forth in the regulation. In her opinion, Judge St. Eve dismissed the plaintiff’s claim that HUD’s rule violated the McCarran-Ferguson Act for lack of subject matter jurisdiction, granted summary judgment to HUD on the question of the burden shifting framework, and granted summary judgment to the plaintiff on whether HUD had adequately addressed industry comments concerning the applicability of the disparate impact standard to the insurance industry during the rulemaking process. Judge St. Eve remanded the regulation to HUD for further consideration of those comments.
On April 18, 2014, the Lawyers’ Committee for Civil Rights Under Law and fourteen other civil rights and housing organizations filed an amicus curiae brief in support of the federal government’s motion to dismiss or, in the alternative, motion for summary judgment PCIA. Fair Housing & Community Development Project Co-Director Joe Rich and Associate Counsel and George N. Lindsay Civil Rights Legal Fellow Thomas Silverstein co-authored the brief with a large number of civil rights and fair housing organizations. There is longstanding case law that the FHA applies to the business of homeowners’ insurance and that aggrieved parties can prove violations of the FHA through evidence of unjustified disparate impact. Despite the overwhelming weight of precedent, the plaintiffs argued that the McCarran-Ferguson Act forecloses the application of disparate impact theory to the provision of homeowners’ insurance. The civil rights and housing groups’ brief contended that the plaintiff’s claim paints an incomplete picture of how homeowner’s insurers make underwriting and pricing decisions, illustrates how disparate impact liability can be consistent with state insurance regulations, and demonstrates the importance of applying the FHA to homeowner’s insurance in light of the history of discrimination in that industry. The Lawyers’ Committee will carefully monitor any proceedings that occur after HUD has completed its response to the insurance industry’s comments.
