He was elected back in 2010, but the just-completed National Association of Insurance Commissioners spring meetings in New Orleans may well prove to have been Oklahoma Insurance Commissioner John Doak’s coming out party as a significant voice of dissent within the national regulators group.
Doak garnered national headlines at the ordinarily staid and, quite frankly, dull meeting of state insurance commissioners by pushing a resolution “urging all state insurance commissioners to protect religious liberties in health care” and to pledge to block the U.S. Department of Health and Human Services’ requirement that group health plans (including those sponsored by Catholic charities and organizations) provide coverage for contraception.
That resolution ultimately went down due to no other commissioner stepping forward to offer a second to Doak’s motion. But it was on another federal-state jurisdictional turf battle that Doak got our attention. As reported (subscription required) by Sean Carr of SNL Financial, Doak is pressing for an inquiry into whether the Federal Insurance Office, established as part of the Dodd-Frank Act, is unconstitutional:
The Federal Insurance Office is an unconstitutional violation of states’ rights, said Oklahoma Insurance Commissioner John Doak, who called on other state insurance officials to join in investigating the Dodd-Frank Act creation.
Speaking at the NAIC spring national meeting in New Orleans, Doak announced that he asked Oklahoma Attorney General E. Scott Pruitt to investigate the constitutionality of the FIO. The announcement, made at a joint committee of state regulators and legislators, was met with silence.
The FIO is a usurpation of states’ rights and the traditional system of state-based insurance regulation enshrined in the McCarran-Ferguson Act of 1945, Doak told SNL after the meeting. “It’s eventually going to get into oversight of everything in the insurance department,” he said.
Doak expounded on his objections to Jeff Jeffrey of BestWire:
“The Dodd-Frank Act and the Federal Office of Insurance is something I view as duplicative and another overreach of the federal government,” Doak said. “These issues are things that I think should make us ask the questions: What are the plans for the federal government? Why do we need a Federal Office of Insurance when state-based regulation has worked for many, many years?”
The NAIC has been quick to note that Doak’s comments do not reflect those of the organization.
There are probably many areas of policy where we would find ourselves in agreement with Commissioner Doak. But as a matter of law, the constitutionality of federal regulation of insurance is a long-settled issue: They can do it.
In fact, the McCarran-Ferguson Act itself, which reserved responsibility for insurance regulation to the states, was passed in 1945 specifically in response to the Supreme Court’s decision, in 1944’s United States v. South-Eastern Underwriters Association, finding that:
- The business of insurance constitutes interstate commerce; thus
- It may be regulated by Congress under the Commerce Clause of the U.S. Constitution; and finally
- That the Sherman Act antitrust law applied to insurance (in this case, specifically, to a question about the use by insurers of centralized rating bureaus to collect claims information and set rates)
Now, Doak is correct, in a sense, that creation of the Federal Insurance Office “violates” McCarran-Ferguson. But McCarran-Ferguson is not a constitutional amendment. It’s a federal statute, just as the Dodd-Frank Act is. So, it is more correct to say that Dodd-Frank, which came later, amended and replaced a portion of McCarran-Ferguson.
Moreover, Congress fully expected this sort of thing to happen when they passed McCarran-Ferguson in the first place. Just take a look at the text of that law, where it states:
No Act of Congress shall be construed to invalidate, impair, or supersede any law enacted by any State for the purpose of regulating the business of insurance, or which imposes a fee or tax upon such business, unless such Act specifically relates to the business of insurance.
And there it is, in as plain language as you’re ever going to get out of a piece of federal legislation. McCarran-Ferguson said that nothing Congress did would be taken to regulate the business of insurance, unless Congress chooses to regulate the business of insurance!
One can certainly make a good case that federal oversight of insurance is not wise, that it is not desirable, but there can be no question at all that it is, indeed, constitutional.