Calif. reaches resolution with insurers over legal fees

The California Department of Insurance has reached a resolution of its obligation to pay attorneys’ fees to two of the insurance companies that challenged the constitutionality of the landmark Holocaust Victims Insurance Relief Act of 1999. Former Insurance Commissioner John Garamendi fought to uphold the law all the way to the U.S. Supreme Court. In 2003, however, the Court ruled by a 5-4 vote that California’s efforts to obtain information concerning insurance policies issued by private insurance companies in Europe during the period prior to the Holocaust violated the President’s authority over foreign affairs.

Three of the plaintiffs, the American Insurance Association, along with two insurers, then sought to recover their legal fees from the state. Federal District Judge William Shubb ruled that they were not entitled to their fees, but the Ninth Circuit Court of Appeals reversed, sending the case back to Judge Shubb to determine the amount of fees the insurers should recover.

The Department announced it had reached an amicable settlement with the two insurers. AIA continues to demand that the state pay it several million dollars. It seeks compensation for time billed by scores of lawyers, some at rates that are close to $700 per hour.