Nebraska Supreme Court Rules That the Federal Risk Retention Act Preempts State Law

CHICAGO, IL--(Marketwired - Sep 30, 2014) - The Nebraska Supreme Court ruled last week that the Liability Risk Retention Act preempts a state law which prohibits arbitration provisions in insurance policies.

A chiropractor sued Allied Professionals Insurance Company, a risk retention group, claiming that an arbitration provision in the Allied policy was illegal under state law. Allied appealed the district court ruling in favor of the chiropractor. The Supreme Court overruled the district court in an unqualified opinion that the federal Liability Risk Retention Act (LRRA) preempts the state law.

"I am very pleased by this sweeping ruling in favor of the risk retention industry on the preemption of state laws regulating risk retention groups," said Michael Schroeder, Chairman of Allied. He pointed out that the Nebraska Supreme Court decision follows recent favorable decisions in similar cases by federal circuit courts of appeal in the Second and Eleventh Circuits.

Joseph Deems, Executive Director of the National Risk Retention Association (NRRA), speaking at the Association's annual conference in Chicago hailed the decision as an "important precedent that reinforces the preemption provisions of the LRRA in cases that involve state statutes and is one more in a series of court decisions upholding the right of risk retention groups to operate free of most regulation in all 50 states when licensed in a single state."