STORY FROM: Reinsurance & Arbitration

Applied Underwriters May Not Arbitrate Workers’ Compensation Fraud Case, Calif. Appellate Court Says

LOS ANGELES — A California appellate court has upheld denial of Applied Underwriters Inc.’s motion to compel a workers’ compensation fraud case, ruling that Nebraska law applies to the reinsurance participation agreement at issue, and thus nullifies the arbitration clause within that agreement as a matter of law.

In a Nov. 22 published decision, the California Court of Appeal, 2nd District, held that the Federal Arbitration Act is preempted in the instant case by the McCarran-Ferguson Act and, as such, Nebraska’s arbitration act — which prohibits arbitration of insurance-related disputes — applies.

In 2012, clothing manufacturers Citizens of Humanity LLC ...

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