Rejection of State’s Disclosure Law Urged

Lawyers for the Bush administration and the insurance industry urged the Supreme Court on Wednesday to strike down a California law that requires many of Europe’s Holocaust-era insurers to disclose all of their policyholders between 1920 and 1945.

California’s Holocaust Victims Insurance Relief Act of 1999 was intended to deal with “the despicable practice by insurance companies

As many as 20,000 Californians may be due money from insurance policies that were taken out by ancestors who died at the hands of the Nazis, he said. They have been unable to file claims, however, because basic information on the policies has been kept hidden, he said.

But the Bush administration and the insurance industry say this is a matter for the federal government. And, they said, a European commission is going through tens of millions of insurance policies in search of those issued to Jews before 1945.

Kenneth Geller, a Washington lawyer representing the American Insurance Assn., said the European group is expected to publish a list of several hundred thousand policyholders shortly.

In the meantime, California should not be permitted to press ahead with its separate disclosure law, the lawyers argued.

“What we have here is one state of the union trying to establish its own foreign policy,” said U.S. Deputy Solicitor General Edwin Kneedler. “The Constitution assigns responsibility for foreign relations to the national government.”

Justice Stephen G. Breyer agreed, quoting a letter by Stuart E. Eizenstat, deputy Treasury secretary when the California law was passed, who called the disclosure law “potentially disruptive and counterproductive.”

“There are two ways of achieving this result,” Breyer said of giving heirs their rightful insurance claims. One is to have the European commission sort through the policies in search of those that were sold to Jews who later died in the Holocaust. The other is to require selected insurance companies that do business in California to disclose the names of all their policyholders.

“What interest does California have in doing it the second way?” Breyer asked. “The Constitution seems to give this authority to the secretary of State, not the insurance commissioner of California.”

Kaplan argued that states generally have broad authority to regulate insurers. Moreover, elderly heirs of Holocaust victims are impatient at the reluctance of German, Austrian and Swiss insurers to reveal information about policies taken out more than 60 years ago.

“These people have been in a line to nowhere,” Kaplan said.

The insurance industry lawyer also ran into some skeptical questions from the justices.

Justices John Paul Stevens and Anthony M. Kennedy noted that California law only seeks information.

“Isn’t it true there are 4,000 to 5,000 California residents who may be beneficiaries of policies they don’t know about?” Stevens asked. “Isn’t that true?” he pressed Geller.

Yes, Geller replied, but it would require going through tens of millions of policies to find those 5,000 policies. German and Swiss privacy laws protect insurance policy information from being disclosed, Geller added.

Justice Ruth Bader Ginsburg objected to this claim of privacy. “We are dealing with a unique situation here,” she said, since the policyholders may have died in the death camps. It is “kind of ironic” to say their privacy needs to be protected, she said.

But Breyer spoke up for the privacy laws, saying they were intended to deal with mundane but recurring family disputes.

“If Gwendolyn finds out that Uncle Harry in England left all the money to Cecily,” it could cause bruised feelings, so this information is shielded, Breyer said. But the European commission is empowered to look for Holocaust-era policies, he added.

While many of the justices sounded sympathetic to California’s goal, most of them seemed inclined to rule that the federal government deserved the lead role in all international disputes.

The court will hand down a ruling in the case of American Insurance Assn. vs. [California Insurance Commissioner John] Garamendi by late June.