Opinion
No. 08-20248.
May 11, 2009.
Jeff D. Lefkowitz, Andrews, Myers, Coulter Cohen, Houston, TX, Katherine Ann Scanlon (argued), Peter Joseph Vodola, Pullman Comley, LLC, Hartford, CT, for Plaintiffs-Appellees.
Susan F. Hatcher, John Robert Craddock, Stewart A. Feldman (argued), The Feldman Law Firm, Houston, TX, for Defendant-Appellant.
Appeal from the United States District Court for the Southern District of Texas; Lee H. Rosenthal, Judge.
Before HIGGINBOTHAM, GARZA and PRADO, Circuit Judges.
For essentially the reasons stated by the district court, we AFFIRM.
For Judge Rosenthal's published memorandum opinion from the case, see Symetra Life Ins. Co. v. Rapid Settlements, Ltd., 599 F.Supp.2d 809 (S.D.Tex. 2008).
In so holding, we join numerous state and federal courts concluding that a sham arbitration cannot be used as a device to bring about an otherwise unlawful transfer. To hold otherwise would be to sanction easy invalidation of a wide range of state policies. Arbitral powers do not extend beyond the substantive capacity of the party agreeing to arbitration, and neither Prima Paint nor any other Supreme Court case teaches to the contrary. And on matters of insurance regulation, the congressional message of the Federal Arbitration Act comes with the congressional message of the McCarran-Ferguson Act. On that score, no fewer than forty-six states have seen fit to enact statutes exercising the power, to which Congress has consented, to guard recipients of structured settlements against abusive transfers. We are loath to read the Federal Arbitration Act to provide an end run around this dually secured line of protection.
See Allstate Life Insur. Co. v. Rapid Settlements Ltd., ___ Fed.Appx. ___, 2009 WL 1175534, No. 08-60685 (5th Cir. May 1, 2009); Allstate Settlement Corp. v. Rapid Settlements, Ltd., 559 F.3d 164 (3d Cir. 2009); Pacific Life Ins. Co. v. Rapid Settlements, Ltd., 309 Fed.Appx. 459 (2d Cir. 2009); Pacific Life Ins. Co. v. Rapid Settlements, Ltd., 2007 WL 2530098 (W.D.N.Y. Sept. 5, 2007); RQ Reins. Co. v. Rapid Settlements Ltd., 2007 WL 2330899 (S.D.Fla. Aug. 13, 2007); Allstate Settlement Corp. v. Rapid Settlements, Ltd., 2007 WL 1377667 (E.D.Penn. May 8, 2007); CNA Structured Settlements, Inc. v. Rapid Settlements, Ltd., 2007 WL 811983 (N.Y.Sup.Ct.Mar.15, 2007).