Doug Ommen, in His Capacity as Liquidator of CoOportunity Health, et al. v. Milliman, Inc., et al.

For over 50 years this Court has upheld the Federal Arbitration Act’s (FAA) aim to make “arbitration agreements as enforceable as other contracts, but not more so.” Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 404 n.12 (1967). While the FAA preempts state-law defenses that single out arbitration agreements, it preserves defenses applicable to all contracts. 9 U.S.C. § 2. In the decision below, however, the Iowa Supreme Court held the FAA preempts the generally applicable statutory authority of an insurance liquidator to disavow a defunct insurer’s improvident contracts. Merely because the contract at issue contained an arbitration clause, the court found preemption applied, thereby elevating the contract for special protection and furthering a split with state courts that appropriately refuse to apply FAA preemption to generally applicable defenses. The court did so despite the disavowal defense’s general applicability and the Liquidators’ disavowal of the entire contract, including onerous provisions contrary to the Liquidators’ public-protection role. Further, the court expanded a split among state and federal courts by holding that the McCarranFerguson Act (McCarran-Ferguson) does not exempt the disavowal defense from FAA preemption. The questions presented are: Whether the FAA preempts the generally applicable disavowal defense codified in Iowa’s Liquidation Act; and If so, whether McCarran-Ferguson exempts the disavowal defense from preemption.