Lawsuit Erie Insurance filed against Md. regulators dismissed
A federal judge threw out a lawsuit Monday in which Erie Insurance accused state regulators of acting illegally in determining that the insurer engaged in insurance “redlining” of predominantly Black neighborhoods in Baltimore.
Judge Julie R. Rubin dismissed the case against the Maryland Insurance Administration, according to an order filed in U.S. District Court in Baltimore. The judge issued the order after holding a proceeding in open court Monday.
Erie had said in a lawsuit filed June 8 that the insurance administration rushed an investigation of insurance brokers’ complaints, then released findings that illegally publicized Erie’s confidential business information.
Matthew M. Cummings, a spokesman for Erie, declined to comment Monday on the dismissal.
The lawsuit said the agency and insurance commissioner “suddenly, arbitrarily, capriciously and with improper motive surprised Erie by issuing the four public determination letters,” which ruled in favor of four Baltimore-area insurance brokers that filed complaints more than two years ago. The insurance administration abruptly concluded what should have been a longer multiyear investigation because the businesses that complained grew impatient, the lawsuit said.
Three of the brokerage firms, all small businesses, filed separate complaints in January 2021 with the insurance administration; they are Baltimore Insurance Network LLC of Bowie, Ross Insurance Agency of Windsor Mill and Welsch Insurance Group of Baltimore. All contract or had contracted with Erie as agents to sell auto insurance policies. A fourth brokerage, Baltimore-based Burley Insurance, filed a similar complaint in December 2021.
Erie said in its lawsuit that the agency’s four separate but identical rulings on the brokers’ complaints publicized information that’s confidential, attorney-client-privileged or work-product-protected. Some documents appear to have been obtained through searches of Erie’s systems and did not come from the insurer, the complaint said.
As part of the lawsuit, Erie had asked the court to find the determination letters unlawful and to issue a temporary restraining order to block release of the letters. Rubin on Monday found that no hearing would be necessary and denied that request, determining the matter should instead go through a state administrative proceeding.
An insurance administration spokesman declined to comment Monday.
The insurance administration had found that Erie unlawfully canceled or rejected business from brokers based on race or for other discriminatory or arbitrary reasons. The insurer also unlawfully canceled or changed agreements for qualified applicants based on “adverse loss ratio,” a measure of an insurer’s profitability, the state agency had said in the rulings.
The insurer, a Fortune 500 company with more than 6 million home, auto, life and business policies, had said it disagreed with the findings and requested a hearing with the agency to appeal. Erie, based in the Pennsylvania city of the same name, had sought a trial by jury in the federal case.
In June, Cummings had said that Erie was “deeply troubled” by the brokers’ allegations because “we find discrimination of any kind abhorrent and inconsistent with the values that have guided our business for nearly 100 years. We are proud of the strong relationship and trust we’ve earned with our independent agents and customers in Baltimore and throughout Maryland.”
The state had found that Erie penalized brokerage firms that failed to engage in discriminatory practices by reducing commissions or terminating contracts. The agency ordered Erie to calculate and pay the agencies all amounts in commission that had been withheld between Dec. 1, 2019, and May.