American Insurance Association v. Garamendi

American Insurance Association v. Garamendi

The Holocaust killed over 6 million Jews in Europe, as well as a number of other ethnic and religious minorities and people considered disabled or “defective” physically or mentally by the Nazi regime. However, after the Holocaust transpired, many insurance companies refused to make good on their policies that had been written for Jewish people. The case of American Insurance Association v. Garamendi is a case about a law passed in California to require insurers to pay out on those policies. The case would be appealed all the way to the Supreme Court. The highest court in the nation would make the determination of whether the California law would be allowed to stand, or if it stood in the way of other legitimate governmental interests.

Effect of the Holocaust on Insurance Policies

Jews who had held insurance policies before they were forced into ghettos and concentration camps were often told after World War II was over that their policies were no longer valid. In some situations, people were told their insurance policies had lapsed due to non-payment. Other people were unable to find records of death for their relatives that would have enabled them to collect death benefits, because the Nazis did not keep records of every death that occurred in the concentration camps.

To add insult to injury, the payouts for many of these insurance policies were actually paid—not to the relatives of the deceased people, but to the Third Reich of Germany. The United States, in the late 20th century, began to work on ways to make sure that all people who deserved reparations and compensation from insurers were able to get it.

California's HVIRA Law

California, meanwhile, got tired of waiting for the federal government to pass meaningful, sweeping legislation pertaining to reparations for the Holocaust insurance policies. It passed a law that was abbreviated to HVIRA, or the Holocaust Victim Insurance Relief Act of 1999. According to the HVIRA, any insurer wishing to do business within the state of California would be required to fully disclose the names of all people from Europe that they insured between the years of 1920 and 1945. The American Insurance Association quickly filed a lawsuit to prevent insurance companies from being required to file these extensive disclosures.

The district court agreed with the insurance companies that the HVIRA was too broad and was not valid law. However, the Circuit Court reversed this ruling on appeal in American Insurance Association v. Garamendi.

Supreme Court Ruling

When the case of American Insurance Association v. Garamendi was taken to the Supreme Court of the United States, the insurance companies won. This was because the justices ruled that the HVIRA law was actually circumventing United States foreign policy that was rightly the province of the President to determine. The California law was overstepping its boundaries, and the Court ruled that it was therefore not valid. The insurance companies were not forced to turn over their records of European customers from 1920-1945.