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27 July 2023
US
Reporter Frances Jones

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Delaware DoI appeals to U.S. Supreme Court

The Delaware Department of Insurance (DDOI) has filed an emergency application against the Internal Revenue Service (IRS) with the U.S. Supreme Court.

The application requests to stay the proceedings and recall the mandate of the US Court of Appeals for the Third Circuit. The DDOI writes that the Third Circuit’s decision “enforces an IRS summons that requires the Department to violate Delaware insurance law.”

The mandate, which the IRS won in April, ruled that Delaware insurance regulators cannot rely on its state law preemption to avoid enforcement of IRS summonses requesting their communications with microcaptive companies. It was expected to have direct implications on microcaptives.

The filing will be dependent on the “the timely filing, consideration, and disposition of Applicant's petition for a Writ of Certiorari.”

The filing states: “This case results from the misapplication by the District Court and Third Circuit Court of Appeals of “reverse-preemption under the McCarran-Ferguson Act. 15 U.S.C. § 1011.”

It adds: “Specifically, these courts found, in error, that a state insurance regulatory statute did not reverse-preempt a federal statute having nothing to do with insurance regulation.”

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