Judge Temporarily Blocks State Law That Would Put JUA Under Control of Pa. Insurance Department

Last Updated: Jul 19, 2018

gavel_stethoscopeOn July 18, 2018, the United States District Court for the Middle District of Pennsylvania issued an order granting the Joint Underwriting Association’s (JUA) request for a preliminary injunction. The order—issued by Chief Judge Christopher Conner—blocks the state from enforcing Act 41 of 2018, which would place the JUA under the control, direction and oversight of the Pennsylvania Department of Insurance. 

On June 29, 2018, the JUA commenced its lawsuit and sought a preliminary injunction, asserting that Act 41 was unconstitutional, in violation of the Substantive Due Process Clause, the Takings Clause, and the Contract Clause. The court heard oral arguments to determine whether the preliminary injunction would be granted on July 6. The court found that the JUA demonstrated a reasonable probability of success on its claim that the state violated the Constitution’s Takings Clause and, subsequently focused its analysis on this issue.

In determining whether to issue the preliminary injunction, the court analyzed four factors: (1) the likelihood of success on the merits; (2) irreparable harm to the JUA; (3) the potential harm to others; and, (4) whether the public interest favors injunctive relief. The court noted that it may only consider the last two factors, if the first two are satisfied.

In its Memorandum, the court held that the JUA met the first two factors: a likelihood of success on the merits and irreparable harm. In support of the preliminary injunction, the JUA argued that the General Assembly, through Act 41, is doing exactly what the court’s May 17 decision (known as JUA I) prohibited it from doing under Act 44 of 2017—taking the JUA’s private assets without just compensation in violation of the Constitution. The court agreed with the JUA’s argument and found that the Association had demonstrated a probability of success on the merits sufficient to grant preliminary injunctive relief. The court also concluded that the JUA would be irreparably harmed if Act 41 was not enjoined from proceeding.  The harm, the court opined, would arise from the dismantling of the Association and the transfer of the Association’s assets to the state.

In reviewing the remaining two factors—the potential harm to others and the public’s interest—the court held that state failed to point out any injury to the state or the public if Act 41 is temporarily stopped from going into effect. The court also noted that the state did not identify any emergent need to have the JUA come under the direction of the state. The court concluded that it will hear the full merits of the case expeditiously, so that Act 41 is only enjoined for a short period of time. 

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