Supreme Court of the United States

United States Department of Treasury v. Fabe

June 11, 1993508 U.S. 491

Summary

The Court held that the federal priority statute is displaced by Ohio's liquidation priorities to the extent those priorities protect policyholders and pay the administrative expenses necessary to distribute policyholder claims. Ohio's priorities for employees, general creditors, and other nonpolicyholder claimants remain preempted because they do not regulate the business of insurance under the McCarran-Ferguson Act. Justice Kennedy, dissenting, would have held that the Ohio statute regulates creditor priorities in a liquidation proceeding rather than the business of insurance and would have reversed the judgment in full.

Holding

  • Whether Ohio's liquidation-priority statute regulates the business of insurance. Ohio's priority statute is a law enacted for the purpose of regulating the business of insurance to the extent it protects policyholders by facilitating payment of their insurance claims after the insurer's bankruptcy.
  • Which Ohio priorities are protected from federal preemption. Ohio may give policyholder claims and the costs and expenses of administering the liquidation priority over claims of the United States, but federal law preempts Ohio's priorities for employees, general creditors, and other categories whose connection to policyholder protection is too tenuous.

Docket 91-1513

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