(Article from Insurance Law Alert, September 2020)
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Affirming a New Jersey federal district court decision, the Third Circuit ruled that force-placed insurance claims alleging fraud, unjust enrichment and violations of state and federal statutes were barred by the filed-rate doctrine. Leo v. Nationstar Mortgage LLC of Delaware, 964 F.3d 213 (3d Cir. 2020).
Borrowers alleged that Nationstar, their reverse mortgage lender, colluded with an insurance company and agent to receive kickbacks on force-placed insurance policies. They claimed that the insurer inflated the rate filed with state regulators in order to return a portion of the profits to Nationstar to induce Nationstar’s continued business. The complaint alleged violations of state and federal law, as well as unjust enrichment, breach of contract and the implied covenant of good faith and fair dealing.
The Third Circuit ruled that the filed-rate doctrine blocks these claims because the complaint sought damages based on an alleged overcharge of a rate that was filed with regulatory agencies. The court stated: “we reiterate that the filed-rate doctrine brooks no distinction between, on one hand, challenging a filed rate as unreasonable and, on the other hand, challenging an overcharge fraudulently included in a filed rate.” As discussed in previous Alerts, several other courts have dismissed suits against mortgage service providers based on the filed-rate doctrine and have declined to create a fraud exception to the doctrine. See October 2018 Alert; September 2015 Alert; May 2011 Alert; October 2010 Alert.