Mar 29, 1984 Administrative Law
Karlin v. Zalta (1984) 154 Cal.App.3d 953

In a class action by a consumer of medical services against an individual physician, a physicians’ organization, and several insurance companies, seeking damages for an alleged conspiracy to fix medical malpractice insurance premium rates at excessive levels in violation of the Insurance Code and to pass those charges on to patients who constituted the class, the trial court sustained defendants’ demurrers to the complaint without leave to amend and entered a judgment of dismissal.

The Court of Appeal affirmed. It held that the UPA, although it proscribes the unfair and anticompetitive trade practices, does not involve the setting of rates for casualty insurance, and that this latter activity lies exclusively within the province of the McBride Act, which completely and expansively regulates all activities involving casualty insurance ratemaking, including the enforcement of prohibitions against anticompetitive activity affecting ratemaking. Accordingly, the court held that the McBride Act and not the UPA applied as to all defendants with respect to the entire gamut of anticompetitive conduct alleged in the complaint. It further held that plaintiff’s failure to exhaust her administrative remedies under the McBride Act was a bar to her action, even though the McBride Act makes no provision for money damages, since, in considering the claim that insurance rates are excessive, it is indispensable that the expertise of the Insurance Commissioner and his agency’s staff be initially engaged.