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United Healthcare Insurance Co v. Davis

Because the State, by choosing with whom it did business, was acting as a participant in — and not a regulator of — the insurance market, La. R.S. �42:802.1 fell within the market participant exception, and the dormant commerce clause was therefore not a bar to its actions. However, �42:802.1 was invalid, as applied, because it interfered with the plaintiffs' current contracts in violation of the contract clause. 5th U.S. Circuit Court of Appeals, No. 08-30001, 03-31-2010

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Before JOLLY and DENNIS, Circuit Judges, and JORDAN, District Judge. *fn1

This appeal presents questions relating to the dormant Commerce Clause and the Contract Clause of the United States Constitution. The district court granted a permanent injunction enjoining the implementation of La. R.S. § 42:802.1 (“Act 479″ or “the Act”), on the basis that it violated the dormant Commerce Clause, because it effectively favored Louisiana insurance companies in bidding for health insurance coverage for state employees. However, the district court held that the Act did not violate the Contract Clause by interfering with the plaintiffs’ contracts with the State. Thus everybody now appeals something. Defendants, Angele Davis and Tommy D. Teague (the “State”),*fn2 and Intervenors, Vantage Health Plan (“Vantage”) and the Covered persons, appeal the permanent injunction and the ruling on the dormant Commerce Clause. Plaintiffs, United Healthcare Insurance Company (“UHC”) and Humana Insurance Company (“Humana”), cross-appeal the district court’s holding that the Act did not violate the Contract or Due Process Clauses. We conclude that the district court erred on both issues. Because the State, by choosing with whom it did business, was acting as a participant in-and not a regulator of-the insurance market, the Act fell within the market participant exception, and the dormant Commerce Clause was therefore not a bar to its actions. However, the Act was invalid, as applied, because it interfered with the plaintiffs’ current contracts in violation of the Contract Clause. Accordingly, we reverse the district court’s judgment in favor of the plaintiffs declaring the Act invalid under the Commerce Clause, vacate the district court’s permanent injunction enjoining implementation of the Act, and remand for further proceedings not inconsistent with this opinion.

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