Speedy Decision In OCC Rules Case?

Mr. Koziol, whose organization is involved in a separate but similar lawsuit challenging the OCC's actions in West Virginia, said the Massachusetts case qualifies for a rapid track "because the parties and interests are a state regulator and a federal regulator."

He said the case might get a decision by Aug. 15. However, a Massachusetts official said timelines could be changed.

The Massachusetts action against U.S. Comptroller of the Currency John D. Hawke is being brought by Massachusetts Attorney General Thomas Reilly in the U.S. Court of Appeals for the First Circuit in Boston on behalf of Insurance Commissioner Julianne M. Bowler and Banking Commissioner Thomas J. Curry.

Thomas A. Barnico, a Massachusetts assistant attorney general on the case, said oral arguments have been set for Aug. 2 before a three-judge panel.

The OCC response to the suit is due July 11, with a state reply July 15.

Mr. Barnico said that although it is possible for a decision by Aug. 15, because the law requires an opinion within 60 days of the filing of a suit, he didn't know whether the court would request an extension. "The court hasn't asked us yet," he said. "Since this is the first petition filed under this law, it's unclear how that would work."

The Massachusetts' suit stems from a March 18 ruling by the Office of the Comptroller of the Currency preempting three Massachusetts statutes regulating insurance sales by banks. That ruling had been requested by the Massachusetts Bank Insurance Association, a division of the Massachusetts Bankers Association in Boston.

The laws, passed in 1998, prohibit unlicensed bank personnel from referring customers to licensed agents unless a customer specifically asks about insurance, bans compensation for unlicensed employees for making such referrals, and prohibits banks from attempting to sell insurance to home-loan customers until after a mortgage is approved.

Mr. Koziol said he believed there is a good chance that the court will rule "that the OCC has exceeded its authority."

He noted that the GLB language concerning regulation of bank insurance sales bars state laws that "prevent or significantly interfere" with them.

In Mr. Koziol's view, the OCC is misconstruing the law to preempt regulation that is not significant interference, but "interference lite" or a little bit of interference.

He said that the NAII is hoping for a decision soon as well from the U.S. Court of Appeals in Washington, D.C., which is hearing a dispute involving West Virginia regulations.

That action was not brought by the state, and so does not qualify for the GLB section 303 (a) fast track, Mr. Koziol explained. The West Virginia suit was brought by two agent groups, with the NAII filing a friend-of-the-court brief.

The National Association of Professional Insurance Agents and the Independent Insurance Agents and Brokers of America, which filed the West Virginia suit challenging the OCC, said last week they are joining the Massachusetts action, by filing a friend-of-the-court brief.

Massachusetts Governor Jane Swift, in announcing her state's suit, said the action was "based on the right of Massachusetts and every other state to not have an unelected federal bureaucracy overturn provisions designed to protect consumers."

The OCC says the laws are preempted by the Gramm-Leach-Bliley Act because "they frustrate the authority of national banks to engage in insurance activities."