Rothstein v. Balboa Ins. Co., No. 14-2250 (2d Cir. 2015)
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Plaintiffs, borrowers who failed to purchase hazard insurance on their mortgaged properties, as required by the terms of their loan agreements, filed suit alleging that they were fraudulently overbilled. Plaintiffs' loan servicer, GMAC, bought lender-placed insurance (LPI) from Balboa at rates that were approve by regulators. GMAC then sought reimbursement from plaintiffs at the same rates. Plaintiffs alleged that the rates they were charged did not reflect secret "rebates" and "kickbacks" that GMAC received from Balboa through Balboa's affiliate, Newport. The court held that a claim challenging a regulator-approved rate is subject to the filed rate doctrine whether or not the rate is passed through an intermediary.
The claim is therefore barred if it would undermine the regulator’s rate-setting authority or operate to give the suing ratepayer a preferential rate. In this case, plaintiffs' claims are barred under the filed rate doctrine and the court reversed and remanded for dismissal of the case.
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