Fourth Circuit upholds the Constitutionality of the Virginia Viatical Settlement Act

On April 30, 2007, the United States Court of Appeals for the Fourth Circuit decided the case of Life Partners v. Morrison holding that the Virginia Viatical Settlement Act was Constitutional.

Here is an excerpt from the case:

We decide, in this case of first impression, whether the Virginia Viatical Settlements Act, Va. Code Ann. § 38.2-600, et seq., which regulates viatical settlements with insureds who are residents of Virginia, is saved from the dormant Commerce Clause of the U.S. Constitution by the McCarran-Ferguson Act, 15 U.S.C. §§ 1011, 1012, as a state law that “relates to” the regulation of the business of insurance or as a state law enacted “for the purpose of regulating the business of insurance.” * * *

On appeals by both parties, we conclude that the sale of life insurance policies by terminally ill patients directly and substantially affects the business of insurance and that the Virginia Viatical Settlements Act “relates to” such business and was enacted “for the purpose of regulating” such business. The McCarran-Ferguson Act thus saves the Virginia Act from preemption of the Commerce Clause and renders it constitutional.

Special thanks to Matthew B. Bogin (Rockville, Maryland) for bringing this case to my attention.