On May 8, 2013, the California Supreme Court heard oral arguments on Zhang v. Superior Court which presents the question whether an insurer may be sued under California’s Unfair Competition Law (UCL) for practices that are governed by the Unfair Insurance Practices Act (UIPA).
Counsel for the insurer in Zhang argued that the Supreme Court’s 1988 decision in Moradi-Shalal v. Fireman’s Fund Insurance Companies provides the answer to the question. Moradi-Shalal held that violations of the UIPA may be prosecuted only by administrative action taken by the Insurance Commissioner, not by civil lawsuits by private citizens. The counsel asserted that under the Moradi-Shalal holding, because the insurer’s alleged conduct is regulated by the UIPA, that conduct may not be the basis for a UCL lawsuit against the insurer.
The Supreme Court is required to issue a written decision in the Zhang case by August 6, 2013.