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Michelman & Robinson Secures Substantial Victory for California Insurers

October 13, 2010

Michelman & Robinson, LLP’s (“M&R”) Regulatory & Administrative Department earned a substantial victory for California insurers when the state’s Office of Administrative Law recently ruled that the California Department of Insurance’s (“DOI”) Iranian investment regulations were improperly imposed.

As renowned professionals in administrative law, five of the state’s top insurance trade associations retained M&R to challenge regulations that the DOI disseminated in February 2010, stating that California would treat insurer investments in
Iranian companies as non-admitted assets. As part of these regulations, DOI Commissioner Steve Poizner identified 50 companies that conduct business, either directly or indirectly, with Iranian energy, nuclear and defense sectors.

Led by partners Bill Gausewitz and Sanford Michelman, M&R filed a petition with the California Office of Administrative Law (“OAL”) contending that the DOI had violated the California Procedure Act when it promulgated the Iranian investment regulations without following the appropriate procedures, which require notice, hearings and other steps before a regulation can take effect. Issuing its decision on October 11, 2010, the OAL agreed with M&R's arguments that these rules constituted underground regulations and concluded that the DOI improperly imposed them against insurers.

“I am thrilled with the OAL’s decision. It was extremely important to our clients to avoid setting a precedent for regulating investments without following the proper administrative procedures. Our team did an outstanding job challenging the DOI’s rulemaking process,” said John Sebastinelli, Chair of the Firm’s Regulatory & Administrative Department.