Financial Advisor reported in the article “Attorneys Expect N.Y. To Appeal Court Rejection Of Annuity Best-Interest Rule” that the New York Department of Financial Services (DFS) is likely to appeal the New York Supreme Court Appellate Division decision that struck down New York’s amendment to create a best-interest standard for annuities and life insurance. The publication shared insight from a May 18 Faegre Drinker podcast, “New York Insurance Regulation 187 Found Unconstitutional: Now What? A Faegre Drinker Podcast,” that discussed DFS’s next steps and the fallout for the industry.
“Perhaps we’ll find ourselves in the same spot we were before the appellate court’s decision,” shared insurance partner Robert Mancuso. He said it was interesting that the appellate court honed in on the vagueness of the rule, while stating other arguments petitioners had made were “rendered academic.”
“The second issue the court really honed in on was that the department by way of the amendment was left with virtually unfettered discretion in determining whether a violation had occurred,” noted Mancuso.
Partner Mark Taticchi added that any of the merits of the case can be revisited on appeal and that the court will not be limited to the finding of constitutional vagueness. “We’re assuming an appeal happens, so it will be interesting to see what the appeals court would choose to do even if they’re inclined to affirm the results of the Supreme Court’s decision,” Taticchi said.
Partner Brad Campbell highlighted the fact that the Department of Labor (DOL) under the Biden administration resurrecting its fiduciary rule could be a factor that impacts how New York decides to respond to this court action, and whether it will appeal or write a new rule instead. “It’s a very dynamic situation really at the state and federal level now and it’s worth noting the complexity of how these rules interplay,” emphasized Campbell.