A federal appeals court has upheld a lower court ruling denying a class action lawsuit seeking damages from an insurer because of an alleged unjust rate increase in Michigan.

The 6th U.S. Circuit Court of Appeals in Cincinnati affirmed the judgment of the U.S. District Court for the Western District of Michigan at Lansing that plaintiffs could not establish a private right of action based on a desired judicial inference of the Michigan Insurance Code.

In addition, the ruling found that the state's Consumer Protection Act did not extend to claims under the insurance laws.

Property-casualty industry representatives hailed the decision.

It's a "common sense ruling," said David Snyder, AIA vice president and assistant general counsel.

"The court rightly discarded this effort by class action lawyers to create a separate enforcement mechanism as a way around Michigan's insurance laws," he added.

In the case of Burl and Cathy McLiechey v. Bristol West Insurance Company, the Michigan couple said the insurer's rate increase violated the state's insurance statute.

The carrier said the couple's move into a higher risk neighborhood, a deteriorating credit score and a two-week lapse of nonpayment prompted the increase.

"Both holdings (district and appeals) are clearly in the mainstream of case law and should send another signal to creative and enterprising trial lawyers that insurance laws offer exclusive remedy for alleged violations, not class actions or other state laws," said Mr. Snyder.

The appeals judges wrote that the remedial scheme of the Michigan Insurance Code for aggrieved policyholders such as the McLiecheys and other parties in the class are not "plainly inadequate," as the plaintiffs alleged.

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