State v. Altus Finance, S.A.

We granted the request of the United States Court of Appeals for the Ninth Circuit to answer two questions of law. (Cal. Rules of Court, rule 29.8.) (1) Can the Attorney General pursue civil remedies, under the California False Claims Act (CFCA) (Gov. Code, § 12650 et seq.) and the unfair competition law (UCL) (Bus. & Prof. Code, § 17200 et seq.) concerning the assets of an insolvent insurance company for which the Insurance Commissioner is acting as conservator or liquidator, or does the Insurance Code, particularly section 1037, give exclusive authority to the Insurance Commissioner to bring civil actions? (2) Do assets to which the Insurance Commissioner acquires title from an insolvent insurance company under Insurance Code section 1011 constitute “state funds” within the meaning of the CFCA?

Answering the second question first, we conclude that the Insurance Commissioner (Commissioner), as a conservator of the insolvent insurance company’s assets, holds these assets in trust for private parties, primarily the insurance company’s policyholders. These assets do not become “state funds” within the meaning of Government Code section 12650. The CFCA does not apply…