Hines, Chief Justice.This is an appeal by plaintiffs Candice Reis and Melvin Williams (“Plaintiffs”) from the grant of summary judgment to defendant OOIDA Risk Retention Group, Inc. (“OOIDA”) in this direct action against OOIDA and others arising from a vehicular collision involving Plaintiffs and a motor carrier insured by OOIDA. At issue is whether provisions in the federal Liability Risk Retention Act of 1986 (“the LRRA”), 15 USC § 3901, et seq., preempt Georgia’s motor carrier and insurance carrier direct action statutes (“direct action statutes”), OCGA §§ 40-1-112 (c),[1] 40-2-140 (d) (4),[2] in regard to risk retention groups,[3] thereby precluding this direct action against OOIDA. For the reasons which follow, we conclude that there is federal preemption of this action against OOIDA, and consequently, we affirm.[4]BackgroundOn February 8, 2015, Plaintiffs were in a car when they were involved in a collision with a 2001 Freightliner driven by defendant Andre Robinson (“Robinson”) and owned by defendant James Powell (“Powell”), d/b/a Zion Train Express, Inc. (“Zion Train”), and insured by OOIDA. OOIDA is a liability risk retention group not chartered or domiciled in Georgia and created pursuant to the LRRA. OOIDA is registered in Georgia as a foreign risk retention group.Plaintiffs filed the present action in superior court against Robinson, Powell, Zion Train, and OOIDA for alleged damages arising from the collision. OOIDA moved for summary judgment asserting that the direct action statutes do not contemplate suits against risk retention groups, and even if they did, they would be preempted by the LRRA. The superior court concluded that there was federal preemption of Georgia’s direct action statutes, and therefore, that OOIDA is not subject to suit under them.Federal Preemption Doctrine The Supremacy Clause of the United States Constitution mandates that federal law will preempt a state law that is inconsistent with it. U. S. Const., Art. VI, cl. 2. Such preemption may be either express or implied, and “is ‘compelled whether Congress’[s] command is explicitly stated in the statute’s language or implicitly contained in its structure and purpose.’” Poloney v. Tambrands, 260 Ga. 850, 850-851 (1) (412 SE2d 526) (1991), quoting Fidelity Federal Savings & Loan Association v. de la Cuesta, 458 U. S. 141, 152 (102 SCt 3014, 73 LE2d 664) (1982) and Jones v. Rath Packing Co., 430 U. S. 519, 525 (97 SCt 1305, 51 LE2d 604) (1977). And, “[w]hen a federal statute unambiguously precludes certain types of state [law], we need go no further than the statutory language to determine whether the state [law] is preempted.” Poloney v. Tambrands, supra at 851 (1), quoting Exxon Corp. v. Hunt, 475 U. S. 355, 362 (106 SCt 1103, 89 LE2d 364) (1986). However, when Congress has enacted legislation in an area traditionally regulated by the states, there is an assumption that the states’ powers are not to be superseded by the federal law unless that was Congress’s clear and manifest purpose. Wyeth v. Levine, 555 U.S. 555, 565 (129 SCt 1187, 173 LE2d 51) (2009). The business of insurance is such an area traditionally regulated by the states. See the McCarran-Ferguson Act, 15 USC § 1011 et seq.[5] Therefore, a state law enacted for the purpose of regulating insurance would not yield to a conflicting federal law unless the federal law specifically requires it. 15 USC § 1012;[6] United States Dep’t of Treasury v. Fabe, 508 U.S. 491, 507 (113 SCt 2202, 124 LE2d 449) (1993).History of the LRRA The original version of the LRRA was enacted by Congress in 1981 as the “Product Liability Risk Retention Act of 1981″ (“PLRRA”), 15 USC §§ 3901-3904 (1982), and did not encompass motor vehicle liability insurance but was limited to product liability insurance. Mears Transp. Grp. v. State, 34 F3d 1013, 1016 (11th Cir. 1994). The PLRRA was expanded by Congress in 1986 resulting in the LRRA in order to encompass all commercial liability insurance. Wadsworth v. Allied Professionals Ins. Co., 748 F3d 100, 103 (2d Cir. 2014).TheLRRA’s Statutory Scheme The structure of the LRRA is ably explained in Wadsworth. Risk retention groups are governed by a tripartite scheme composed of both federal and state regulations:First, at the federal level, [the LRRA] preempts “any State law, rule, regulation, or order to the extent that such law, rule, regulation or order would . . . make unlawful, or regulate, directly or indirectly, the operation of a risk retention group,” 15 [USC] § 3902 (a) (1), . . . The second part of the scheme secures the authority of the domiciliary, or chartering, state to “regulate the formation and operation” of risk retention groups. 15 [USC] § 3902 (a) (1). Federal preemption, therefore, functions not in aid of a comprehensive federal regulatory scheme, but rather to allow a risk retention group to be regulated by the state in which it is chartered, and to preempt most ordinary forms of regulation by the other states in which it operates. Thus, [the LRRA] provides for broad preemption of a non-domiciliary state’s licensing and regulatory laws. Similarly, [the LRRA] prohibits states from enacting regulations of any kind that discriminate against risk retention groups or their members, but does not exempt risk retention groups from laws that are generally applicable to persons or corporations.15 [USC] § 3902 (a) (4). While [the LRRA] assigns the primary regulatory supervision of risk retention groups to the single state of domicile, the third part of its regulatory structure explicitly preserves for [nondomiciliary] states several very important powers. [It] specifically enumerates those reserved powers in subsequent subsections, with many powers of the nondomiciliary state being concurrent with those of the chartering state. See 15 [USC] §§ 3902 (a) (1) (A)-(I), 3905 (d). In particular, subject to [the LRRA's] anti-discrimination provisions, nondomiciliary states have the authority to specify acceptable means for risk retention groups to demonstrate “financial responsibility” as a condition for granting a risk retention group a license or permit to undertake specified activities within the state’s borders. 15 [USC] § 3905 (d). . . . In short, as compared to the near plenary authority it reserves to the chartering state, [the LRRA] sharply limits the secondary regulatory authority of nondomiciliary states over risk retention groups to specified, if significant, spheres. Wadsworth v. Allied Professionals Ins. Co., supra at 103-104 (some citations and quotation marks omitted).DiscussionAs noted, 15 USC § 3902 (a) (1) provides, in relevant part, that “a risk retention group is exempt from any State law . . . to the extent that such law . . . would make unlawful, or regulate, directly or indirectly, the operation of a risk retention group. . . .” And, it is undisputed that OOIDA is a risk retention group governed by the LRRA and that it is not chartered or domiciled in Georgia. Therefore, 15 USC § 3902 (a) (1), insofar as it relates to the powers of nondomiciliary states, governs the authority of Georgia to impose regulations on OOIDA’s operations in Georgia. In the case at bar, the superior court concluded that the LRRA preempted Georgia’s direct action statutes after finding that the statutes would “‘regulate, directly or indirectly the operation of the risk retention group as prohibited by 15 [USC] § 3902 (a) (l).”Plaintiffs urge that the direct action statutes[7] do not regulate the operation of risk retention groups but rather are “financial responsibility laws,” as set forth in 15 USC § 3905,[8] and therefore, are not preempted by the LRRA. They argue that the direct action statutes qualify as financial responsibility laws because they are in the nature of an indemnity policy benefitting the public, that the purpose of requiring an indemnity insurance policy, formerly a bond, is to evidence the financial responsibility of the motor carrier, and that the Federal Motor Carrier Safety Act designates laws requiring insurance or a bond for motor carriers as financial requirement laws. See 49 CFR § 387.7 (a).[9] They further cite Mears Transp. Grp. v. State, supra, in support of their argument that the direct action statutes are really financial responsibility laws. But, Plaintiffs’ argument is unavailing. As acknowledged by Plaintiffs, Mears did not involve direct action statutes. Rather, Mears was a challenge by for-profit passenger transportation companies, and the risk retention group from which they purchased insurance, to the validity of a Florida statute[10] which required owners and operators of for-hire transportation vehicles to maintain certain specified insurance coverage, expressly for the purpose of proving financial responsibility. Id. at 1014. The direct action statutes are not financial responsibility laws as they in no manner assure the financial soundness or solvency of a risk retention group. Rather, the direct action statutes provide a vehicle for directly naming a risk retention group as a party in a lawsuit.In contrast, Wadsworth, like the present case, involved a state direct action statute. In Wadsworth, the plaintiff filed a personal injury action against a chiropractor in New York. Judgment was entered against the chiropractor, which judgment the chiropractor failed to satisfy. The plaintiff then filed a direct action against the chiropractor’s insurer, a risk retention group not domiciled in New York, pursuant to a New York insurance law[11] that required insurance policies issued in New York to contain a provision permitting, in specified circumstances, a party with an unsatisfied judgment to maintain a direct action against the tortfeasor’s insurer for the satisfaction of that judgment. Id. at 101. Like Georgia, New York’s insurance law regarding risk retention groups largely mirrored the structure of the LRRA. Wadsworth at 104; see OCGA § 33-40-1 et seq. The Wadsworth court found that such a direct action statute, which is in derogation of the common law, vested a substantive right in an injured party against a tortfeasor’s insurer. Wadsworth at 104-105. Similarly, a prior Georgia direct action statute addressing motor carriers and insurance carriers has been held to be substantive in nature, rather than procedural.[12] Hidalgo v. Ohio Sec. Ins. Co., 2011 WL 12711470, at n.3 (N.D. Ga. 2011), citing Shapiro v. Aetna Casualty & Surety Co., 234 FSupp. 41, 42 (N.D. Ga. 1963). The Wadsworth court focused on Congress’s intent to exempt risk retention groups broadly from any requirement of state law that would make it difficult for such groups to form or to operate on a multi-state basis. Wadsworth at 107. It concluded that an expansive reading of the preemption language furthered the purpose of the LRRA. Id. That court confirmed its prior determination that, [i]n enacting the LRRA, . . . Congress desired to decrease insurance rates and increase the availability of coverage by promoting greater competition within the insurance industry Congress intended to exempt [risk retention groups] broadly from state law requirements that make it difficult for risk retention groups to form or to operate on a multi-state basis.Id. (Citations and quotation marks omitted.) Indeed, other courts have acknowledged the broad preemptive effect of the LRRA.[13] The Wadsworth court further concluded that application of the direct action statute to a foreign risk retention group would “undoubtedly ‘regulate, directly or indirectly,’ those groups by subjecting them to lawsuits” filed in other states by claimants who are not parties to the contracts with the insureds. Id. at 108. The court expressed concern, as did the superior court in the present case, that “the cost of litigation might well result in higher attorneys’fees, costs, and potential recoveries.” Id.Section 3902 (b) of the LRRA expressly provides that “[t]he exemptions specified in subsection (a) apply to laws governing the insurance business ” (Emphasis supplied.) It has been held that whether a practice is part of “ the business of insurance” can be determined by consideration of three characteristics: whether the practice effectively transfers or spreads a policyholder’s risk; whether it is an integral part of the contractual relationship between the insurer and the insured; and whether the practice is limited to entities within the insurance industry. Union Labor Life Ins. Co. v. Pireno, 458 U. S. 119, 129 (102 SCt 3002, 73 LE2d 647) (1982). The direct action statutes would impact operation of the business of insurance of a risk retention group inasmuch as application of the statutes would result in the spreading of risk and associated increases in costs due to the additional financial burden of defending unanticipated lawsuits in which they are directly named as parties, in affecting the relationship between an insurer and insured by creating possible conflicts of interest between the insurer and the policyholder, and in limiting their application to insurers of motor carriers. Therefore, the direct action statutes would regulate the operation of risk retention groups. See Speece v. Allied Professionals Ins. Co., supra at 88.The clear goal of the LRRA is to streamline the operations of risk retention groups like OOIDA by subjecting them to consistent regulation overseen by their chartering state. Wadsworth, supra at 108. The direct action statutes subject insurers of motor carriers to lawsuits as parties, and thus, exposes them directly to liability and any consequent damages. As such, direct action statutes both directly and indirectly regulate the operations of insurers of motor carriers in Georgia. While this type of regulating may be permissible with respect to traditional insurance carriers, it is not allowed in the case of a foreign risk retention group by the express act of Congress in the LRRA. 15 USC § 3902 (a) (1). And, we cannot disregard Congress’s command. Poloney v. Tambrands, supra at 850-851 (1).In summary, application of the direct action statutory provisions, OCGA § § 40-1-112 (c), 40-2-140 (d) (4), to the risk retention group OOIDA is preempted by the LRRA. Accordingly, the superior court properly granted summary judgment to OOIDA.Judgment affirmed. All the Justices concur.
