RESERVE System issues regulations governing the actions of Federal Reserve banks. The many other administrative agencies and departments make regulations to provide clarity and guid- ance in their respective areas of the law. Administrative agencies carry out legislation in several ways, including enacting regulations to carry out what the agency believes is the legislative intent. Agencies generally formulate proposed regulations and then open up rule- making proceedings in which interested parties can testify and comment on them. The agency then issues a rule or policy that binds the agency in future cases just as statutory law does. The ADMINISTRATIVE PROCEDURE ACT OF 1946, 5 U.S.C.A. § 551 et seq., with its subsequent amendments, was designed to make adminis- trative agencies accountable for their rule making and other government functions. It imposed a number of procedural requirements designed to make procedures among agencies more uniform. In administrative rule-making proceedings formal hearings must be held, interested parties must be given the opportunity to comment on proposed rules, and the adopted formal rules must be published in the FEDERAL REGISTER . After being published in the Federal Register, the regulations are subsequently ar- ranged by subject in the CODE OF FEDERAL REGULATIONS . The Administrative Procedure Act has been criticized, however, because it contains a number of exemptions that allow the agencies discretion in determining whether they strictly adhere to the guidelines established in the act. Organizations such as the AMERICAN BAR ASSOCIA- TION are working toward eliminating such discretion in administrative agencies. FURTHER READINGS Mashaw, Jerry L., Richard A. Merrill, and Peter M. Shane. 2003. Administrative Law: The American Public Law System, Cases and Materials. 5th ed. St. Paul, MN: Thomson/West. Mezines, Basil J., Jacob A. Stein, and Jules Gruff. 2009. Administrative Law. New York: Matthew Bender. CROSS REFERENCES Administrative Agency; Administrative Law and Procedure; Code of Federal Regulations; Federal Register; Public Administrative Bodies; Quasi-Legislative. REHABILITATION The restoration of former rights, authority, or abilities. The process of rehabilitating a witness involves restoring the credibility of the witness following IMPEACHMENT by the opp osing party. Rehabilitating a prisoner refers to preparing him or her for a productive life upon release from prison. REHABILITATION ACT OF 1973 See DISABILITY DISCRIMINATION. v REHNQUIST, WILLIAM HUBBS William Hubbs Rehnquist was appointed to the U.S. Supreme Court in 1972 and was elevated to the position of chief justice in 1986. A political and judicial conservative, Rehnquist consis- tently sought to limit the power of the federal government to intervene in areas traditionally left to the states. Rehnquist was born on October 1, 1924, in Milwaukee, Wisconsin. In 1943, he joined the U.S. Army Air Corps and served until 1946. He then took advantage of the GI BILL to attend college at Stanford University. After gradua ting in 1948 with both a bachelor ’s and a master’s degree, Rehnquist earned a second master’s degree in political science from Harvard University in 1949. He then attended Stanford University Law School, where he finished first in his 1952 graduating class. Rehnquist served as a law clerk for U.S . Supreme Court Justice ROBERT H. JACKSON. It was during the 1952 term that the Court first heard arguments on the constitutionality of state- segregated public education. In a memorandum to Jackson that would come back to haunt him at his judicial confirmation hearings, Rehnquist argued for upholding the SEPARATE BUT EQUAL doctrine contained in PLESSY V. FERGUSON, 163 U.S. 537, 16 S. Ct. 1138, 41 L. Ed. 256 (1896). While clerking, Rehnquist wrote a memo defending the case of Plessy v. Ferguson. Plessy had established the “ separate but equal” doctrine as to the races, which the Court was reconsidering in the famous case of BROWN V. BOARD OF EDUCATION (1954). The memo took the view that such matters should be determined by democratic processes rather than by judicial FIAT. When this memo came to light during Rehnquist’s confirmation hearings for Supreme Court justice in 1971, he claimed that it was either reflecting Jackson’s view s or was a “devil’s advocate” memo to air the other side of the GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 298 REHABILITATION issue. In any case, Jackson ended up joining Chief Justice Earl Warren’s opinion striking down the so-called separate but equal educa- tional system of Topeka, Kansas. After he left his judicial clerkship in 1953, Rehnquist relocated to Phoenix, Arizona, where he joined the state bar and entered private practice. In 1958 he served as a sp ecial state prosecutor, bringing charges against several state highway officials who were accused of FRAUD. During his years of pra ctice, he special- ized in civil LITIGATION. Rehnquist’s path to the U.S. Supreme Court began in Arizona REPUBLICAN PARTY politics of the 1950s. Under the leadership of U.S. Senator BARRY M. GOLDWATER, the party became the dominant force in Arizona government, es- pousing a political view that was more rigid and doctrinaire than that of the national Republican party. Rehnquist became active in the party and made the acquainta nce of RICHARD G. KLEINDIENST, an attorney who chaired the state Republican Party and who was a close adviser to Goldwater. Kleindienst served as Rehnquist’s political mentor and involved him in the 1964 presidential election that Goldwater lost to President LYNDON B. JOHNSON. In 1968 Kleindienst worked on RICHARD M. NIXON’s presidential campaign. After Nixon was elected, he appointed Kleindienst to be deputy attorney general. Kleindienst in turn recommended Rehnquist for the position of assistant attorney general in charge of the Office of Legal Coun sel in the U.S. JUSTICE DEPARTMENT. Attorney General JOHN N. MITCHELL was initially reluctant to hire Rehnquist, but, after inter- viewing him, Mitchell became convinced that Rehnquist was the right person for the job. William Hubbs Rehnquist 1924–2005 ▼▼ ▼▼ 1925 2000 1975 1950 ❖ 1924 Born, Milwaukee, Wisc. 2005 Died, Arlington, Va. 1939–45 World War II ◆ 1950–53 Korean War 1961–73 Vietnam War ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ ◆ 1943–46 Served in the U.S. Army Air Corps 1952 Graduated first in class from Stanford University Law School 1952–53 Clerked for Supreme Court Justice Robert H. Jackson 1958 Served as special state prosecutor in case against Arizona state highway officials accused of fraud 1969 Appointed head of Office of Legal Counsel at the U.S. Justice Department ◆ 1972–86 Served as associate justice of U.S. Supreme Court 1973 Dissented in Roe v. Wade 1976 Wrote majority opinion in National League of Cities v. Usery 1984 Wrote majority opinion in United States v. Leon 1986 Appointed chief justice of Supreme Court; wrote majority opinion in Meritor Savings Bank, FSB v. Vinson 1992 Dissented in part in Planned Parenthood v. Casey ◆ ◆ 1998 All the Laws but One: Civil Liberties in Wartime published 1999 Presided over Senate impeachment trial of President Clinton 2000 Dissented in Santa Fe Independent School District v. Doe; wrote majority opinion in Boy Scouts of America v. Dale; voted with majority in Bush v. Gore and wrote separate concurrence 2001 The Supreme Court, revised edition, published 2002 Wrote for majority in landmark school vouchers decision Zelman v. Simmons-Harris 2003 Voted with majority in Nev. Department of Human Resources v. Hibbs 2000 Presidential election result uncertain due to disputed Fla. vote count; recount halted by U.S. Supreme Court with 5–4 vote in Bush v. Gore ❖ William H. Rehnquist. ª JASON REED/ REUTERS/CORBIS. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3 RD E DITION REHNQUIST, WILLIAM HUBBS 299 As head of the Office of Legal Counsel, Rehnquist supplied legal advice to all of the departments of the federal government. He also became one of the most stalwart defenders of the Nixon administration’s policies. He sup- ported PREVENTIVE DETENTION and the adminis- tration’s authority to order WIRETAPPING and surveillance without a court order. He also agreed that the EXCLUSIONARY RULE in criminal cases should be abolished. This rule excludes evidence that the police have seized illegally. In 1971 President Nixon nominated Rehnquist to the U.S. Supreme Court. Senate Democrats, concerned about Rehnquist’s con- servative philosophy and his actions as a member of the Nixon administration, sought to defeat the nomination. They used Rehnquist’s memorandum supporting the upholding of Plessy as evidence that he was hostile to CIVIL RIGHTS . Despite these efforts, Rehnquist was easily confirmed. Rehnquist joined a Court that was headed by Chief Justice WARREN E. BURGER. At the time of his appointment, the Court still had a liberal majority. Rehnquist immediately became the most conservative member of the Court. When the Court ruled in ROE V. WADE, 410 U.S. 113, 93 S. Ct. 705, 35 L. Ed. 2d 147 (1973), that a woman had the right to an ABORTION, Rehnquist dissented. He remained consistently opposed to abortion but never found enough votes to overturn Roe. As justices retired or died during the 1970s and early 1980s, more conservative justices were appointed to the Court. Rehnquist’s views on FEDERALISM began to be adopted by his collea- gues. The concept of federalism concerns the distribution of power to the states and the federal government. Until the coming of FRANKLIN D. ROOSEVELT’s NEW DEAL in the 1930s, states had much more power over regulating day-to-day life than the federal government did. The liberal WARREN COURT of the 1960s greatly expanded the right of Congress to regulate economic and other societal activities. By the late 1970s Rehnquist helped con- vince a majority of the Court to begin to pull back from the idea that the federal government, which included the federal courts, could intrude into areas that traditionally were left to the states. In National League of Cities v. Usery, 426 U.S. 833, 96 S. Ct. 2465, 49 L. Ed. 2d 245 (1976), Rehnquist held that the COMMERCE CLAUSE of the U.S. Constitution did not give Congress the power to extend federal MINIMUM WAGE and overtime standards to state and local governments. Rehnquist wrote decisions that restricted the power of a federal court to oversee the reform of a police department (Rizzo v. Goode, 423 U.S. 362, 96 S. Ct. 598, 46 L. Ed. 2d 561 [1976]); prohibited construing nineteenth-century fed- eral civil rights laws to allow AFFIRMATIVE ACTION (General Building Contractors v. Pennsylva nia, 458 U.S. 375, 102 S. Ct. 3141, 73 L. Ed. 2d 835 [1982]); and prevented plaintiffs from collecting government benefits that had been wrongfully withheld by state governments (Edelman v. Jordan, 415 U.S. 651, 94 S. Ct. 1347, 39 L. Ed. 2d 662 [1974]). In cases involving CRIMINAL LAW and proce- dure, Rehnquist consistently sided with law enforcement. In Illinois v. Gates, 462 U.S. 213, 103 S. Ct. 2317, 76 L. Ed. 2d 527 (1983), he crafted a new rule that made it easier for police to obtain a warrant on the basis of an informant’s tip. He supported the creation of a “good faith” exception to the exclusionary rule (United States v. Leon, 468 U.S. 897, 104 S. Ct. 3405, 82 L. Ed. 2d 677 [1984]) and has upheld the constitutionality of pretrial deten- tion (United States v. Salerno, 481 U.S. 739, 107 S. Ct. 2095, 95 L. Ed. 2d 697 [1987]). Rehnquist also was a defender of the constitutionality of the death penalty and a critic of lengthy and repetitive death penalty appeals based on the writ of HABEAS CORPUS. In CIVIL RIGHTS CASES, Rehnquist sought to tie affirmative action to specific discriminatory conduct against the plaintiffs, rather than to past societal wrongs. He did, however, write the majority opinion in Meritor Savings Bank, Federal Savings Bank v. Vinson, 477 U.S. 57, 106 S. Ct. 2399, 91 L. Ed. 2d 49 (1986), which applied Title VII of the CIVIL RIGHTS ACT OF 1964 (42 U.S.C.A. § 200 0a et seq.) to SEXUAL HARASSMENT on the job. An employer may be held liable if a “hostile work environment” is created where sexual harassment takes place. In 2000 Rehnquist wrote the lead opinion in BOY SCOUTS OF AMERICA V. DALE, 530 U.S. 640, 120 S. Ct. 2446, 147 L. Ed. 2d 554 (2000), where the Court held that applying a New Jersey public-accommodation law to require the Boy Scouts to admit homosexuals violated the FIRST AMENDMENT . The case had been watched closely JUSTICE IS TOO IMPORTANT A MATTER TO BE LEFT TO THE JUDGES , OR EVEN TO THE LAWYERS : THE AMERICAN PEOPLE MUST THINK ABOUT , DISCUSS, AND CONTRIBUTE TO THE FUTURE OF THEIR COURTS . —WILLIAM H. R EHNQUIST GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 300 REHNQUIST, WILLIAM HUBBS by GAY AND LESBIAN RIGHTS advocates. Some commentators suggested that Rehnquist and the majority had relied too heavily on tradition in making the ruling. However, others main- tained that the decision was consistent with others in First Amendment JURISPRUDENCE. In recognition of Rehnquist’s record on the Court, President RONALD REAGAN nominated him in 1986 to succeed Chief Justice Burger. Again there was some opposition to his nomination, but he was easily confirmed. Although Presidents Ronald Reagan and GEORGE H. W. BUSH appointed conser vatives to the Court after Rehnquist became chief justice, the Rehnquist Court maintained a moderate course. Former Justices SANDRA DAY O’CONNOR and DAVID H . SOUTER, along with Justice ANTHONY M. KENNEDY, who all had moderately conservative views, resisted calls from Rehnquist and Justices ANTONIN SCALIA and CLARENCE THOMAS to overturn Court precedents, includin g ROE V. WADE. Rehnquist presided over the Senate IMPEACH- MENT trial of President BILL CLINTON during January and February 1999. He assumed the role based on Article I, Section 3 of the Constitution, which provides that the chief justice shall preside when the PRESIDENT OF THE UNITED STATES is tried, but it offers no guidance as to what the chief justice’s role should be. Clinton’s impeachment marked the second time in U.S. history that a chief justice has presided over the impeachment trial of a president. Rehnquist shared this distinction with his predecessor, SALMON P. CHASE, who presided over the 1868 trial and subsequent ACQUITTAL of President ANDREW JOHNSON. Rehnquist modeled the Senate proceedings after the 1868 trial. The trial little resembled a typical courtroom trial because the chief justice’s authority was rigidly circumscribed. The rules mandated that senators sit mute through the trial. Only Rehnquist could ask questions upon the written request of the senators. He had the authority to decide questions of procedure and admissibility of evidence, but the Senate had the power to overturn any ruling by a simple majority vote. Rehnquist was not called upon to rule on any evidentiary issues, nor was he asked to decide what questions a witness could be asked. In some cases, Rehnquist seemed to moder- ate positions he had held when he first came on the Court. For example, in Dickerson v. United States (2000) he abandoned his long quest to OVERRULE Miranda and authored a majority opinion to uphold it, over an outraged DISSENT by Justice Scalia. However, this probably had more to do with resistance to Congress’s attempt to “overrule” Miranda than with any newfound fondness for the holding of that case, and he soon agreed with subsequent opinions that significantly limited Miranda’s impact. Similarly, in Nevada Department of Human Resources v. Hibbs (2003), he enhanced federal power over the states by authoring an opinion (over the dissents of Scalia, Clarence Thomas, and ANTHONY KENNEDY) holding that Congress may require states to grant “family leave” to their employees by acting under the FOURTEENTH AMENDMENT . It cannot be known whether Dickerson and Hibbs represented Rehnquist’s true beliefs or efforts to limit the damage done by decisions with which he would have preferred to disagree but could not get a majority to go that way. In any event, his opinions for the majority in both cases showed an increased willingness to work toward consensus and compromise. Perhaps the most notable decision of Rehnquist’s tenure as chief justice was Bush v. Gore (2000), which effectively decided the 2000 presidential election for GEORGE W. BUSH by stopping the recount of co ntested ballots in Florida. Cass R. Sunstein of the University of Chicago Law School deemed this decision “a far more radical intervention into the political processes than anything dared by the Warren Court.” Rehnquist seemed to defend this intervention of the Court into the poli tical process in a speech referring to the Court’s decision concerning the controversial 1876 presidential election: “There is a national crisis, and only you can avert it. It may be very hard to say no.” Rehnquist served as chief justice for 19 years, establishing him as the fourth-longest- serving chief justic e, although he was the longest-serving chief justice who had previously served as an associate justice. For the last 11 years of his service as chief justice (1994— 2005), the associate justices on the Court remained unchanged, making it the second- longest tenure of one makeup of the Court. After Rehnquist’s death at his home from complications of thyroid cancer on September 3, 2005, he was succeeded by JOHN G. ROBERTS JR., who had served as a law clerk for Rehnquist in GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION REHNQUIST, WILLIAM HUBBS 301 1980. Rehnquist is buried in Arlington National Cemetery. He will be remembered for leading the Court away from the activism of the Warren Court and for enhancing the power of the states in the federal system. FURTHER READINGS Belsky, Martin H., ed. 2002. The Rehnquist Court: A Retrospective. New York: Oxford Univ. Press. Rehnquist, William H. 2001. The Supreme Court. New York: Knopf. Schwartz, Herman, ed. 2002. The Rehnquist Court: Judicial Activism on the Right. New York: Hill and Wang. Yarbrough, Tinsley E. 2000. The Rehnquist Court and the Constitution. New York: Oxford Univ. Press. REINSTATE To restore to a condition that has terminated or been lost; to reestablish. To reinstate a case, for example, means to restore it to the same position it had before dismissal. REINSURANCE The contract made between an insurance com- pany and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. A reinsurance contract is a contract of INDEMNITY, meaning that it becomes effective only when the insurance company has made a payment to the original policyholder. Reinsur- ance provides a way for the insurance company to protect itself from financial disaster and ruin by passing on the risk to other companies. Reinsurance redistributes or diversifies the risk or threat associated with the business of issuing policies by allowing the reinsured to show more assets by reducing its reserve requiremen ts. Reinsurers have played an important role in many U.S. catastrophes during the 20th and 21st centuries. For instance, the reinsurance industry absorbed about 60 percent of the losses incurred due to the terrorist attacks on SEPTEMBER 11, 2001. Likewise, it bore approx i- mately 61 percent of the losses that resulted from Hurricane Katrina in 2005. The parties to the reinsurance contract are the reinsurer, the reinsured, and the original policyholder. The reinsurer is the THIRD PARTY or the company issuing the reinsurance policy. Typically, reinsurers engage solely in the business of issuing reinsurance policies; how- ever, any company that meets the requirements and is authorized to issue insurance may issue such policies. The reinsured is the insurance company that issued the first policy and is applying for reinsurance. The original policy- holder or original insured is the party who purchased the original policy. When the reinsurance contract is between just the two insurance companies (the reinsured and the reinsurer), the original policyholder usually has no rights against the reinsurer. The reinsurance policy covers the risk or liability associated with the original policy issued. The reinsurance policy must be for a specific INSURABLE INTEREST. The interest to be insured must exist at the time the reinsurance policy is issued; it cannot be created later. All or part of the liability of the original policy can be covered by the reinsurance, but nothing greater. The reinsurance policy cannot cover a period longer than the original policy. Generally, because the reinsurance is not a promise to pay the debt of another but to indemnify a potential liability, the STATUTE OF FRAUDS does not require the agreement to be in w riting. Most often in practice, however, reinsurance policies are written to avoid problems later. The two basic types of reinsurance are facultative reinsurance and treaty reinsurance. Facultative reinsurance is issued on an individ- ual analysis of the situation and facts of the underlying policy. It may cover all or part of the underlying policy. By deciding coverage case by case, the reinsurer can determine whether it wants the risk associated with that particular policy. Facultative reinsurance is used by the reinsured to reduce the chance of loss or risk associated with a certain policy. Treaty reinsurance, on the other hand, is written to cover a particular class of policies issued by the reinsured. Examples of classes covered by treaty reinsurance are all property insurance policies or all casualty insurance policies written by the reinsured. Treaty rein- surance automatically passes the risk to the reinsurer for all policies that are covered by the treaty, not just one particular policy. Treaty policies are more general than facultative policies because the reinsurance decision is based on general potential liability rather than on a specific enumerated risk. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 302 REINSTATE In addition to the two types of reinsurance issued, there are two ways that coverage can be allotted between the parties: either proportion- ally or non-proportionally. In the case of proportional reinsurance, the reinsured obtains coverage for only a portion or percentage of the loss or risk from the reinsurer. The proportion of coverage is typically based on the percentage of premiums paid to the reinsurer. For examp le, if the reinsured pays 40 percent of the premiums to the reinsurer, then the reinsured recovers 40 percent of its losses when it pays the original policyholder according to the original policy terms. The reinsured can only recov er a portion of its total loss, not the entire amount. The amount actually paid by the reinsurer is not figured into the reinsurance contract, only the percentage of loss the policy will cover. In contrast, non-proportional reinsurance covers a set amount of loss. A base or deductible amount is set in the reinsurance policy, and any loss exceeding that amount is paid by the reinsurer. The amount being paid by the reinsurer has no relationship to the premiums received. The reinsured, in effect, is reimbursed for all payments made under the original policy that exceed the deductible amount. The deduct- ible amount can be figured either by each event or in the aggregate. Either type of coverage can be used in either facultative or treaty insurance contracts. The terms of the policy depend on the situation and the relationship the reinsured and the reinsurer have had in the past. Reinsurance policy terms can be made to be flexible for the appropriate facts at the time. Although the terms of the policies can be flexible, several doctrine s help to define the nature of the re insurer and reinsured relation- ship. These doctrines are the duty of utmost GOOD FAITH and the doctrine of “follow the fortunes.” The duty of utmost good faith has several facets, including the requirement that both parties to the reinsurance contract deal with each other with candor and honesty. The duty assumes that both parties are sophisti- cated and knowledgeable in the insurance industry. As a result, they should be aware of what is relevant and necessary for the other party to know. The reinsured must follow the duty by disclosing all material facts to the reinsurer that relate to or affect the original policy and its calculated risk. The reinsured must essentially put the reinsurer in the same position as it would be in when deciding about the ri sks and the possibility of coverage on the original policy. In addition, the duty requires that the reinsured act with honesty in negotiating any settlement with the original policyholder. If the settlement is not handled by following the appropriate business procedures, the reinsurer may not be bound by its terms and then will not have to pay under the policy coverage. Lastly, the duty of utmost good faith requires the reinsured to provide adequate notice of any claim or potential claim to the reinsurer. For notice to be adequate, it should be given as soon as the reinsured becomes aware of a potential claim. To be aware, the reinsured must investigate with diligence to discover these possible claims. Notice is required to make the reinsured aware of the possible need for available funds in case a claim is filed. Notice also allows the reinsured to participate, if desired, in the defense of the underlying claim. Practically, reinsurers may also use the notice of potential claims to determine renewal of, or change in, premiums under the reinsurance contract. The duty of utmost good faith that is part of reinsurance policies requires the rein- sured and reinsurer to deal honestly with each. Also implicit to reinsurance policies is the follow-the-fortunes doctrine. “Follow the for- tunes” means the reinsurer should follow along with the reinsured’s payment to the original policyholder. Provided the reinsured makes a good faith payment that reasonably falls within the terms of the original policy to the policy- holder, the reinsurer is then required to make payment according to the terms of the reinsur- ance policy. The reinsurer should make the payment even if payment is not specifically mandated under the terms of the policy but is arguably within the meaning of its terms. The doctrine is meant to encourage coverage by reinsurers and discourage unnecessary LITIGATION by the parties over interpretation of the policy. The follow-t he-fortunes doctrine does have limits to protect the reinsurer from excessive payments. The reinsurer is not obligated to cover payments made by the reinsured that are clearly outside of the policy language. The reinsurer is also not obligated to follow the business fortune of the reinsured, only the insurance-related fortune of the company. The reinsurer need only indemnify for the type of loss intended by the policy, not losses due to GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION REINSURANCE 303 uncollectible premiums. Losses clearly related to the business decision and not the policy are not within the scope of the doctrine. The follow- the-fortunes doctrine implies a duty by the reinsurer to indemnify reasonable payments made by the reinsured under the underlying insurance policy. Once the policy terms and the parties’ relationship are defined, several defenses are available to the parties to avoid liability. Defenses that may be available include normal contract defenses, inadequate notice and failure to disclose, or MISREPRESENTATION. Usually any defense available to either party to a contract would be available to either the reinsurer or the reinsured. Those defenses can include impossi- bility of performance, an act outside the parties ’ authority, actions by a party that are inconsis- tent with the policy, actions by a party that unreasonably increase the risk, or misconduct by the parties. Any defense that would be an option for a party under the original insurance policy is available for the parties to the reinsurance policy. The defense of inadequate notice is available to the reinsurer. If the reinsured has violated its duty to give prompt and reasonable notice to the reinsurer, the reinsurer may be able to reduce or refuse payment under the policy. Because of the relationship between the parties, the reinsured is required to comply fully with all the terms of the policy, or the reinsurer is not necessarily obligated. However, the reinsurer must often show that it has been prejudiced or hurt by the lack of notice in order to avoid liability on the policy. The most common defense available to the parties is the failure to disclose (also referred to as FRAUD, misrepresentation, or concealment). This defense is tied heavily to the duty of utmost good faith because both deal with the disclosure of material facts. For the reinsurer to assert the defense of failure to disclose, the reinsured must have concealed some relevant or important information. Relevant information would in- clude facts such as a claim previously filed under the original policy or an unusually high risk related to the original policy. The failure to disclose need not be an intentional statement known to be false; it could be the reinsured’s failure to investigate and determine the truth of a fact. When deciding whether a fact or information is material or relevant, the courts ask whether the misrepresented or withheld information, if disclosed, would have changed the reinsurer’s decision to issue the policy. The false statement alone is not enough to avoid liability; the reinsurer must have acted upon that misrepresentation in such a way that it was prejudiced. If the reinsurer’s decision or action would have been different regarding the risk, it may be relieved of liability. Generally, the original policyholder has no rights against the reinsurer. Because the original policyholder has no contract with the reinsurer, they have no obligations to each other. This arrangement can be altered by inserting language into the reinsurance policy allowing the original policyholder to obtain payment directly from the reinsurer. Such language often is effective only when the reinsured becomes insolvent or unable to pay. These clauses are not often used, because a reinsured can view such clauses as a lack of confidence in its ability to pay. The clause may be used in the case of a reassignment or sale of the policy to another insurance company to protect the original insured. Without specific language in the policy, the original policyholder has few rights with the reinsured. If the reinsured becomes overly active in the claim process and defense, it could open itself to a direct claim. The original insured can bring an action against the reinsurer if the reinsurance policy requires the reinsurer to pay any claim directly to the original policyholder. The original policyholder is con- sidered a third-party BENEFICIARY and can sue either the reinsured or the reinsurer. The recovery obtained by the original policyholder cannot be more than the total loss. FURTHER READINGS Diaconis, John S., chair. 1996. Reinsurance Law and Practice: New Legal and Business Developments in a Changing Global Environment. New York: Practicing Law Institute. Haar, Matthew M. 2003. “The Role of Reinsurance: Defending under the Follow-the-Fortunes Doctrine.” For the Defense 45. Ostrager, Barry R., ed. 1999. Insurance, Excess, and Reinsur- ance Disputes. New York: Practicing Law Institute. Reinsurance Law and Practice. 1996. New York: Practicing Law Institute. Staring, Graydon S. 2003. “Insurance and Reinsurance of Marine Interests in the New Age of Terrorism.” Tulane Law Review 77. Wollan, Eugene. 2002. Handbook of Reinsurance Law. New York: Aspen Law & Business. CROSS REFERENCES Contracts; Disaster Relief; Insurance; Liability; September 11th attacks; Tort Law. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 304 REINSURANCE REJOINDER The answer made by a defendant in the second stage of COMMON-LAW PLEADING that rebuts or denies the assertions made in the plaintiff’s replication. The rejoinder allows a defendant to present a more responsive and specific statement challenging the allegations made against him or her by the plaintiff. RELATION Kin; relative. The connection of two individuals, or their situation with respect to each other, who are associated, either by law, agreement, or kinship in a social status or union for purposes of domestic life, such as parent and child or husband and wife. Also a doctrinal principle by which an act performed at one time is deemed, through a LEGAL FICTION, to have been performed at a prior time and thus to have taken legal effect. For example, in the conveyance of real property, the final proceeding that completes the transfer of property is considered, for certain purposes, to have become effective by relation as of the day when the first proceeding took place. This mechanism is also known as “relation back.” RELATOR The individual in whose name a legal action is brought by a state; the individual who relates the facts on which an action is based. The relator is the individual upon whose complaint certa in writs are issued. The relator is the party of interest in a proceeding, who is allowed to institute such proceeding in the name of the people, or in the name of the attorney general when such official has the sole right to sue. For example, if A was the relator and B was the defendant, the citation of the case would read, State ex rel. A v. B. RELEASE A contractual agreement by which one individual assents to relinquish a claim or right under the law to another individual against whom such claim or right is enforceable. The right or claim given up in a release ordinarily involves contracts or TORTS.Ageneral release encompasses all claims that are in existence between the parties and are within their contemplation when the release is executed. A specific release is generally limited to the particular claims specified therein. No particular form or language is required for a release, provided the contract is complete and clearly indicates the releasor’s intention. In the absence of a specific statutory provision, releases need not be in writing. In order for it to take effect, a release must be supported by adequate consideration. Pro- vided something of value is received, the consideration will be deemed adequate. The consideration can take various forms—such as payment to an employee for time lost due to an injury, in exchange for a release of the employ- ee’s damage claim; or repossession of a particular item in exchange for the release or discharge of a debt. Validity Since it is a contract, a release is subject to the same validity requirements as a contract. A voluntary release that is obtained in exchange for valuable consideration from an individual who is capable of totally understanding its legal effect is valid. An individual who signs a release has the obligation to read its contents prior to executing it; the person cannot have the release set aside because he or she has not become familiar with its contents. A release is not void merely because the bargain was unwise. In situations where a release has been executed as a result of a mutual mistake that significantly affects the parties’ rights, it can be set aside. In order to ascertain whether a release was executed under mutual mistake, all of the circumstances regarding the signing of the release must be taken into consideration, including the sum paid for release and whether the issue of liability w as in dispute at the time the settlement was made. An innocent MISREPRESENTATION that is relied upon by the releasor justifies setting aside a release induced by it. For example, by relying on a medical diagnosis for an injury sustained, an individual might sign a release in exchange for a particular sum of money. If, subsequently, the individual discovers that the injury is more serious than was indicated by the initial diagno- sis, the release can be set aside, since the claims were released based on misrepresentation. Fraudulent representations made by the releasee and relied on by the individual who gives up the claim for injury will also invalid ate a release. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION RELEASE 305 Torts Under the COMMON LAW, when an individual who had been injured by the wrongful acts of two or more persons acting in concert— known as joint tortfeasors—executed a release to one of the defendants, the releasor was regarded as having relinquished the claim against all the defendants, unless rights against them were clearly and specifically reserved in the release. This rule proved to be unfair, however, because it forced the injured party to give up an entire claim against all tortfeasors without necessarily being totally compensated. Few jurisdictions still apply this rule. Most states currently permit a plaintiff to continue an action against the remaining joint tortfeasors after one of them has been released from liability unless the plaintiff has made an intentional surrender of the claim or has been totally compensated. An agreement of this type is called a COVENANT not to sue—the plaintiff does not give up the lawsuit but agrees not to enforce the claim against a particular joint tortfeasor although the others are still liable. A sample release. ILLUSTRATION BY GGS CREATIVE RESOURCES. REPRODUCED BY PERMISSION OF GALE, A PART OF CENGAGE LEARNING. RELEASE This Release executed on the ______ day of _____________________, 20_____ by _________________________________ (Releasor) and between _______________________________________ (Releasee). For good and valuable consideration, the receipt of which is hereby acknowledged, releasor voluntarily and knowingly executes this release with the express intention of effecting the extinguishment of obligations created by or arising out of: Releasor, with the intention of binding itself, its spouse, heirs, legal representatives, and assigns, expressly releases and discharges Releasee and its heirs and legal representatives from all claims, demands, actions, judgments, and executions that Releas or ever had, or now has, or may have, known or unknown, against Releasee or its heirs or legal representatives created by or arising out of said claim. In witness whereof, Releasor has executed this release on the day and year first above written. ___________________________________________________ Signature STATE OF ) COUNTY OF ) Subscribed and sworn before me on this the ________ day of __________________________________ , 20_______. Witness my hand and seal. ___________________________________________________ My commission expires: Notary public Release GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 306 RELEASE RELEASE TIME PROGRAM A release time prog ram is the name for the arrangement by which local public school boards permit students to be dismissed from classes prior to the completion of the regular school day for purposes of religious instruction. The FIRST AMENDMENT to the Constitution guarantees freedom of religion in both belief and practice under the free exercise clause but prohibits the government from aiding and recognizing any religion under the establish- ment clause. Such constitutional mandates are binding upon the states through the DUE PROCESS CLAUSE of the FOURTEENTH AMENDMENT. The state must remain neutral in its treatment of religion; at the same time, it must refra in from infringing upon a person’s right to practice his or her faith. Since their creation in 1914 in Gary, Indiana, release time programs have provided a means by which students who otherwise would be deprived of an opportunity to receive religious instruction can learn about their religion. However, such programs have come under judicial scrutiny because of the claim that the involvement of public school boards in religious concerns violates the establishment clause. In the 1948 case of Illinois ex rel. McCol lum v. Board of Education (333 U.S. 203, 68 S. Ct. 461, 92 L. Ed. 649), a release time program provided by the Champaign, Illinois, public schools was alleged to be unconstitutional. The schools offered classroom space once per week for one period of 30 to 45 minutes during the school day to private teachers to instruct interested students in religion. The students who were “released” for religious training had to present signed parental-request forms in order to attend such courses. All other students were sent to other parts of the school building to finish the school day while this religious instruction took place. Both the release-time students and the other students had to satisfy attendance requirements in order to comply with compulsory education laws of the state. A taxpayer named Vashti McCollum, the parent of a student, sought MANDAMUS to compel the school board to adopt and enforce regulations prohibiting all religious instruction in public schools. The state trial and appellate courts denied the writ, and the PLAINTIFF appealed to the U.S. SUPREME COURT. The Court ruled that the involvement of the public school in the program of religious education was so great that it violated the First Amendment. The Court based its reasoning on the facts that public classrooms financed by taxpayers were being used for religious purposes and that the public system of compuls ory education was being used to promote religion. Another challenge was brought concerning a release time program in the New York City public schools in the 1952 case of Zorach v. Clauson (343 U.S. 306, 72 S. Ct. 679, 96 L. Ed. 954). In that case, students participated in the program only upon the written request of their parents. Such pupils were released, or permitted to leave school, for one hour of regular class time once per week, to attend religious instruc- tion at sectarian centers. All other students remained in school. Church officials were responsible for making weekly attendance reports to the schools. The plaintiff, Tessim Zorach, a taxpayer and the parent of a student, brought an action in state court to review the action of the school board in permitting such a program. The case was brought on appeal to the Vashti McCollum and her son, Terry. McCollum was successful in her 1948 challenge of an Illinois public school release time program, which the Supreme Court found unconstitutional. AP IMAGES GALE ENCYCLOPEDIA OF AMERICAN LAW, 3 RD E DITION RELEASE TIME PROGRAM 307 . REED/ REUTERS/CORBIS. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3 RD E DITION REHNQUIST, WILLIAM HUBBS 299 As head of the Office of Legal Counsel, Rehnquist supplied legal advice to all of the departments of the federal. OR EVEN TO THE LAWYERS : THE AMERICAN PEOPLE MUST THINK ABOUT , DISCUSS, AND CONTRIBUTE TO THE FUTURE OF THEIR COURTS . —WILLIAM H. R EHNQUIST GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 300. September 11th attacks; Tort Law. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 304 REINSURANCE REJOINDER The answer made by a defendant in the second stage of COMMON -LAW PLEADING that rebuts or