The business of insurance is sustained by a complex system of risk analysis. Generally, this analysis involves anticipating the likelihood of a particular loss and charging enough in pre- miums to guarantee that insured losses can be paid. Insurance companies collect the pre- miums for a certain type of insurance policy and use them to pay the few individuals who suffer losses that are insured by that type of policy. Most insurance is provided by private corporations, but some is provided by the government. For example, the FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) was established by Congress to insure bank deposits. The federal government provides life insurance to military service personnel. Congress and the states jointly fund MEDICAID and MEDICARE,whichareHEALTH INSURANCE programs for persons who are disabled or elderly. Most states offer health insurance to qualified persons who are indigent. The 2008 presidential candidacy of BARACK OBAMA focused largely on a platform of promised health care reform, centered on the insurance industry. In 2009, the Obama administration and Congress struggled with internal power plays along party lines to include a “public option” (government- provided insurance to qualifying persons) in any health care reform package that would ostensibly enhance competition among private insurance companies. Government-issued insurance is regulated like private insurance, but the two are very different. Most recipients of government insur- ance do not have to pay premiums, but they also do not receive the same level of coverage available under private insurance policies. Government-issued insurance is granted by the legislature, not bargained for with a private insurance company, and it can be taken away by an act of the legislature. However, if a legislature issues insurance, it cannot refuse it to a person who qualifies for it. History The first examples of insurance related to marine activities. In many ancient societies, merchants and traders pledg ed their ships or cargo as security for loans. In Babylon creditors charged higher interest rates to merchants and traders in exchange for a promise to forgive the loan if the ship was robbed by pirates or was captured and held for ransom. In postmedieval England, local groups of working people banded together to create “friendly societies,” forerunners of the modern insurance companies. Members of the friendly societies made regular contributions to a common fund, which was used to pay for losses suffered by members. The contributions were determined without reference to a member’s age, and without precise identification of what claims would be covered. Without a system to anticipate risks and potential liabili ty, many of the first friendly societies were unable to pay claims, and many eventually disbanded. Insur- ance gradually came to be seen as a matter best handled by a company in the business of providing insurance. Insurance companies began to operate for profit in England during the seventeenth century. They devised tables to mathematically predict losses based on various data, including the characteristics of the insured and the probability of loss related to particular risks. These calculations made it possible for insur- ance companies to anticipate the likelihood of claims, and this made the business of insurance reliable and profitable. The British Parliament granted a monopoly over the business of insurance in colonial America to two English corporations, London Assurance and Royal Exchange. During the 1760s colonial legislatures granted a few American insurance companies permission to operate. Since the Revolutionary War, U.S. insurance companies have grown in number and size, with most offering to insure against a wide range of risks. Regulation and Control Until the middle of the twentieth century, insurance companies in the United States were relatively free from federal regulation. Accord- ing to the U.S. Supreme Court in Paul v. Virginia, 75 U.S. (8 Wall.) 168, 19 L. Ed. 357 (1868), the issuing of an insurance policy did not constitute a commercial transaction. This meant that states had the power to regulate the business of insurance. In 1944, the high court held in United States v. South-Eastern Under- writers Association, 322 U.S. 533, 64 S. Ct. 1162, 88 L. Ed. 1440, that insurance did, in some cases, constitute a commercial transaction. This meant that Congress had the power to regulate it. The South-Eastern holding made the business GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 448 INSURANCE of insurance subject to federal laws on rate fixing and monopolies. As of 2010, insurance is governed by a blend of statutes, administrative agency regulations, and court decisions. State statutes often control premium rates, prevent unfair practices by insurers, and guard against the financial insol- vency of insur ers to protect insureds. At the federal level, the McCarran-Ferguson Act (Pub. L. No. 79-15, 59 Stat. 33 [1945][codified at 15 U.S.C.A. §§ 1011–1015 (1988)] ) permits states to retain regulatory control over insurance, as long as their laws and regulations do not conflict with federal antitrust laws on rate fixing, rate discrimination, and monopolies. In most states, an administrative agency created by the state legislature devises rules to cover procedural details that are missing from the statutory framework. To do business in a state, an insurer must obtain a license through a registration process. This process is usually managed by the state administrative agency. The same state agency may also be charged with the enforcement of insurance regulations and statutes. Administrative agency regulations are many and varie d. Insurance companies must submit to the governing agency yearly financial reports regarding their economic stability. This require- ment allows the agency to anticipate potential insolvency and to protect the interests of insureds. Agency regulations may specify the types of insurance policies that are acceptable in the state, although many states make these declarations in statutes. The administrative agency is also responsible for reviewing the competence and ethics of insurance company employees. The JUDICIAL branches of governments also shape insurance law. Courts are often asked to resolve disputes between the parties to an insurance contract, and disputes with third parties. Court decisions interpret the statutes and regulations based on the facts of cases, creating many rules that must be followed by insurers and insureds. Insurance companies may be penalized for violating statutes or regulations. Penalties for misconduct include fines and the loss or suspension of the company’s business license. In some states, if a court finds that an insurer’s denial of coverage or refusal to defend an insured in a lawsuit was unreasonable, the insurance company may be required to pay court costs, attorneys’ fees, and a percentage beyond the insured ’s recovery. Types of Insurance Insurance companies create insurance policies by grouping risks according to their focus. This provides a measure of uniformity in the risks that are covered by a type of policy, which, in turn, allows insurers to anticipate their potential losses and to set premiums accordingly. The most common forms of insurance policies include life, health, automobile, homeowners’ and renters’, PERSONAL PROPERTY, fire and casual- ty, marine, and inland marine policies. Life insurance provides financial benefits to a designated person upon the death of the insured. Many different forms of life insurance are issued. Som e provide for payment only upon the death of the insured; others allow an insured to collect proceeds before death. A person may purchase life insurance on his or her own life for the benefit of a third person or persons. Individuals may even purchase life insurance on the life of another person. For example, a wife may purchase life insurance that will provide benefits to her upon the death of her husband. This kind of policy is commonly obtained by spouses and by parents insuring themselves against the death of a child. However, individuals may only purchase life insurance on the life of another person and name themselves beneficiary when there are reasonable grou nds to believe that they can expect some benefit from the continued life of the insured. This means that some familial or financial relationship must unite the beneficiary and the insured. For example, a person may not purchase life insurance on the life of a stranger in the hope that the stranger will suffer a fatal accident. Health insurance policies cover only speci- fied risks. Generally, they pay for the expenses incurred from bodily injury, disability, sickness, and accidental death. Health insurance may be purchased for oneself and for others. All automobile insurance policies contain liability insurance, which is insurance against injury to another person or against damage to another person’s vehicle caused by the insured’s vehicle. Auto insurance may also pay for the loss of, or damage to, the insured’s motor vehicle. Most states require that all drivers carry, at a GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION INSURANCE 449 minimum, liability insurance under a no-fault scheme. In states that recognize no-fault insur- ance, damages resulting from an accident are paid for by the insurers, and the drivers do not have to go to court to settle the issue of damages. Drivers in these states may bring suit over an accident only in cases of egregious conduct, or where medical or repair costs exceed an amount defined by statute. Homeowners’ insurance protects home- owners from losses relating to their dwelling, including damage to the dwelling; personal liability for injury to visitors; and loss of, or damage to, property in and around the dwelling. Renters’ insurance covers many of the same risks for persons who live in rented dwellings. As its name would suggest, personal proper- ty insurance protects against the loss of, or damage to, certain items of personal property. It is useful when the liability limit on a home- owner’s policy does not cover the value of a particular item or items. For example, the owner of an original painting by Pablo Picasso might wish to obtain, in addition to a homeowner’s policy, a separate personal property policy to insure against loss of, or damage to, the painting. Businesses can insure against damage and liability to others with fire and casualty insurance policies. Fire insurance policies cover damage caused by fire, explosions, earthquakes, lightning, water, wind, rain, collisions, and riots. Casualty insurance protects the insured against a variety of losses, including those related to legal liability, burglary and theft, accidents, property damage, injury to workers, and insurance on credit extended to others. Fidelity and surety bonds are temporary, specialized forms of casualty insurance. A FIDELITY BOND insures against losses relating to the dishonesty of employees, and a surety bond provides protection to a business if it fails to fulfill its contractual obligations. Marine insurance policies insure transporters and owners of cargo shipped on an ocean, a sea, or a navigable waterway. Marine risks include damage to cargo, damage to the vessel, and injuries to passengers. Inland marine insurance is used for the transportation of goods on land and on landlocked lakes. Many other types of insurance are also issued. Group health insurance plans are usually offered by employers to their employees. A person may purchase additional insurance to cover losses in excess of a stated amount or in excess of coverage provided by a particular insurance policy. Air- travel insurance provides life insurance benefits to a named beneficiary if the insured dies as a result of the specified airplane flight. Flood insurance is not included in most homeowners’ policies, but it can be purchased separately. MORTGAGE insurance requires the insurer to make mortgage payments when the insured is unable to do so because of death or disability. Contract and Policy An insurance contract cannot cover all conceiv- able risks. An insurance contract that violates a statute is deemed contrary to public policy; if it plays a part in some prohibited activity, it will be held unenforceable in court. A contract that protects against the loss of burglar y tools or illegal narcotics, for example, is contrary to public policy and thus unenforceable. Insurable Interest To qualify for an insurance policy, the insured must have an INSURABLE INTEREST, meaning that the insured must derive some benefit from the continued preservation of the article insured, or stand to suffer some loss as a result of that article’s loss or destruction. Life insurance requires so me familial and pecuniary relation- ship between the insured and the beneficiary. Property insurance requires that the insured must simply have a lawful interest in the safe ty or preservation of the property. Premiums Different types of policies require different premiums based on the degree of risk that the situation presents. For example, a policy insur- ing a homeowner for all risks associated with a home valued at $200,000 requires a higher premium than one insuring a boat valued at $20,000. Although liability for injuries to others might be similar under both policies, the cost of replacing or repairing the boat would be less than the cost of repairing or replacing the home, and this difference is reflected in the premium paid by the insured. Premium rates also depend on character- istics of the insured. For example, a person with a poor driving record generally has to pay more for auto in surance than does a person with a good driving record. Furthermore, insurers are free to den y policies to persons who present an unacceptable risk. For example, most insurance companies do not offer life or health insurance GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 450 INSURANCE to persons who have been diagnosed with a terminal illness. Claims The most common issue in insurance disputes is whether the insurer is obligated to pay a claim. The determination of the insurer’s obligation depends on man y factors, such as the circumstances surrounding the loss and the precise coverage of the insurance policy. If a dispute arises over the language of the policy, the general rule is that a court should choose the interpretation that is most favorable to the insured. Many insurance contracts contain an incontestability clause to protect the insured. This clause provides that the insurer loses the right to contest the validity of the contract after a specified period of time. An insurance company may deny or cancel coverage if the insured party concealed or misrepresented a material fact in the policy application. If an applicant presents an unaccept- ably high risk of loss for an insurance company, the company may deny the application or charge prohibitively high premiums. A company may cancel a policy if the insured fails to make payments. It also may refuse to pay a claim if the insured intentionally caused the loss or damage. However, if the insurer knows that it has the right to rescind a policy or to deny a claim, but conveys to the insured that it has voluntarily surrendered such right, the insured may claim that the insurer waived its right to contest a claim. Denial of Claims or Benefits In 2004 the U.S. Supreme Court issued its RULING in an impor- tant and closely watched matter involving the liability of Health Maintenance Organizations (HMOs) for NEGLIGENCE in denial of insurance benefits decisions. In Aetna Health v. Davila, 542 U.S. 200, the high court unanimously ruled in favor of the HMOs. Technically, the issue decided was a procedural one: whether the federal Employees Retirement Income Security Act (ERISA) preempted a Texas state law that permitted such suits. (The insureds were both provided healthcare insurance benefits through ERISA-regulated employee benefit plans.) The Court ruled that the federal law prevailed, effectively prohibiting suits under state laws. The significance of the Court’s procedural decision amounted to a denial of the right of patients to sue for tort damages (e.g., pain and suffering or scarring) caused by such HMO decisions. Instead, they would be limited to damages allowable under ERISA (e.g., the right to receive the denied treatment). Another case on this subject was the earlier Pegram v. Herdrich, 530 U.S. 211 (2000). In January 2007 a Mississippi jury awarded a married couple $2.5 million in PUNITIVE DAMAGES against State Farm Insurance Company stemming from its denial of a Hurricane Katrina-related homeowners’s claim. Although a judge later reduced the punitive damages to $1 million as more reasonably related to the $223,000 in actual damages, this was but a drop in the bucket for State Farm. It still faced more than 600 other Katrina-related lawsuits and 35,000 pending claims still unresolved. The court ruled that State Farm had failed to meet its burden, under Mississippi law, of proving that the damage to the insured’s home was caused by storm-surged water rather than wind, and therefore excluded from coverage. State Farm had argued that the homeowners’ policy covered damage from wind but not from water. Further, the policy ostensibly excluded damages that could have been caused by a combination of both, even if the hurricane winds preceded the storm’s water damag e. State Farm also argued that the policy at issue categorically excluded any damage caused by negligence. (The storm surge and flooding in the aftermath of Hurricane Katrina are widely believed to have resulted from negligent engi- neering of levees.) But in the first Katrina-related lawsuit to go to trial (August 2006), a federal judge had ruled that Nationwide Insurance Company was not liable for payment on a policyholder’s claims for water damage caused by the hurricane. Later, in November 2006, another federal judge held that water and flood damage caused by Katrina may be covered under those policies that did not specifically exclude damage caused by negligence. State Farm finally announced that it would pay at least $50 million to settle the pending CLASS ACTION involving 35,000 policyholders, and offered another $80 million to settle 640 existing lawsuits. While the settlements were pending, State Attorney General Jim Hood had repeatedly called for a statewide settlement between all Mississippi policyholders and all insurance companies. Its office had agreed in January 2007 to drop State Farm from the lawsuit it had filed against several insurance companies for GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION INSURANCE 451 their refusal to cover such Katrina damages, in return for State Farm’s agreement to settle those claims. In March 2007, more than a year and a half after the storm, State Farm announced that it would bypass the court and work directly with the state insurance commissioner, George Dale, to reopen pending claims and attempt settle- ment. Meanwhile, the court denied class-action status to the approximately 640 related lawsuits still pending against State Farm. Following denial of class-action status, State Farm continued to settle the pending lawsuits individually, either during or shortly before trials that were scheduled to start, in order to avoid the possibility of punitive damages being awarded. In some cases, State Farm agreed to settle the lawsuits after the jury had awarded actual damages to the homeowners, but prior to any determination of punitive damages. The dollar amount of these settlements remained undisclosed. In November 2007 Louisiana’s attorney general filed a massive suit against several insurance companies for alleged and ongoing schemes to avoid fair compensation to victims of Hurricanes Katrina and Rita, in violation of the Louisiana Monopolies Act (an ANTITRUST LAW ). Named as defendants in the suit were Allstate Insurance Company; Lafayette Insur- ance Compan y; Xactware, Inc.; Marshall & Swift/Boeckh, LLC; Insurance Services Office, Inc.; State Farm Fire and Casualty Company; USAA Casualty Insurance Company; Farmers Insurance Exchange; Standard Fire Insurance Company; and McKinsey & Company. DEFEN- DANT McKinsey & Company was not an insurer, but rather a New York-based consulting group that allegedly taught insurance companies how to reduce payouts and increase profits. The lawsuit alleged that McKinsey, called the “architect” of sweeping changes in the insurance industry starting in the 1980s, advised its insurer-clients to stop premium leakage by undervaluing claims using the tactics of deny, delay, and defend. The suit claimed that all of the defendant insurance companies had used the services of McKinsey and, therefore, had conspired in a price-fixing scheme. Some of the alleged illegal tactics included coercing policyholders into settling their damage claims for less than actual value, editing engineering assessment reports, delaying and forestalling payments, and forcing policyholders into costly litigation to challenge their estimates. The case was still pending in 2009. The lawsuit’s filing coincided with local media’s investigation into insurance company policies and practices that result ed in record profits despite Katrina and Rita claims. Local WWL news correspondent Dennis Woltering reported that, according to the Consumer Federation of America, Allstate, for example, netted more after-tax income than it had before dealing with the losses from the 2005 hurri- canes. In fact, in 2006, when it was still paying claims for Katrina and Rita, its profits jumped to $5 billion. The consumer group also found that between 1996 and 2006, the amount of each premium dollar that Allstate paid back to its policyholders fell from 73 cents per dollar to 59 cents. Such business practices were allegedly uncovered in internal Allstate presentation slides in which McKinsey demonstrated how the insurer could boost profits. In defense, insurance companies asser ted that profits were the result of millions of new policyholders, including auto insurance custo- mers. Allstate responded that when Louisiana insurance officials conducted a market review of its response to Katrina and Rita, they concluded that it was compliant with state statutes, rules, and regulations. However, the state insurance commissioner ordered the company to change its “flawed” property inspection process and to reinstate policyholders after Allstate cancelled the policies of more than 4,700 homeowners. Other Contractual Provisions An insurer may have a duty to defend an insured in a lawsuit filed against the insured by a THIRD PARTY. This duty usually arises if the claims in the suit against the insured fall within the coverage of a liability policy. If a third party caused a loss covered by a policy, the insurance company may have the right to sue the third party in place of the insured. This right is called SUBROGATION, and it is designed to make the party that is responsible for a los s bear the burden of the loss. It also prevents an insured from recovering twice: once from the insurance company, and once from the responsible party. An insurance company can subrogate claims only on certain types of policies. Property and liability insurance policies allow subrogation because the basis for the payment of claims is GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 452 INSURANCE indemnification, or reimbursement, of the insured for losses. Conversely, life insurance policies do not allow subrogation. Life insur- ance does not indemnify an insured for a loss that can be measured in dollars. Rather, it is a form of investment for the insured and the insured’s beneficiaries. A life insurance policy pays only a fixed sum of money to the beneficiary and does not cover any liability to a third party. Under such a policy, the insured stands no chance of double recovery, and the insurance company has no need to sue a third party if it must pay a claim. Terrorism Insurance Following the attacks on the World Trade Center and the Pentagon, insurance premiums skyrocketed, especially for tenants of highly visible landmarks like sports arenas and sky- scrapers. The TERRORISM Risk Insurance Act of 2002 (TRIA), Pub. L. No. 107–297, 116 Stat. 2322 (reauthorized in Dece mber 2007), estab- lished a temporary federal program providing for a shared public and private compensation for insured losses resulting from acts of terrorism. The act provides that insurers must make terrorism coverage available and must provide policyholders with a clear and conspic- uous disclosure of the premium charged for losses covered by the program. TRIA caps the exposure of insurance carriers to future acts of foreign terrorism, leaving the federal govern- ment to reimburse the insurance company for excess losses up to a maximum of $100 billion per year. Under TRIA as originally written, the TREASURY DEPARTMENT covers 90 percent of terrorism claims when an insurer’s exposure exceeds 7 percent of its commercial premiums in 2003, 10 percent of premiums in 2004, and 15 percen t in 2005. TRIA has since been Gene Testing W B hen a person a pplies for medical, life, or disability insurance, the in surance company typically requires the disclosure of preexisting medical conditions and a family medical history. In some cases the appli cant must undergo a physical examination. Based on this information, the insur- ance company decides whether to offer coverage and, if so , at what price. Breakthroughs in genetics now allow persons to be tested for rare medical conditions such as cystic fibrosis and Huntington’s disease. In addition, genetic testing can reveal an increased risk of more common conditions, including breast, colon, and prostate cancer; lymphoma; and leukemia. Concerns have been raised that once these tests become affordable, insurance companies will use the results to deny coverage. Research stud ies published in the 1990s indi- cated that persons already had been denied insurance coverage because of the risk of genetic disease. The prospect of widespread genetic discrimination has troubled many profe ssionals in the medical and legal communities. It is unfair, they charge, to deny a person coverage or to charge higher premiums, based on a potential risk of genetic disease that the person is powerless to modify. The insuranc e industry, which as of the early 2000s collects medical information on genetic disease through the inspection of medical records and family histories, responds that a fundamental principle in writing insurance is charging people rates that reflect their risks. Doing so means that each applicant pays t he fairest possible price, based on individual’ characteristics. The industry also notes that the concern s about genetic testing do not come into play wi th large-group health plans, where rates are based on methods other than individu al assessments. In 2008 Congress resolved the controversy by enacting the Genetic Information Nondiscrimination Acts (GINA). GINA prohibits employers and health insurance companies from discriminating against or refusing coverage to ind ividuals based on the results of genetic testing. CROSS REFERENCE Genetic Screening GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION INSURANCE 453 extended beyond its original terms, with a new expiration date of December 31, 2014. TRIA defines an act of terrorism as any act that is certified by the U.S. secretary of the treasury, in concurrence with the U.S. SECRETARY OF STATE and U.S. attorney general. The act of terror must result in damage within the United States, or outside the United States in the case of an airplane or a U.S. mission. A terrorist act must be committed by an individual or individuals acting on behalf of any foreign person or foreign interest. An event must be a violent act or an act that is dangerous to human life, property, or infrastructure. Nuclear, biological, and chemical attacks are not covered, and an event cannot be certified as an act of terrorism unless the total damages exceed $5 million. FURTHER READINGS Cady, Thomas C., and Christy H. Smith. 1995. “West Virginia’s Automobile Insurance Policy Laws: A Practitioner’s Guide.” West Virginia Law Review 97. Dixon, Lloyd. 2007. The Federal Role in Terrorism Insurance: Evaluating Alternatives in an Uncertain World. Arlington, VA: RAND. Robinson,EricL.1992.“The Oregon BasicHealth Services Act: A Model for State Reform?” Vanderbilt Law Review 45 . INSURED The person who obtains or is otherwise covered by insurance on his or her health, life, or property. The insured in a policy is not limited to the insured named in the policy but applies to anyone who is insured under the policy. INSURER An individual or company who, through a contractual agreement, undertakes to compensate specified losses, liability, or damages incurred by another individual. An insurer is frequently an insurance com- pany and is also known as an underwriter. INSURRECTION A rising or rebellion of citizens against their government, usually manifested by acts of violence. Under federal law, it is a crime to incite, assist, or engage in such conduct against the United States. INTANGIBLES Property that is a “right” such as a patent, copyright, or trademark, or one t hat is lacking physical existence, such as good will. A nonphysical, non- current asset that exists only i n connection with something else, such as the good will of a business. INTEGRATED Completed; made whole or entire. Desegregated; converted into a nonracial, nondiscriminatory system. A contract that has been adopted as a final and complete expression of an agreement between two parties is an INTEGRATED AGREEMENT. A school that has been integrated has been made into one in which students, faculty, staff, facilities, programs, and activities combine individuals of different races. CROSS REFERENCE School Desegregation. INTEGRATED AGREEMENT A contract that contains within its four corners the entire understanding of the parties and is subject to the parol evidence rule, which seeks to preserve the integrity of written agreements by refusing to allow the parties to modify their contract through the introduction of prior or contemporaneous oral declarations. An agreement is integrated when the parties adopt the writing or writings as the final and complete expression of the agreement. INTEGRATED BAR The process of organizing the attorneys of a state into an association, membership in which is a condition precedent to the right to practice law. Integration is usually attained by enactment of a statute that grants authority to the highest court of the state to integrate the bar, or by rule of court in the exercise of its inherent power. When the bar is integrated, all attorneys within an area, which can include a state, a county, or a city, are members. INTEGRATION The bringing together of separate elements to create a whole unit. The bringing together of people from the different demographic and racial groups that make up U.S. society. In most cases, the term integration is used to describe the process of bringing together people of different races, especially blacks and whites, in schools and other settings. But it is also used 454 INSURED GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION to describe the process of bringing together people of different backgrounds. A primary purpose of the Americans with Disabilities Act of 1990 (ADA) (42 U.S.C.A. § 12101 et seq.), for example, was to more fully integrate disabled individuals into U.S. society. The House Judi- ciary Committee’s report on the ADA described it as “a comprehensive piece of CIVIL RIGHTS legislation which promises a new future: a future of inclusion and integration, and the end of exclusion and segregation” (H.R. Rep. No. 485, 101st Cong., 2d Sess., pt. 3, at 26 [1990], reprinted in 1990 U.S.C.C.A.N. 445, 449.7). The term integration is most commonly used in association with the efforts of African- Americans in the United States to eliminate racial SEGREGATION and achieve equal opportuni- ty and inclusion in U.S. society. Often, it has been used synonymously with desegregation to mean the elimination of discriminatory prac- tices based on race. However, although similar, the terms have been used in significantly different ways by the courts, by legal theorists, and in the context of the CIVIL RIGHTS MOVEMENT. In general, desegregation refers to the elimina- tion of policies and practices that segregate people of different races into separate institu- tions and facilities. Integration refers not only to the elimination of such policies but also to the active incorporation of different races into institutions for the purpose of achieving racial balance, which many believe will lead to equal rights, protections, and opportunities. Throughout the civil rights movement in the United State s, black leaders have held different opinions about the meaning and value of integration, with some advocating integration as the ultimate goal for black citizens, and others resisting integration out of concern that it would lead to the assimilation of black citizens into white culture and society. In 1934 a disagreement over the value of integration versus segregation led W. E. B. Du Bois—a cofounder of the National Association for the Advancement of Colored People ( NAACP) and a leading scholar, writer, and civil rights INTEGRATION 455 Months after the Brown v. Bd. of Ed. Decision, two schools at military bases in Virginia were first opened to black children. Although not yet required of public schools, the Defense Department ordered the racial integration of all schools on military posts. BETTMANN/CORBIS. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3 RD E DITION activist—to resign from the NAACP. Du Bois rejected the NAACP’s heavy emphasis on integration, calling instead for black citizens to maintain their own churches, schools, and social organizations, and especially to develop their own economic base separate from the mainstream white economy. After Du Bois’s resignation, the NAACP adopted a full-fledged campaign to eliminate segregation and to promote integration. In 1940, NAACP leaders sent to President FRANKLIN D . ROOSEVELT, the secretary of the Navy, and the assistant secretary of war a memorandum outlining provisions fo r the “integration of the Negro into military aspects of the national defense program.” This was the first instance in which the NAACP had specifically used the term integration in a civil rights policy pro- nouncement. After WORLD WAR II, the term racial integration became commonly used to describe civil rights issues pertaining to race. On the legal front, the NAACP focused its efforts on eliminating segregation in the public schools. This campaign was led by THURGOOD MARSHALL , the first director-counsel of the NAACP LEGAL DEFENSE AND EDUCATIONAL FUND and later a U.S. Supreme Court justice. In 1954, Marshall successfully argued the landmark case BROWN V. BOARD OF EDUCATION, 347 U.S. 483, 74 S. Ct. 686, 98 L. Ed. 873, before the U.S. Supreme Court. The RULING in that case declared that racially segregated schools are inherently unequal and thus unconstitutional. Like other NAACP leaders, Marshall was strongly committed to the principle of racial integration. His arguments in Brown were heavily based on the work of Kenneth B. Clark, a black social psychologist whose research suggested that black children were stigmatized by being educated in racially segregated schools, causing them to suffer psychological and intellec- tual harm. Marshall used this theory of “stigmatic injury” to persuade the Court that racially segregated schools were inherently unequal. Although the Brown decision called for an end to formal segregation, it did not explicitly call for positive steps to ensure the integration of public schools. The desegregation momentum begun by Brown was enacted in to law by the 1964 CIVIL RIGHTS ACT (Pub. L. No. 88-352, 78 Stat. 246), which denied federal funds to any program that discriminated illegally on the basis of race, sex, color, RELIGION, or national origin, outlawing such discrimination not only in public schools but also in areas of public accommodation and employment. To ensure the support necessary for passage of the act, its writers worded the act specifically to emphasize that its purpose was to desegregate, not to integrate. “Desegregation,” the act said, was “the assignment of students to public schools without regard to their race,” but “not the assignment of students to public schools in order to overcome racial imbalance.” Nevertheless, after the Civil Rights Act was passed, judges and other federal officials enfor- cing it required schools to go beyond racially neutral desegregation policies to try to remedy past segregation by enforcing a greater degree of racial integration. This policy was established by the U.S. Supreme Court in 1968 in Green v. County School Board, 391 U.S. 430, 88 S. Ct. 1689, 20 L. Ed. 2d 716, in which the Court ruled that a school district’s desegregation plan was unaccept- able u nder the Brown ruling. The Green case involved a school district that had two high schools that had previously been segregated by race. When the district changed its rules to allow students to attend the school of their choice, few black students chose to attend the traditionally white school, and no whites chose the black school, thus leaving the schools segregated. In its ruling in Green, the Court called the “freedom-of- choice” plan a “deliberate perpetuation of the unconstitutional dual system” and said that school boards had an “affirmative duty to take whatever steps might be necessary to convert to a unitary system in which RACIAL DISCRIMINATION would be eliminated root and branch.” Although States with the Highest Percentages of Minority Populations, by Race, in 2005 State Total minority Black Hispanic Asian Other a Hawaii Washington, D.C. New Mexico California Texas Maryland Georgia Mississippi Nevada Arizona 76.5% 68.9% 56.9% 56.2% 50.8% 40.8% 40.4% 40.3% 40.0% 39.6% 2.1% 55.7% 1.8% 6.2% 11.2% 28.8% 29.4% 36.8% 7.2% 3.2% 8.0% 8.6% 43.4% 35.2% 35.1% 5.7% 7.1% 1.7% 23.5% 28.5% 40.5% 3.0% 1.1% 11.9% 3.2% 4.7% 2.6% 0.7% 5.5% 2.1% 26.0% 1.6% 10.5% 2.8% 1.3% 1.6% 1.1% 1.0% 3.8% 5.8% a Other includes Native Hawaiians/Pacific Islanders, American Indians/Alaskan natives, and persons of more than one race. SOURCE: National Center for Education Statistics, Status and Trends in the Education of Racial and Ethnic Minorities, 2007. 456 INTEGRATION ILLUSTRATION BY GGS CREATIVE RESOURCES. REPRODUCED BY PER- MISSION OF GALE, A PART OF CENGAGE LEARNING. GALE ENCYCLOPEDIA OF AMERICAN LAW, 3 RD E DITION a freedom-of-choice plan could theoretically be a viable method for converting to a “unitary, nonracial school system,” the Court said, it would have to “prove itself in operation,” adding that such methods as rezoning might prove speedier, and thus more acceptable. Although the Court did not explicitly require active integration, it suggested that the validity of desegregation plans would be measured by the amount of integration that they actually produced. This emphasis on achieving specific levels of integration as proof of desegregation was reinforced by the 1971 U.S. Supreme Court ruling in SWANN V. CHARLOTTE-MECKLENBURG BOARD OF EDUCATION , 402 U.S. 1, 91 S. Ct. 1267, 28 L. Ed. 2d 554. In Swann, the Court ruled that schools could use methods such as involuntary busing and the altering of attendance zones to achieve specific ratios of racial mixing, as long as those ratios were established as a “starting point[s] in the process of shaping a remedy” for past discrimination. In a 1974 case, Milliken v. Bradley, 418 U.S. 717, 94 S. Ct. 3112, 41 L. Ed. 2d 1069, the Supreme Court made it more difficult for city school districts to achieve racial integration. In Milliken, the Court ruled that a federally ordered desegregation remedy could not include subur- ban schools when a city’sschooldistrictwas officially segregated for reasons other than past illegal discrimination, such as the simple demo- graphics of its residents. In other words, if the surrounding suburban districts had not contrib- uted to past illegal segregation, they could not be held responsible for remedying it. A cross-district remedy, the Court ruled, would be permissible only to correct a cross-district wrong. The effect of Milliken has been to allow an increasing amount of resegregation in public schools as housing patterns divide black and white residents between cities and their surrounding suburbs. More recent cases, such as Missouri v. Jenkins, 515 U.S. 70, 115 S. Ct. 2038, 132 L. Ed. 2d 63 (1995), have continued to impose strict JUDICIAL limits on the power of the courts to impose and enforce desegregation plans in the public schools. Despite significant legal victories mandating greater integration, therefore, the actual amount of racial integration in the United States—in the schools and elsewhere—remains limited. In fact, in 2003 the Harvard University Civil Rights Project warned that early school integration gains were actually being reversed. In an 82-page report titled “A Multiracial Society with Segregated Schools: Are We Losing the Dream?” th e multidisciplinary research-and-policy think tank examined trends in federal public school enroll- ment data from the start of integration efforts through the year 2000. According to its analysis of these figures, the desegregation of black students progressed continuously until the late 1980s. Quantifiable gains from this policy included sharp increases in minority high-school gradua- tions and the narrowing of differences in test scores between white and minority students. Then a process of “resegregation” began. As argued in the report, resegregation has been marked by several disturbing statistical trends. Whites have clustered in schools with an average of 80 percent white populations, blacks have found themselves more segregated than at any time since the 1970s, and a substantial number of schools have emerged with virtually all non-white student populations. These the authors scathingly designated “apartheid schools” for their institutional resemblance—in terms of economic impoverishment, lack of resources, and social and health problems—to those found under the system of racial segregation enforced in twentieth-century South Africa. The findings also highlighted the isolation of Latino students, who have become the most highly segregated racial group in the public school system. Most damningly, the Civil Rights Project report diagnosed an intellectual and moral failure in U.S. society to uphold the principles of integration. Not for want of public support was integration being abandoned, the authors argued. Instead, governments had essentially given up: Policy makers had erroneously concluded that enough progress had been made and that more was unattainable. Noting the absence of Con- gressional action since the early 1970s and the dearth of EXECUTIVE BRANCH enforcement since the Johnson era (with the sole exception of the Carter administration), the authors blamed lawmakers, the Executive Branch, and the courts for allowing integration efforts to wither while resegregation took root. The report called for a renewed focus on desegregation from both state and federal authorities to offer minority students attendance choices among better, more integrated schools. Such failures have led many black leaders to question whether integration is indeed possible in the United States and whether it would actually benefit African Americans. Those in favor of INTEGRATION 457 GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION . Mexico California Texas Maryland Georgia Mississippi Nevada Arizona 76 .5% 68.9% 56 .9% 56 .2% 50 .8% 40.8% 40.4% 40.3% 40.0% 39.6% 2.1% 55 .7% 1.8% 6.2% 11.2% 28.8% 29.4% 36.8% 7.2% 3.2% 8.0% 8.6% 43.4% 35. 2% 35. 1% 5. 7% 7.1% 1.7% 23 .5% 28 .5% 40 .5% 3.0% 1.1% 11.9% 3.2% 4.7% 2.6% 0.7% 5. 5% 2.1% 26.0% 1.6% 10 .5% 2.8% 1.3% 1.6% 1.1% 1.0% 3.8% 5. 8% a Other. business GALE ENCYCLOPEDIA OF AMERICAN LAW, 3RD E DITION 448 INSURANCE of insurance subject to federal laws on rate fixing and monopolies. As of 2010, insurance is governed by a blend of statutes,. the Education of Racial and Ethnic Minorities, 2007. 456 INTEGRATION ILLUSTRATION BY GGS CREATIVE RESOURCES. REPRODUCED BY PER- MISSION OF GALE, A PART OF CENGAGE LEARNING. GALE ENCYCLOPEDIA OF AMERICAN LAW,