RESPA 

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Rule Prohibiting Kickbacks Regardless of "Quid Pro Quo" Upheld 

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Matter of New York State Land Title Association, Inc. v. New York State Department of Financial Services, 169 A.D.3d 18, 92 N.Y.S.3d 49 (2019) 

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Supreme Court of New York, Appellate Division, First Department 

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Facts: The DFS determined that some title insurance industry practices resulted in higher premiums and closing costs and violated the state's laws prohibiting kickbacks from title insurers to closers, attorneys, real estate agents and others. The industry practice of "wining and dining" resulted, on average, 5.3% of premiums charged statewide from 2008 to 2012. The state's law prohibits giving anything of value as an inducement or compensation for any title insurance business "regardless of whether provided as a quid pro quo for specific business." 

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Issue: Was this promulgation of the regulation arbitrary, capricious and in excess of the DFS's statutory authority? 

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Held: No. The regulation is broad, but unambiguous as to "other consideration or valuable thing" and it not limited to quid pro quo exchanges for specific business. The statute provides the inducement for "any title insurance business" indicates that the statute was intended to be broadly construed. The statute may reasonably be applied to a more longstanding arrangement in which insurers regularly spend vast sums of money on extravagant gifts for referral sources who are tacitly expected to return the favors by providing a reliable stream of referrals.