American Council of Life Ins. v. Foster

• Decision Date: 10 September 1990
• Citation: 134 Pa.Cmwlth. 634,580 A.2d 448
• Parties: AMERICAN COUNCIL OF LIFE INSURANCE, Health Insurance Association of America and the Insurance Federation of Pennsylvania, Inc., Petitioners, v. The Honorable Constance FOSTER, Insurance Commissioner of the Commonwealth of Pennsylvania, Respondent (Two Cases).
• Court: Pennsylvania Commonwealth Court

Page 448

580 A.2d 448

134 Pa.Cmwlth. 634

AMERICAN COUNCIL OF LIFE INSURANCE, Health Insurance

Association of America and the Insurance

Federation of Pennsylvania, Inc., Petitioners, v. The Honorable Constance FOSTER, Insurance Commissioner of

the Commonwealth of Pennsylvania, Respondent (Two Cases).

Commonwealth Court of Pennsylvania.

Argued May 2, 1990.

Decided Sept. 10, 1990.

Marc J. Sonnenfeld, with him, David L. Harbaugh and Margaret L. Sanner (Morgan, Lewis & Bockius, Philadelphia, of counsel), for petitioners.

Arthur Selikoff, Asst. Counsel, with him, Victoria A. Reider, Deputy Chief Counsel, and Linda J. Wells, Chief Counsel, for respondent, in case 1976 C.D.1989.

Sandra W. Stoner, Deputy Atty. Gen., with her, John G. Knorr, III, Chief Deputy Atty. Gen., Chief of Litigation Section, and Ernest D. Preate, Jr., Atty. Gen., for respondent, in case 300 Misc. Dkt.1989.

Before CRUMLISH, Jr., President Judge, and CRAIG, DOYLE, COLINS, PALLADINO, SMITH and PELLEGRINI, JJ.

PELLEGRINI, Judge.

The American Council of Life Insurance, Health Insurance Association of America and The Insurance Federation of Pennsylvania, Inc., (IFP) (collectively, the Associations) file a Petition For Review of an Order of Constance Foster, Insurance Commissioner of the Commonwealth of Pennsylvania (Commissioner), denying the Associations' Petition For Investigation and Declaratory Order (Investigation Petition) on the use of gender as a factor in the underwriting and pricing of life and health insurance coverages (the Appeal). 1976 C.D.1989.

The Associations contemporaneously also filed a Complaint For Declaratory Judgment and Injunctive Relief seeking a ruling from this Court that the Commissioner has no authority to prohibit by regulation or otherwise the insurance industry's use of gender in the underwriting and pricing of life and health insurance coverages since such are reasonable based on physical characteristics unique to each sex (the Complaint). 300 M.D.1989.

The Appeal and Complaint before us arise from actions taken by the Commissioner to eliminate gender-based classifications from the life and health lines of insurance. In April of 1988, this Court issued its decision in Bartholomew v. Foster, 115 Pa. Commonwealth Ct. 430, 541 A.2d 393 (1988), aff'd per curiam 522 Pa. 489, 563 A.2d 1390 (1989), petition for reconsideration denied, 524 Pa. 241, 570 A.2d 508 (1990), holding that gender-based classifications for automobile insurance coverage violates the Equal Rights Amendment to the Pennsylvania Constitution (ERA). ¹ Shortly thereafter, the Commissioner announced that the Insurance Department (Department) had interpreted Bartholomew to mean that all gender-based insurance rates violate the ERA.

The Department informed IFP of its determination that the Bartholomew decision should apply to all lines of insurance and invited them to participate in a task force to develop appropriate regulations. The Department subsequently met with insurance industry representatives and solicited written comments from IFP, among others. IFP responded with written comments concerning the proposal to develop regulations.

In February, 1989, the Department distributed an "Exposure Draft" of proposed amendments to Chapter 145 of the Pennsylvania Code, which prohibited gender-based rates in all lines of insurance, including life and health (Unisex Regulations). IFP provided extensive comment to the Department concerning the proposed Unisex Regulations contained in the Exposure Draft. On May 3, 1989, the Department provided IFP with a revised draft of the Unisex Regulations and stated that they were being submitted to the Office of General Counsel pursuant to the rulemaking process.

The Associations filed a Petition For Investigation and Declaratory Order (Investigation Petition) pursuant to Section 35.19 of Title 1 of the Pennsylvania Code. ² The Investigation Petition requested a formal adjudicatory hearing for purposes of determining the Commissioner's authority to regulate the use of gender in underwriting and pricing life and health insurance. The Associations were essentially seeking a declaratory ruling on whether gender is an appropriate basis for establishing rates for life and health insurance.

The Commissioner dismissed the Investigation Petition, ruling that the matter was not yet ripe for a decision because (1) the proposed regulations were not formally promulgated; (2) no present case or controversy existed in which declaratory relief might be rendered; and (3) the Associations would have an adequate opportunity to voice their concerns with the proposed Unisex Regulations through written comment and appearance at the various hearings during the normal rulemaking process. ³

The Associations appealed the Commissioners' Order to this Court. Contemporaneously with the Appeal, the Associations filed their Complaint For Declaratory Relief. The Commissioner filed Preliminary Objections to the Associations' Complaint in the nature of a Demurrer. Both the Preliminary Objections and the Appeal are now before us and we will discuss each individually.

The Preliminary Objections to the Complaint

The Complaint filed by the Associations request that this Court issue a Declaratory Judgment finding that the use of gender-based classifications in the life and health insurance lines is lawful since such classifications are "reasonably and genuinely based on physical characteristics unique to one sex." quoting from Bartholomew, 115 Pa. Commonwealth Ct. at 438, 541 A.2d at 397; and Fischer v. Department of Public Welfare, 509 Pa. 293, 305, 502 A.2d 114, 121 (1985).

The Commissioner, by way of Preliminary Objections, demurs to the Associations' Complaint. The Commissioner contends that this Court lacks jurisdiction to grant such relief because (a) no present case or controversy exists because the proposed regulations have not yet been formally promulgated; (b) the Associations must express their concerns through the rulemaking process and then are entitled to an exclusive administrative review through the Department; and (c) the Appeal pending before this Court involving the same parties, rights asserted and relief sought precludes a declaratory judgment.

The issuance of a declaratory judgment under the Pennsylvania Declaratory Judgments Act (Act), 42 Pa.C.S. §§ 7531-7541, is a matter of judicial discretion which should only be exercised to illuminate an existing right, status or legal relation. Pennsylvania Independent Petroleum Producers v. Pennsylvania Department of Environmental Resources, 106 Pa. Commonwealth Ct. 72, 525 A.2d 829 (1987), aff'd 520 Pa. 59, 550 A.2d 195 (1988). 42 Pa.C.S. § 7532. The purpose of the Act "is to settle and to afford relief from uncertainty and insecurity with respect to rights, status and other legal relation." 42 Pa.C.S. § 7541(a).

Although the Act specifically provides that its terms are to be liberally construed and administered, 42 Pa.C.S. § 7541(a), there are certain limitations upon the Court's ability to render declaratory judgments.

One limitation on the Court's ability to issue a declaratory judgment is that the issues involved must be ripe for judicial determination. Ripeness has been defined as the presence of an actual controversy. Allegheny County Constables Association v. O'Malley, 108 Pa. Commonwealth Ct. 1, 528 A.2d 716 (1987); Pennsylvania Independent Petroleum Producers; South Whitehall Township v. Pennsylvania Department of Transportation, 82 Pa. Commonwealth Ct. 217, 475 A.2d 166 (1984). It requires the Court to evaluate the fitness of the issues for judicial determination, as well as the hardship to the parties of withholding court consideration. Abbott Laboratories v. Gardner, 387 U.S. 136, 87 S.Ct. 1507, 18 L.Ed.2d 681 (1967).

A declaratory judgment is an appropriate remedy where a case presents antagonistic claims, indicating imminent and inevitable litigation. Liberty Mutual Insurance Company v. S.G.S. Company, 456 Pa. 94, 318 A.2d 906 (1974); Allegheny County Constables; Chester Upland School District v. Commonwealth of Pennsylvania, 90 Pa. Commonwealth Ct. 464, 467, 495 A.2d 981, 983 (1985). However, it is an inappropriate remedy to determine rights in anticipation of events which may never occur. Yarmoski v. Lloyd, 110 Pa. Commonwealth Ct. 97, 531 A.2d 1169 (1987). Chester; Berger, et al. v. Pennsylvania Department of Environmental Resources, 42 Pa. Commonwealth Ct. 206, 400 A.2d 905 (1979); Singer v. Sheppard, 33 Pa. Commonwealth Ct. 276, 381 A.2d 1007 (1978).

In cases involving challenges to administrative regulations, an actual controversy ripe for judicial determination, has existed only where the regulation was in effect or had been formally promulgated, Arsenal Coal Co. v. Pennsylvania Department of Environmental Resources, 505 Pa. 198, 477 A.2d 1333 (1984); Spooner v. Secretary of Commonwealth of Pennsylvania, 114 Pa. Commonwealth Ct. 352, 539 A.2d 1 (1988); Paratransit Association of Delaware Valley, Inc. v. Yerusalim, 114 Pa. Commonwealth Ct. 279, 538 A.2d 651 (1988); Pennsylvania Independent Petroleum Producers v. Pennsylvania Department of Environmental Resources, 95 Pa. Commonwealth Ct. 51, 504 A.2d 420 (1986).

Here, the proposed Unisex Regulations are in the rulemaking phase as required under the Commonwealth Documents Law (CDL) ⁴ and the Regulatory Review Act (RRA). ⁵ The CDL and RRA provide the procedure the Department must...