Benton-Hecht Moving & Storage, Inc. v. Call

• Decision Date: 07 November 1989
• Docket Number: No. WD,BENTON-HECHT,WD
• Citation: Benton-Hecht Moving & Storage, Inc. v. Call, 782 S.W.2d 668 (Mo. App. 1989)
• Parties: MOVING & STORAGE, INC., et al., Appellants, v. Larry C. CALL, substituted for Lewis R. Crist, Director of the Missouri Division of Insurance, Respondent, and National Council on Compensation Insurance, Intervenor-Respondent. 41549.
• Court: Missouri Court of Appeals

Page 668

782 S.W.2d 668

BENTON-HECHT MOVING & STORAGE, INC., et al., Appellants, v.Larry C. CALL, substituted for Lewis R. Crist, Director of the Missouri Division of Insurance, Respondent and National Council on Compensation Insurance, Intervenor-Respondent.

No. WD 41549.

Missouri Court of Appeals Western District.

Nov. 7, 1989 Respondent's Motion to Modify or Change Opinion Denied Jan. 2, 1990.

Intervenor-Respondent's Motion for Rehearing and/or Transfer to Supreme Court Denied Jan. 2, 1990 Application to Transfer Denied Feb. 13, 1990.

James C. Swearengen and John A. Ruth, Jefferson City, for appellants.

Edward M. Vokoun, Evans and Dixon, St. Louis, for Nat. Council.

Mark Wayne Stahlhuth, Government Counsel, Jefferson City, for Mo. Div. of Ins.

Before CLARK, P.J., and LOWENSTEIN and BERREY, JJ.

CLARK, Presiding Judge.

Appellants who represent employers engaged in the moving and transfer business, appeal the judgment of the circuit court which affirmed an order entered by the director of the Missouri Division of Insurance setting certain rates to be paid in the state as premiums for worker's compensation insurance.Appellants contend the court erred in affirming the order because it was not supported by competent and substantial evidence presented at the hearing before the director.They also argue that the director erred in limiting the proceedings at the hearing or alternatively, that the circuit court should have conducted a de novo hearing instead of reviewing the record of the hearing before the director.The judgment is reversed and the cause is remanded to the circuit court for rehearing.

The critical and dispositive question on this appeal is whether the public hearing conducted by the director as required by § 287.320, RSMo 1986, ¹ was in the nature of a contested or non-contested case under the Administrative Procedures Act.That determination sets the parameters of judicial review both in the circuit and appellate courts and coincidentally, the presence or absence of error as appellant contends.If the decision by the director was in a contested case, then judicial review of the decision pursuant to § 536.100, is upon the record made before the administrative body with deference to its fact finding function.The decision must be affirmed if it is supported by competent and substantial evidence on the whole record, is not arbitrary, capricious or unreasonable and does not constitute an abuse of agency discretion.Hermel, Inc. v. State Tax Comm'n, 564 S.W.2d 888, 894(Mo. banc 1978).

If, however, the hearing and decision by the director setting insurance premium rates was in a non-contested case, judicial review is conducted pursuant to § 536.150.The circuit court must conduct a de novo hearing to determine the facts without deference to the administrative body and decide whether the administrative decision conforms to the constitution and laws and is not otherwise unreasonable, arbitrary or capricious or involves an abuse of discretion.Phipps v. School Dist., 645 S.W.2d 91, 95, 96(Mo.App.1982).

The court of appeals reviews the decision of the circuit court on appeal in a non-contested case as in any other court tried case, applying the standards of Murphy v. Carron, 536 S.W.2d 30(Mo.banc 1976).If the administrative decision was in a contested case, then appellate review is of the decision made by the administrative agency, not that of the circuit court.Stephenson's Restaurants, Inc. v. Mo. State Highway and Transp. Comm'n., 666 S.W.2d 437, 440(Mo.App.1984).The review on appeal to this court focuses on the hearing level at which the facts of the case were determined, either before the administrative body in a contested case or before the circuit court in a non-contested case.

The problem presented in the subject case arises because the director of insurance conducted the public hearing as in a non-contested case, but the circuit court did not take evidence and reach any independent determination of the facts, a review procedure applicable only to a contested case.The consequence is a record which is not in conformity either with a contested or a non-contested case.The point of initial inquiry is, therefore, to determine whether the mode of hearing before the director was correct.The relevant facts are as follow.

In September, 1987, respondentNational Council on Compensation Insurance(NCCI) filed an application with the Missouri Division of Insurance seeking a review of current rates for compensation insurance and proposing increases.The NCCI is a licensed rating organization sponsored by insurance companies.It serves to collect and analyze statistics relative to worker's compensation insurance and is a not-for-profit unincorporated association.

Upon receipt of the application and in accordance with § 287.320, the director of the division of insurance scheduled a public hearing to consider the application and determine if the proposed rate changes were fair, reasonable and adequate.Notice of the hearing was published in St. Louis, Kansas City and Jefferson City newspapers.

The hearing convened on November 17, 1987.The procedure adopted by the director for the hearing, and announced to those in attendance, provided an opportunity for anyone desiring to comment on the proposed rates to testify.Interrogation of witnesses, however, was restricted to the hearing officer and his staff.No witness testified under oath and no cross-examination of witnesses was permitted.After the hearing concluded, the director announced that the record would remain open for an additional ten days during which time any written testimony submitted would be considered.

The decision by the director was announced on December 4, 1987.An overall increase in worker's compensation premium rates was approved effective January 1, 1988.The rate for appellants' insurance was increased 18.55 percent.Appellants filed this suit in the circuit court on December 31, 1987 seeking judicial review of the director's decision.NCCI sought and was granted leave to intervene in support of the order.

Appellants' petition for review was considered by the circuit court based on the record made at the November 17, 1987 hearing before the director and arguments presented by counsel for the parties.The circuit court affirmed the director's order finding it to be lawful and reasonable in all respects and supported by competent and substantial evidence on the record as a whole.Because the circuit court took no evidence, it based its decision entirely on the evidence received by the director at the November 17, 1987 hearing.

It is immediately apparent that the mode of judicial review adopted in this case by the circuit court was appropriate only for a contested case.That choice, however, was not available to the circuit court because the director's hearing was conducted in the format of a non-contested case.If the hearing under § 287.320 should have been as in a contested case, then the circuit court should have remanded the case for a new hearing.

A contested case is a proceeding before an agency in which legal rights, duties or privileges of specific parties are required by law to be determined after a hearing.Section 536.010(2);Franklin v. Bd. of Directors, 772 S.W.2d 873, 876(Mo.App.1989).The statutory requirement for a hearing, in the present case, § 287.320, does not necessarily classify a case as contested.Not every case in which there is a contest about rights, duties or privileges, even though a hearing may be held, will be a contested one.City of Richmond Heights v. Bd. of...