Blue Cross and Blue Shield of Delaware, Inc. v. Elliott

• Decision Date: 30 June 1982
• Citation: 449 A.2d 267
• Parties: BLUE CROSS AND BLUE SHIELD OF DELAWARE, INCORPORATED, Plaintiff, v. David H. ELLIOTT, Insurance Commissioner of the State of Delaware, Defendant.
• Court: Delaware Superior Court

Page 267

449 A.2d 267

BLUE CROSS AND BLUE SHIELD OF DELAWARE, INCORPORATED, Plaintiff, v. David H. ELLIOTT, Insurance Commissioner of the State of Delaware, Defendant.

Superior Court of Delaware New Castle County.

Submitted June 29, 1982.

Decided June 30, 1982.

Upon appeal from the Insurance Commissioner and upon plaintiff's motion to stay. Granted and remanded.

Stephen E. Herrmann, and Samuel A. Nolen, of Richards, Layton & Finger, Wilmington, for plaintiff.

Catherine S. Mulholland, Dept. of Justice, Wilmington, for defendant.

O'HARA, Judge.

On May 26, 1982, Blue Cross and Blue Shield of Delaware, Inc. ("Blue Cross"), filed a 19.2 percent rate increase, applicable to several thousand subscribers, pursuant to 18 Del.C. § 2501 et seq., effective July 1, 1982. It notified some of those subscribers of the projected increase on May 15, 1982. On June 2, 1982, the Deputy Insurance Commissioner ("Deputy Commissioner") disallowed the increase, maintaining that the documentation accompanying the filing was inadequate in specifically enumerated areas. He stated, however, that the filing would be reconsidered if the requested information was submitted. On June 16, 1982, Blue Cross responded to the June 2, 1982 letter and disputed the need for the requested information, questioned the apparent recent change in documentation procedure for filings, and further asserted that the disallowance letter was legally defective as to authorized signature as well as in content. Blue Cross requested that any disallowance be made effective three and a half months in the future, as per a prior understanding between itself and the Insurance Commissioner ("Commissioner"). On June 25, 1982, the Deputy Commissioner responded by incorporating his June 2 objections in the filing in a new disallowance letter, and gave Blue Cross notice of its statutory right to a hearing regarding the disallowance. He fixed the effective date of that disallowance as July 1, 1982.

Blue Cross received this second letter on June 28, 1982, and filed an appeal of both decisions on June 29, 1982. It also requested a stay and setting aside of the decisions, a remand to the Commissioner, and any other just relief. Blue Cross asserts that the Deputy Commissioner was without authority to disallow filings, that statutory procedures were not followed, that the Commissioner abused his discretion and acted in a discriminatory fashion toward Blue Cross.

The first issue to be addressed is that of jurisdiction. 18 Del.C. § 2531 provides that appeals from any order, decision or act of the Commissioner are subject to review in the Court of Chancery. ¹ However, plaintiff asserts, and defendant agrees, that the Administrative Procedures Act ("APA"), 29 Del.C. §§ 10102(4), 10141(a) and 10142(a) (formerly 29 Del.C. §§ 6401, 6441, 6442, redesignated effective July 1, 1980), supercedes 18 Del.C. § 2531, and grants jurisdiction to Superior Court. ² This Court does not find the matter so easily resolved.

The purpose of 18 Del.C. c. 25, Rates and Rating Organizations, is applicable to the substantive issue here. That purpose is to

promote the public welfare by regulating insurance rates ... to the end that they shall not be excessive, inadequate or unfairly discriminatory ... [without tending] to prohibit or discourage reasonable competition or ... prohibit, or encourage ... uniformity in insurance rates ..." 18 Del.C. § 2501.

The policy of Title 29, c. 101, as well as its predecessor statute, is also significant. Its purpose is to

standardize the procedures and methods whereby certain state agencies exercise their statutory power and to specify the manner and extent to which action by such agencies may be subjected to judicial review. 29 Del.C. § 10101.

Title 29 specifically applies to the Insurance Commissioner. 29 Del.C. § 10161(7).

In Elliott v. Blue Cross and Blue Shield of Delaware, Inc., Del.Supr., 407 A.2d 524 (1979), the Supreme Court, in dicta, affirmed the application of the APA to the Insurance Commissioner's functions. However, the Court mentioned Title 29 only in regard to general applicability to the Commissioner and the availability of mandamus under former 29 Del.C. § 6443 (current section 10143). The question of conflicting jurisdictional provisions did not arise. However, the Elliott case is significant for two reasons: procedurally, it was certified to the Supreme Court from the Court of Chancery, Elliott, 407 A.2d at 526, n. 2; substantively, the Court determined that the Commissioner's filing disallowance activities were governed by the provisions of 18 Del.C. § 2507. ³ The Court ruled that under that statute the Commissioner was not required to hold a hearing before making a disallowance decision. The Court did not mention 29 Del.C. § 6422, (current 29 Del.C. § 10122), which requires notice of a formal or informal hearing prior to a case decision by the Commissioner. ⁴

It is possible to harmonize these statutes, overall, on the basis that each is directed at separate conduct. However, the APA was designed to regulate 13 commissions and boards. 29 Del.C. § 10161. Its provisions include a comprehensive scheme for judicial review of agency decisions. Those provisions mandate exhaustion of remedies, 29 Del.C. § 10141, time for appeal on the record, 29 Del.C. § 10142, availability of mandamus, 29 Del.C. § 10143, standards for stays pending review, 29 Del.C. § 10145. The APA was enacted in 1975, see, 60 Del.Laws c. 585 (1975). Eighteen Del.C. c. 25 was enacted in current form in 1967, 56 Del.Laws c. 380 (1967), and, in contrast, does not contain such minute review provisions and is directed toward the rate-making conduct of the Commissioner and other parties. Judicial review is only a minor incident of this scheme and found in 18 Del.C. § 2531.

Nevertheless, the jurisdiction sections of these statutes are irreconcilable and there is an absence of information as to legislative intent. The specific holding of Elliott is not material to the issue here but both the procedural posture and the primacy of Title 18 in that decision cast doubt on the parties' assertion of jurisdiction under the APA. Therefore, rules of statutory construction must be applied to resolve the question. Those rules mandate that the later enacted statute controls the earlier statute, Green v. County Council of Sussex County, Del.Ch., 415 A.2d 481 (1980), and the specific statute controls the more general to the extent of any conflict, Hamilton v. State, Del.Supr., 285 A.2d 807 (1971), Artesian Water Co. v. State Dept. of Highways and Transportation, Del.Super., 330 A.2d 432, modified on other grounds, 330 A.2d 441 (1974). 29 Del.C. c. 101 is both the later statute and the more specifically detailed jurisdictional statute. Therefore, this Court concludes that the Legislature impliedly intended it to supplant the jurisdictional provisions in 18 Del.C. § 2531. Although repeal by implication is not favored, repeal must be recognized here in order to give meaning to the legislative intent of 29 Del.C. c. 101 et seq., to standardize the manner in which certain agencies are subjected to judicial review. Fraternal Order of Police v. McLaughlin, Del.Supr., 428 A.2d 1158 (1981). Thus, this Court holds that it has jurisdiction in this matter under the authority of 29 Del.C. § 10142.

The standard to determine whether a stay should be granted is governed by 29 Del.C. § 10144.

When an action is brought in the Court for review of an agency regulation or decision, enforcement of such regulation or decision by the agency may be stayed by the Court only if it finds, upon a preliminary hearing, that the issues and facts presented for review are substantial and the stay is required to prevent irreparable harm.

Substantial issues and facts have been presented for review. In his June 2, 1982, letter the Deputy Commissioner failed to satisfy the criteria delineated by both statute and case law regarding disallowance of a filing. In Elliott, 407 A.2d at 530, the Court mandated:

When the Commissioner finds that a rate filing does not meet the requirement of Chapter 25, § 2507 provides that he shall: (1) issue an order specifying the reasons for his disapproval; (2) state that a hearing will be granted within 20 days after written request for a hearing by the insurer; and (3) state when, within a reasonable period after entry of his order, the disapproved rate shall not longer be effective, if it has previously gone into effect.

The June 2 letter did not contain the notice provision or an effective date. In his June 25 letter, the Deputy...