Criterion Ins. Co. v. State, Dept. of Ins.

• Decision Date: 11 October 1984
• Docket Number: No. AT-462,AT-462
• Citation: 458 So.2d 22
• Parties: CRITERION INSURANCE COMPANY, Appellant, v. STATE of Florida, DEPARTMENT OF INSURANCE and Bill Gunter, as Insurance Commissioner and Treasurer of the State of Florida, Appellees.
• Court: Florida District Court of Appeals

Page 22

458 So.2d 22

CRITERION INSURANCE COMPANY, Appellant, v. STATE of Florida, DEPARTMENT OF INSURANCE and Bill Gunter, as Insurance Commissioner and Treasurer of the State of Florida, Appellees.

No. AT-462.

District Court of Appeal of Florida First District.

Oct. 11, 1984.

Rehearing Denied Nov. 13, 1984.

Ronald L. Harrop and Leon H. Handley of Gurney & Handley, Orlando, for appellant.

Daniel Y. Sumner and Ruth L. Gokel, Tallahassee, for appellees.

ERVIN, Chief Judge.

Criterion Insurance Company appeals from the trial court's final judgment upholding the facial constitutionality of Section 627.0651(10), Florida Statutes (1982), and dismissing with prejudice Criterion's amended complaint seeking injunctive and declaratory relief. We affirm.

On October 13, 1982, Criterion submitted to the Department of Insurance (Department), pursuant to section 627.0651, Florida's rate filing statute, a rate filing notifying the Department that Criterion had implemented rate increases for personal injury protection and uninsured motorist coverages effective October 1, 1982. On February 22, 1983, the Department, pursuant to section 627.0651(10), notified Criterion by its "Notice of Intent to Issue Final Order" that the rate filing "may be unfairly discriminatory or excessive among the members of the class affected." Criterion requested an administrative hearing which was eventually held on June 23, 1983. No recommended order has issued from the hearing officer.

On March 31, 1983, Criterion submitted another rate filing to the Department, advising of another rate increase for coverage for other than personal injury protection and uninsured motorist coverages, including coverages for bodily injury, property damage, medical payments, comprehensive, collision, towing and labor. The Department took the position that this rate filing was within the prohibited time period under section 627.0651, which provides in part:

After the department notifies an insurer that a rate may be excessive, inadequate, or unfairly discriminatory, unless the department withdraws the notification, the insurer shall not increase the rate until the earlier of 120 days after the date the notification was provided or 180 days after the date of implementation of the rate. The department may, subject to chapter 120, disapprove without the 60-day notification any rate increase filed by an insurer within the prohibited time period or during the time that the legality of the increased rate is being contested.

A principal issue between the Department and Criterion is whether the statutory prohibition for increasing "the rate" within the time period specified in the statute applies to rate increases for all coverages in situations where the original rate increases purported to be for only certain specified coverages. The Department is of the view that the effect of the statute is to prohibit any such increases, and that this interpretation is the only reasonable and workable one. Criterion, however, disagrees. In any event, the Department, on April 8, 1983, issued an "Immediate Final Order of Disapproval", finding that the March rate filing constituted an immediate danger to the public health, safety or welfare in that Criterion "is charging and collecting from insurance buying consumers of the State of Florida rates which have been illegally filed, and in utter derogation of the provisions of Section 627.0651(10), F.S. (1982)." The final order was issued without notice or hearing pursuant to Section 120.59(3), Florida Statutes (1981), which provides:

(3) If an agency head finds that an immediate danger to the public health, safety, or welfare requires an immediate final order, it shall recite with particularity the facts underlying such finding in the final order, which shall be appealable or enjoinable from the date rendered.

(e.s.) At the same time the Department notified Criterion of its right to request a 120.57(1) administrative hearing.

Thereafter, Criterion filed a complaint in the circuit court seeking injunctive and declaratory relief and attacking the facial constitutionality of section 627.0651. In what Criterion refers to as an abundance of caution, it also requested a formal administrative hearing. On June 13, 1983, the hearing officer entered an order holding such hearing in abeyance until such time as the parties advised him that the case should be heard or dismissed or until further order of the hearing officer. No such hearing has been held. ¹

Criterion's circuit court complaint, as amended, sought declaratory and injunctive relief and alleged nine counts: Count I--the April 8, 1983 order violates Criterion's due process and equal protection rights since its rates are not unreasonable, arbitrary or excessive; Count II--the April 8 order unconditionally impairs the obligations of contract between Criterion and its policyholders; Count III--the Department misconstrues and misapplies section 627.0651(10); Count IV--section 627.0651(10) constitutes an unlawful delegation of legislative authority and is facially unconstitutional; Count V--the April 8 order is deficient for failure to recite with sufficient particularity the facts constituting the alleged danger to the public health, safety or welfare; Count VI--the entry of the April 8 order, without prior notice and opportunity for hearing, violates Criterion's due process rights; Count VII--the Department is without authority to require return or rebate of premiums; Count VIII--the April 8 order, requiring return of premiums, constitutes the imposition of an administrative penalty not authorized by law and in violation of Article I, Section 18, Florida Constitution; Count IX--section 627.0651(10) is facially unconstitutional as it creates an unlawful, irrebuttable presumption that all rate increases within the prohibited time period are excessive, arbitrary, void or otherwise unlawful and, therefore, violative of Criterion's due process and equal protection rights. The Department responded by moving to dismiss the complaint. The hearing was on: (1) the Department's motion to dismiss the complaint; (2) Criterion's motion for leave to file the amended complaint (tendered with the motion); (3) Criterion's motion for stay, and (4) its motion to stay enforcement of the April 8 order.

Following the hearing, the court granted Criterion's motion for leave to file its amended complaint, held that it had "no jurisdiction to consider any issue raised or raisable by the amended complaint other than the facial constitutionality vel non of section 627.0651(10)," and then ruled:

This Court determines that facially Section 627.0651(10), Florida Statutes (1982 Supp.), does not appear to be in violation of any constitutional principle.

Thereupon it denied the two motions to stay and dismissed the amended complaint with prejudice.

Criterion first contends that the court prematurely ruled on the facial constitutional claims; that it had no notice that the court would consider the constitutionality of the statute at the hearing on the motion to dismiss the complaint. We disagree. The motion to dismiss the complaint was explicitly based on appellant's failure to exhaust its administrative remedies on the ground that it had an adequate administrative remedy under Chapter 120, Florida Statutes. In making such allegations, the Department in effect challenged the court's subject matter jurisdiction to hear the case, a challenge which is properly raised by motion to dismiss. See Fla.R Civ.P. 1.140(b). The only ground on which the court could have considered the suit was as to the claims directed to the facial constitutionality of the statute. See Key Haven v. Board of Trustees of Internal Improvement Trust Fund, 427 So.2d 153 (Fla.1982). Criterion was under no misconception as to the reach of the Department's motion. In fact, before the court entered its order of dismissal, Criterion filed a memorandum of law in response to the motion to dismiss, stating, "[U]nder well established principles of law this court has jurisdiction to consider the constitutionality of ... Section 627.0651(10), Florida Statutes (1982)." In Criterion's memorandum, citing to Gulf Pines Memorial Park, Inc. v. Oaklawn Memorial Park, Inc., 361 So.2d 695 ((Fla.1978) and Department of Revenue v. Young American Builders, 330 So.2d 864 (Fla. 1st DCA 1976), it argued that "administrative remedies do not displace circuit court jurisdiction to enjoin the enforcement of facially unconstitutional agency action." (e.s.) Criterion specifically stated in its response that count IV of its complaint was a challenge to the facial constitutionality of the statute in question. Clearly, then, Criterion not only was aware of the scope of the Department's motion, but in fact appears to have invited the court's ruling on the constitutional issue.

The case before us is therefore in an altogether different posture from the circumstances presented in those cases relied upon by Criterion, Mills v. Ball, 344 So.2d 635, 638 (Fla. 1st DCA 1977), and Government Employees Insurance Company v. Anta, 379 So.2d 1038 (Fla. 3d DCA 1980), wherein factual issues--rather than issues of law--were required to be resolved following a final hearing on the merits. As this court observed in Mills v. Ball, 344 So.2d at 638: "A ruling on the merits should not be made until after the final hearing where the parties have full opportunity to present evidence in support of their respective positions." (e.s.) In the case at bar, once the trial court determined the legal issue that the statute under attack was constitutional, it correctly abstained from entertaining any of the nonconstitutional questions by holding such questions were not properly before it.

We disagree also with Criterion's argument that section 120.59(3), by using the words "appealable or enjoinable", authorizes a statutory means for permitting entry into the circuit court without complying with the exhaustion...