Insurance Rating Bd. v. Commissioner of Ins.
| Decision Date | 13 July 1970 |
| Citation | 260 N.E.2d 922,358 Mass. 171 |
| Parties | INSURANCE RATING BOARD v. COMMISSIONER OF INSURANCE. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Herbert P. Wilkins, Boston (Acheson H. Callaghan, Jr., Boston, with him), for the Insurance Rating Board.
Walter H. Mayo, III, Asst. Atty. Gen. (James P. Kiernan, Arlington, with him), for the Commissioner of Insurance.
Before CUTTER, KIRK, SPIEGEL, REARDON, and QUIRICO, JJ.
This is a suit for declaratory relief brought by the Insurance Rating Board (board) to determine whether the Commissioner of Insurance (commissioner) had authority to disapprove and forbid the use of certain insurance rates prior to a hearing on the issue. The case was reserved and reported by the single justice without decision upon the pleadings and a statement of agreed facts.
The board is an insurance rating organization licensed under G.L. c. 175A to file rates with the commissioner on behalf of its members and subscribers for automobile physical damage insurance (insurance). This insurance provides coverage with respect to fire, theft, comprehensive, collision, and other miscellaneous automobile physical damage losses on the insured's own car. On December 24, 1969, the board presented to the commissioner a letter setting forth rates for such insurance on private passenger and commercial cars, respectively, and stating the effective date for the revisions to be December 24, 1969. Certain documents purporting to support the necessity for the two revisions were also presented to the commissioner.
Later that day the commissioner wrote the board (1) to acknowledge receipt of the rate filings; (2) to indicate that the rule used by the board in determining the effective date of the filing was 'entirely unclear, nebulous, and inconsistent'; (3) to inform the board that data filed in support of the revision in rates was 'insufficient * * * incomplete and does not justify any rate revision, nor does it support the revision filed by * * * (the board)'; (4) to 'disapprove said filing forthwith and (to) direct that said filing may not be used within this Commonwealth'; and (5) to notify the board that it could request a hearing on the matter under c. 175A, § 19(a).
On December 29, 1969, the commissioner again wrote the board reiterating the points he had made in his earlier letter and directing its attention to c. 175A, § 18, which prescribes that any person or organization wilfully violating a provision of the chapter is punishable by a fine of not more than $500 for each such violation.
The next day, December 30, 1969, at approximately 3 P.M. the board delivered to the commissioner a letter stating that it regarded the December 24, 1969, filings as ineffective. At the same time the same revised rates previously filed on December 24, 1969, were again filed by the board to be effective as of the following day, December 31, 1969. 1 The commissioner immediately wrote the board to acknowledge that the rule of application as to the effective date had been modified but pointed out that no supporting data in addition to that submitted on December 24 had been filed. He again 'disapprove(d) said filing forthwith and direct(ed) that said filing may not be used within this Commonwealth' and notified the board of its rights to a hearing under c. 175A, § 19(a).
On January 12, 1970, the board filed its bill in equity for declaratory relief. G.L. c. 231A. The commissioner demurred to the bill on the ground that the board had failed to exhaust its administrative remedies. The board argues that its December 30, 1969, filings became effective according to their terms, and that the commissioner was without authority to disapprove them without first holding a hearing as required by G.L. c. 175A, § 7(a). Moreover, it argues that the information presented with the filings adequately supported the rate increases. In response the commissioner contends that since the board did not comply with the conditions precedent set forth in c. 175A, § 6(a), for an effective rate filing, there was no effective filing to which the procedure in § 7(a) applies. He argues that if the board disagreed with his decision on the effectiveness of its filing, its proper course was to request a hearing under § 19(a), that by not doing so it failed to exhaust its administrative remedies provided by statute and that therefore the demurrer to the board's bill in equity should be sustained.
It will be helpful to state the pertinent parts of several sections of c. 175A. Section 6(a) describes the procedure for filing rates. It provides,
Section 7(a) reads, 'If at any time the commissioner finds that a filing does not meet the requirements of this chapter, he shall, after a hearing held upon not less than ten days' written notice, specifying the matters to be considered at such hearing, to every insurer and rating organization which made such filing, issue an order specifying in what respects he finds that such filing fails to met the requirements of this chapter, and stating when, within a reasonable period thereafter, such filing shall be deemed no longer effective. * * *'
The legislative history shows emphaticaly that these two sections, when read together, do not allow the commissioner to disapprove rates and thereby make them ineffective without a hearing.
The board's filing of December 29, 1969, complied with the requirements of § 6(a) that the filing 'shall state the effective date thereof, which shall not be prior to the filing date,' and that it 'shall indicate the character and extent of the coverage contemplated.' The commissioner argues that at his discretion he may interpose a third 'condition precedent' to such a filing by requesting information which supports the filing. We do not agree. The statute states that 'the commissioner may require such insurer to furnish the information upon which it supports such filing.' As we construe the statute, the insurer or rating board may provide such supporting information with its filing, but it is not required to do so. The failure to provide any such supporting information, or to provide what the commissioner deems adequate supporting information, with the original filing does not preclude the filing from taking effect in accordance with its terms. Although the commissioner may request such supporting information, or additional supporting information, such a request does not itself preclude the filing from taking effect, nor can it be used as the basis of any decision or ruling by the commissioner that the filing shall not take effect. We intimate no opinion on the power of the commissioner to suspend the filed rates in the event the insurer or board fails, neglects or refuses to file such supporting information when requested by the commissioner.
Section 19(a), upon which the commissioner relies, has no bearing on this case. It provides,
It is clear from its context that § 19(a) does not apply to a case such as this where another section, 7(a), provides a hearing procedure which the commissioner has failed or refused to utilize. 2 Section 19(a) is to be used only in those circumstances where the commissioner is authorized by the statute to act and make an order or decision without first giving the parties a hearing. 3 Its function is not that of providing an alternate method of review for those decisions made by the commissioner after holding a hearing required by the statute; nor is it that of providing a procedure for redress when the commissioner acts without first holding a hearing as provided by some other section of c. 175A.
On December 30, 1969, the commissioner purported to set aside the board's rate filing of the same date without first holding any hearing thereon as required by § 7(a)....
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