National Council on Compensation Ins. v. New Mexico State Corp. Com'n, 16310

Citation107 N.M. 278,756 P.2d 558,1988 NMSC 36
Decision Date10 May 1988
Docket NumberNo. 16310,16310
PartiesNATIONAL COUNCIL ON COMPENSATION INSURANCE, Petitioner-Appellant, v. NEW MEXICO STATE CORPORATION COMMISSION, Eric Serna, John Elliott, Jimmie Glenn, Members, acting as the State Insurance Board, and the Superintendent of Insurance, Vincente Jasso, Respondents-Appellees.
CourtSupreme Court of New Mexico
OPINION

RANSOM, Justice.

On December 23, 1985, the Insurance Board disapproved a workers' compensation insurance premium increase that was to go into effect January 1, 1986. The National Council on Compensation Insurance (NCCI), which submitted the rate filing, petitioned this Court for review. We declined to accept jurisdiction, and NCCI filed an appropriate appeal of the Board's decision in the District Court of Santa Fe County. See National Council on Compensation Ins. v. New Mexico State Corp. Comm'n, 103 N.M. 707, 712 P.2d 1369 (1986). The district court affirmed the order of the Board. NCCI appeals. We affirm.

This appeal is governed by the Insurance Code, NMSA 1978, Sections 59A-1-1 to 59A-53-17 (Orig.Pamp.1984). Article 17 (Secs. 59A-17-1 to 59A-17-35) comprises the Insurance Rate Regulation Law, the statutes most specifically applicable to this appeal.

PROCEEDINGS

NCCI is an official rate service organization. See Secs. 59A-17-4(B), 59A-17-19. On October 17, 1985, NCCI filed a premium rate increase for all workers' compensation carriers operating in New Mexico. The premium increase applied to all policies issued or renewed during the calendar year beginning January 1, 1986.

On October 31, the Superintendent of Insurance informed NCCI by letter that the Board had hired an independent actuary, Allen Kaur, to review the filing. The Superintendent asked NCCI to cooperate with any request from Mr. Kaur for additional information. The letter also notified NCCI that a hearing had been scheduled to solicit input from employer groups and to allow NCCI to make a presentation of its filing.

On November 15, the Superintendent mailed written notice to NCCI regarding a December 10 public hearing to receive comment and to give consideration to the rate filing in terms of specific statutory criteria under Section 59A-17-8 and other relevant factors described in the notice.1 Because the filing was not specifically disapproved within fifteen days of its submission, the filing was treated as having become effective prior to the hearing.2 Following the December 10 hearing, the Board disapproved the rate filing scheduled to go into effect January 1.

STANDARD OF REVIEW

Section 59A-17-35 governs appeals from an order made by the Board disapproving a rate filing. National Council on Compensation Ins. v. New Mexico State Corp. Comm'n, 103 N.M. 707, 712 P.2d 1369 (1986). The district court is required to sustain the administrative action appealed from unless such action is either unlawful, arbitrary or capricious, or not based upon substantial evidence. Sec. 59A-17-35(C). In reviewing the administrative action, the court should give due consideration to the expertise of the Superintendent and the Board. Id.

In Duke City Lumber Co. v. New Mexico Environmental Improvement Board, 101 N.M. 291, 681 P.2d 717 (1984), this Court held that for purposes of reviewing administrative decisions the substantial evidence rule is expressly modified to include whole record review. Id. at 294, 681 P.2d at 720. Under whole record review, the court views the evidence in the light most favorable to the agency decision, Wolfley v. Real Estate Comm'n, 100 N.M. 187, 668 P.2d 303 (1983), but may not view favorable evidence with total disregard to contravening evidence. New Mexico Human Servs. Dep't v. Garcia, 94 N.M. 175, 608 P.2d 151 (1980).

To conclude that an administrative decision is supported by substantial evidence in the whole record, the court must be satisfied that the evidence demonstrates the reasonableness of the decision. No part of the evidence may be exclusively relied upon if it would be unreasonable to do so. The reviewing court needs to find evidence that is credible in light of the whole record and that is sufficient for a reasonable mind to accept as adequate to support the conclusion reached by the agency. See Sandoval v. Dep't of Employment Sec., 96 N.M. 717, 634 P.2d 1269 (1981).

On appeal to this Court, the review of an administrative decision is the same as before the district court. Jimenez v. Department of Corrections, 101 N.M. 795, 689 P.2d 1266 (1984). However, our review requires a two-fold analysis. Tapia v. City of Albuquerque, 104 N.M. 117, 717 P.2d 93 (Ct.App.1986). Ultimately, we must decide whether the district court was correct in finding substantial evidence to support the Board's order. In making that decision, we must independently examine the entire record. Id. at 120, 717 P.2d at 96.

NCCI claims numerous separate errors of law and complains that many of the Board's findings are not supported by substantial evidence on the record as a whole. We address its points seriatim, together with relevant substantial evidence questions.

POWERS OF THE BOARD IN RELATION TO ITS SECRETARY

The Insurance Code provides that the Insurance Rate Regulation Law is under the exclusive jurisdiction of the Insurance Board and that it be administered by the Board's Secretary, the Superintendent of Insurance. Secs. 59A-3-2, 59A-17-5. All powers relating to state control and supervision of insurance rates and rate practices are under the exclusive control of the Board (Sec. 59A-2-1), which consists of the chairman and members of the Corporation Commission. Sec. 59A-3-1. Appointed by the Corporation Commission, the Superintendent of Insurance is the chief administrative officer of the Board as well as its Secretary. Sec. 59A-3-3(A). As Secretary, the Board may remove him for cause, and he is automatically removed if the Corporation Commission removes the Superintendent for cause. Sec. 59A-3-3(B). The Secretary certifies the proceedings of the Board under a seal furnished by the Board (Sec. 59A-3-4), and his general powers as to rules and regulations, enforcement, and otherwise are coextensive with those as Superintendent. Sec. 59A-17-5.

NCCI claims that Section 59A-17-14(B) permits only the Superintendent, not the Board, to make a preliminary finding and then conduct a hearing on a filing. (See [107 NM 283] Footnote 2 for text of Subsection (B)). At issue is whether the powers and duties specifically prescribed for the Superintendent under that section are intended by the legislature to be his to the exclusion of the Board itself. In support of its argument that the Superintendent's powers and duties are exclusively his, NCCI submits that the legislature intended a two-tier hearing for any person aggrieved by the Superintendent's action, threatened action or failure to act. Under Section 59A-17-34, any such person is entitled to a hearing before the Superintendent and, if aggrieved by the Superintendent's order on such hearing, or by the Superintendent's refusal to hold the hearing, that person may request a review thereof by the Board.

We agree that Section 59A-17-34(A) mandates the Superintendent hold a hearing upon request by a person aggrieved by the Superintendent's act, threatened act, or failure to act, or by any report, rule, regulation or order of the Superintendent (Sec. 59A-4-15), and that a request may be made for review by the Board of the Superintendent's order after a hearing or refusal to hold a hearing. Sec. 59A-17-34(B). However, we do not agree that the grievance procedure mandates that the Board, which by statute has exclusive jurisdiction over the rate regulation law and the control and supervision of rates and rate practices, cannot, as a body, exercise its powers to examine a rate filing without first allowing its Secretary to act under specific statutory authorization and direction. Unless any intent of the legislature to the contrary be expressly stated, we cannot infer that powers authorized under Section 59A-17-14(B) for the Superintendent could be exercised only by him to the exclusion of the Board.

PROCEDURAL DUE PROCESS

Notice. NCCI submits that its due process rights under Article 17 were violated. NCCI contends that the notice provided by the Superintendent lacked the specificity required under Section 59A-17-14(B). This section provides that if, following the applicable review period, the Superintendent determines that a filing fails to meet the requirements of Article 17, "he shall, after a hearing upon written notice specifying the matters to be considered at the hearing to every rate insurer and rate service organization which made such filing, issue an order * * * ." (Emphasis added.) NCCI claims that the Superintendent's notice did not sufficiently apprise NCCI of the issues to be addressed during the hearing. To support its contention that the Superintendent's notice was inadequate, NCCI relies primarily upon Mountain States Telephone & Telegraph Co. v. New Mexico State Corp. Commission, 90 N.M. 325, 563 P.2d 588 (1977).

The application of Mountain States to the case at bar is inapposite. We note initially that under Article XI of the New Mexico Constitution, the Corporation Commission is mandated to establish the rates charged by telephone companies within the state, whereas the Commission acting as the Insurance Board does not establish rates. The Board merely approves or disapproves rate filings.

In Mountain States, the Court reviewed a Corporation Commission order of 1973, regarding cost of service pricing in determining telephone rates. In 1975, the Commission relied upon...

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