Pennsylvania Coal Min. Ass'n v. Insurance Dept.

• Decision Date: 28 February 1977
• Parties: PENNSYLVANIA COAL MINING ASSOCIATION et al., Appellants, v. INSURANCE DEPARTMENT of the Commonwealth of Pennsylvania and William J.Sheppard, Insurance Commissioner, Appellees, Coal Mine Compensation Rating Bureau of Pennsylvania, Intervenor.
• Court: Pennsylvania Supreme Court

370 A.2d 685

471 Pa. 437

PENNSYLVANIA COAL MINING ASSOCIATION et al., Appellants,
v.
INSURANCE DEPARTMENT of the Commonwealth of Pennsylvania and

William J.Sheppard, Insurance Commissioner, Appellees, Coal Mine Compensation Rating Bureau of Pennsylvania, Intervenor.

Supreme Court of Pennsylvania.

February 28, 1977

Argued Sept. 20, 1976.

Petition for Clarification Denied April 5, 1977. [370 A.2d 686] [Copyrighted Material Omitted] [370 A.2d 687]

[471 Pa. 442] John M. Elliott, Steven L. Friedman, Constance B. Foster, Dilworth, Paxson, Kalish & Levy, Philadelphia, for appellants.

Linda S. Lichtman, Deputy Atty. Gen., Guy J. Depasquale, Harrisburg, for appellees.

Thomas R. Balaban, Shaffer, Calkins & Balaban, Harrisburg, Wilbur S. Legg, Spencer LeRoy, Lord, Bissell & Brook, Chicago, Ill., Harold R. Schmidt, Pittsburgh, for intervenor, Coal Mine Compensation Rating Bureau of Pa.

Before JONES, C.J., and EAGEN, O'BRIEN, ROBERTS, POMEROY, and MANDERINO, JJ.

OPINION OF THE COURT

ROBERTS, Justice.

In Pennsylvania, coal mining companies are required to purchase insurance coverage for black lung benefits as a condition of doing business. ^[1] The rates charged for such insurance are subject to regulation by the appellee Pennsylvania Insurance Department. On August 1, 1975, a rate increase became effective without notice to [370 A.2d 688] the coal mining companies which purchase black lung insurance. [471 Pa. 443] Today we must decide whether due process is satisfied by procedures which allow rate increases to go into effect without prior notice or an opportunity to present objections. We conclude that the coal mining companies have been denied due process, and set aside the 1975 rate increases.

I

The procedure for the regulation of insurance rates for workmen's compensation coverage in the Commonwealth is set forth in the Insurance Company Law of 1921, Act of May 17, 1921, P.L. 682, § 654, as amended, 40 P.S. § 814 (Supp.1976). Insurance rates are proposed annually by a rating bureau subject to supervision and examination by the Insurance Commissioner. Proposed rates for black lung coverage are proposed by the intervenor Coal Mine Compensation Rating Bureau of Pennsylvania (Rating Bureau), an organization composed of the insurance carriers which provide black lung coverage. No insurance policy may issue except in accordance with the rates proposed by the Rating Bureau, as modified, amended or approved by the Insurance Commissioner. Under this regulatory scheme, the Insurance Commissioner reviews the rates to determine if they are excessive or discriminatory. After proposed rates are filed and before they become effective, the Insurance Commissioner may hold hearings on the proposed rates, in which insured parties whose rates would increase are entitled to participate. ^[2]

Until December 1974, no rate proposal could become effective without the prior approval of the Insurance Commissioner. At that time, the Legislature adopted an amendment which provided that, after a waiting period of thirty days, a rate proposal shall be 'deemed' approved [471 Pa. 444] unless disapproved or modified by the Commissioner. ^[3]

On June 27, 1975, the Rating Bureau submitted proposed rates for black lung insurance for the year beginning July 1, 1975 (1975 rates). The Rating Bureau proposed a rate of $27.31 per $100 of payroll, an increase over the $18.54 rate approved for 1974 and the $13.09 rate in effect for 1973. ^[4] Appellants, the Pennsylvania Coal Mining Association and six member coal mining companies (Association), were given no notice of the rate filing.

On July 16, 1975, the Association, having learned of the rate filing, requested a copy of the proposed rates and stated that it 'may well have objections to the filing and may seek to intervene in the proceedings.' Copies of the filing were hand delivered to the Association on July 18. The Association was not informed that the rates would be deemed effective unless the Insurance Commissioner took action within thirty days after the proposed rates were submitted. ^[5]

On August 11, 1975, the Association petitioned to intervene in the rate hearing on the 1975 rates. The Association subsequently was informed that the 1975 rates had been deemed into effect. On August 21, 1975, the Association wrote the Insurance Commissioner, reciting that the Association did not receive notice that the 1975 rates had been submitted, that when the Association requested a copy of the proposed [370 A.2d 689] rates it expressed its [471 Pa. 445] objection to any rate increase, and that it had petitioned to intervene in proceedings for review of the 1975 rates. The Association requested the Insurance Commissioner to reject or suspend the 1975 rate filing, so that a hearing could be held in which the Association could participate. The Insurance Commissioner responded on September 5, explaining the basis for the 1975 rate increase, and denying the Association's petition to intervene because the rates had already been deemed into effect.

The Association appealed to the Commonwealth Court. The Commonwealth Court held that the Association was not entitled to notice and a hearing on the proposed rates before they became effective, and dismissed the appeal. ^[6] This Court granted the Association's petition for allowance of an appeal, ^[7] and issued a writ of supersedeas to prevent the 1975 rates from becoming effective until we resolved the Association's claims.

II

In order to determine the requirements of procedural due process, this Court must first determine if the interest [471 Pa. 446] asserted by the Association is protected by the due process clause. ^[8] Next, we must balance the interests of the individual in procedural protections against the interests of the government in proceeding without protections to determine what due process requires. See Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970); Conestoga National Bank v. Patterson 442 Pa. 289, 272 A.2d 6 (1971).

A. The Association's interest in the rates its members are required to pay for black lung insurance does not involve any property rights under traditional concepts of property law. The absence of such traditional property rights, however, does not mean that the Association has no 'property' interest subject to due process protections. The expanding participation of the government in our economy has meant that many forms of benefits and privileges extended by the government are at least as important to the individual as traditional forms of property. The role of the government in providing such benefits, and the power that inheres in this role, have made it necessary to provide safeguards to preserve the independent status of the individual. See Reich, The New Property, 73 Yale L.J. 733 (1964). Thus, the Association's interest in the rates set for black lung insurance cannot be dismissed as a mere privilege. As Mr. Justice Blackmun recently wrote for the United States Supreme Court: 'this Court now has rejected the concept that constitutional rights turn upon whether a governmental benefit is characterized as a 'right' or as a 'privilege. " Graham v. Richardson, 403 [370 A.2d 690] U.S. 365, 374, 91 S.Ct. 1848, 1853, 29 L.Ed.2d 534 (1972); accord Morrissey v. Brewer, 408 U.S. 471, 92 S.Ct. 2593, 33 L.Ed.2d 484 (1972).

[471 Pa. 447] Similarly, we cannot conclude that the Association's interest is not within the protections of the due process clause simply because the Pennsylvania Workmen's Compensation Act, ^[9] and the Insurance Company Law of 1921 ^[10] do not expressly create any entitlement in the Association to the rates it must pay for insurance. See Morrissey v. Brewer, 408 U.S. 471, 482, 92 S.Ct. 2593, 2601, 33 L.Ed.2d 484 (1972); Perry v. Sindermann, 408 U.S. 593, 601--02, 92 S.Ct. 2694, 2699--700, 33 L.Ed.2d 570 (1972). To require an explicit 'statutory entitlement' before due process...