People's Insurance v. Allstate
| Decision Date | 15 April 2009 |
| Docket Number | No. 86 September Term, 2008.,86 September Term, 2008. |
| Citation | 969 A.2d 971,408 Md. 336 |
| Parties | PEOPLE'S INSURANCE COUNSEL DIVISION, et al. v. ALLSTATE INSURANCE COMPANY, et al. |
| Court | Court of Special Appeals of Maryland |
Joshua N. Auerbach, Asst. Atty. Gen. (Douglas F. Gansler, Atty. Gen. of Maryland and Cynthia Dietz Spirt, Asst. Atty. Gen., Baltimore), on briefs, for Appellants.
Bryan D. Bolton (Michael P. Cunningham of Funk & Bolton, P.A., Baltimore), on brief, for Appellees.
Argued Before BELL, C.J., HARRELL, BATTAGLIA, GREENE, MURPHY, ADKINS, and IRMA S. RAKER (Retired, specially assigned), JJ.
The issue in this case is whether the People's Insurance Counsel Division (hereinafter the "Division") may seek judicial review of an order of the Insurance Commissioner, under Sections 6-301 et seq. of the State Government Article, which create and define the powers and duties of the Division,1 and Section 2-215 of the Insurance Article, which governs judicial review actions from final decisions of the Insurance Commissioner.2
Specifically, in 2006, Allstate Insurance Company, Respondent, advised the Insurance Commissioner that it had planned to cease writing new homeowners and mobile-home insurance policies in certain "catastrophe-prone" areas.3 The Maryland Insurance Administration reviewed Allstate's filing, and on May 31, 2007, issued its position by e-mail, stating that "the Administration has concluded that the [non-write zone] designation has an objective basis and is neither arbitrary nor unreasonable." The next day, the Division requested a hearing on the Commissioner's "non-write" action, which was granted by the Commissioner. After a hearing was held, an Order was issued on February 2, 2008, by the Associate Deputy Commissioner, deciding that the Division had standing and ordering "that Allstate Insurance Company and Allstate Indemnity Company be and hereby are found to have met the requirements of § 19-107 of the Insurance Article; ... that [they] ... are found not to have violated § 27-501 of the Insurance Article; and ... that, a final decision on the hearing is rendered in favor of Allstate...." From this Order, the Division sought judicial review in the Circuit Court for Baltimore City, and Allstate moved for dismissal, arguing that the Division lacked standing to seek judicial review. The Judge granted Allstate's motion, holding that because the Division was not a "party" to the hearing before the Commissioner, it could not seek judicial review under Section 2-215 of the Insurance Article. The Division appealed to the Court of Special Appeals, and Allstate petitioned this Court for certiorari prior to any proceedings before the Court of Special Appeals, asking us to review the trial judge's decision to dismiss. We granted Allstate's petition and shall address the following question:
Whether the General Assembly authorized the People's Insurance Counsel Division to file a petition for judicial review from a final decision of the Insurance Commissioner.
We shall hold that the Division is a party in matters before the Insurance Commissioner, that this constituted such a matter, and that as a party, the Division may seek judicial review from an order of the Commissioner under Section 2-215(b) of the Insurance Article.
On December 4, 2006, Allstate notified the Insurance Commissioner, pursuant to Section 19-107 of the Insurance Article,4 that it intended to stop accepting new homeowners insurance business in certain "catastrophe prone" areas, which potentially involved a large number of consumers in Maryland. Between December 2006 and May 23, 2007, the Maryland Insurance Administration conducted a review of the filing,5 and on May 31, 2007, the Administration e-mailed its "position" to Allstate:
RE: Allstate Filings R17710, R 17712 & R 17214. Dear Mr. Wisniewski: The Maryland Insurance Administration has thoroughly reviewed the filings made under Section 19-107 of the Insurance Article by Allstate Insurance Company and Allstate Indemnity Company as referenced above. Based on the information submitted and this review, the Administration has concluded that the designation has an objective basis and is neither arbitrary nor unreasonable. Obviously, if additional information is provided or if the underlying data changes, this may change the Administration's position.
On June 1, 2007, the Division requested a hearing before the Insurance Commissioner, alleging that Allstate's filing was not in compliance with Section 19-107, governing "nonwrites."6 Specifically, the Division contended that the "designation of the geographic area does not have an objective basis," and that the "designation is arbitrary and unreasonable," because Allstate made "no showing that its existing rate structure or an actuarially-based rate change is inadequate to show the extent that `the rate is unreasonably low for the insurance provided and continued use of the rate would endanger the solvency of the insurer' per Md.Code. Ann. Ins. § 11-306(a)(3)."7 The Division also requested a stay of the "non-write" filing, which would become effective on June 4, 2007.
On July 2, 2007, The Interim Insurance Commissioner granted the Division's request for a hearing but denied the stay request, stating, in pertinent part, that:
[The Division's] request for a hearing on behalf of the People's Insurance Counsel Division (PICD) is hereby granted.
* * *
[The Division's] request for a hearing does not stay the implementation of Allstate's filings. Those filings were not subject to prior approval by the Administration and the Administration issued no order approving the implementation of the filings. By statute, the filings may be implemented 60 days after they are filed. Preventing the implementation of the filings would require an affirmative order by the Administration, based on a finding that the filings did not meet the statutory criteria. Hence, while I have recognized the standing of PICD to request a hearing on the Administration's decision not to order Allstate to halt the implementation of its filings (as amended), there is no affirmative order of the Administration which is subject to being stayed by [the Division's] request.
Allstate filed a motion to intervene and a motion to dismiss the Division's request for a hearing, asserting that the Division lacked standing to challenge its filing. In an "Order on Motions," dated August 31, 2007, the Interim Commissioner granted Allstate's request to intervene in the hearing,8 but denied its motion to dismiss, preliminarily determining that the Division had "standing to pursue this proceeding." A hearing was held in December of 2007, and four issues were presented:
1. Does PICD have standing to request a hearing?
2. When an insurer makes a filing pursuant to Ins. § 19-107, in which the insurer designates a geographic area in the state in which the insurer plans to refuse to issue or renew motor vehicle, property or casualty insurance, is the underwriting standard by which the geographic designation will be implemented exempted from the Insurance Article's prohibition on discrimination in underwriting, which is set forth in Ins. § 27-501?[9]
3. Did Allstate satisfy its burden of showing that its underwriting standard, upon which it will base its refusal to write new homeowner's business in Hurricane Bands 4-6, actually exists, is lawful, and will be applied in a manner that is reasonably related to Allstate's business and economic purposes, as required by Ins. § 27-501?
4. Did Allstate satisfy its burden of demonstrating, as required by Ins. § 19-107, that its designation of the geographic area in which it will refuse new business has an objective basis and is not arbitrary or unreasonable?
At the termination of the hearing, an associate deputy commissioner,10 in a written memorandum, determined:
I. PICD had standing to request a hearing on this matter.
II. In light of PICD's challenge to Allstate's decision to cease writing new business in designated coastal regions, Allstate had the burden of persuasion to demonstrate: that the underwriting standard to be applied to refuse coverage in the designated areas is not discriminatory and was reasonably related to Allstate's business and economic purposes, as required by Ins. § 27-501, and that the geographic designation upon which Allstate based its refusal to issue new homeowner's business was objective and was not arbitrary or unreasonable.
III. Allstate has satisfied its burden, pursuant to § 27-501, of showing that its underwriting standard, by which it will refuse new homeowner's business in Hurricane Bands 4-6 actually exists, is not discriminatory, and is reasonably related to its business and economic purposes.
IV. Allstate has satisfied its burden of showing it has complied with Ins. § 19-107 by filing a timely geographic designation reflecting the areas in which it will cease to writing new homeowner's business because Allstate's timely designation is objective, reasonable, and not arbitrary.
With respect to the Division's standing, the associate deputy commissioner interpreted Section 6-306 of the State Government Article and determined that it provided the Division with the ability to represent consumers at-large:
PICD was created by the Maryland General Assembly during its special session in December 2004. The purpose of the PICD is to protect, through statutorily prescribed means, the interests of persons insured under policies of medical professional liability or homeowner's policies issued or delivered in the State. The PICD is authorized, in pertinent part, to do the following:
(a)(1) The Division shall evaluate each medical professional liability insurance and homeowner's insurance matter pending before the Commissioner to determine whether the interests of insurance consumers are affected.
(2) If the Division determines that the interests of insurance consumers are affected, the Division may appear...
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