State ex rel. Com'r of Ins. v. North Carolina Fire Ins. Rating Bureau

• Decision Date: 08 February 1977
• Docket Number: No. 91,91
• Citation: 292 N.C. 70,231 S.E.2d 882
• Court: North Carolina Supreme Court
• Parties: STATE of North Carolina ex rel. COMMISSIONER OF INSURANCE v. NORTH CAROLINA FIRE INSURANCE RATING BUREAU.

Page 882

231 S.E.2d 882

292 N.C. 70

STATE of North Carolina ex rel. COMMISSIONER OF INSURANCE v. NORTH CAROLINA FIRE INSURANCE RATING BUREAU.

No. 91.

Supreme Court of North Carolina.

Feb. 8, 1977.

Rufus L. Edmisten, Atty. Gen. by Isham B. Hudson, Jr., Asst. Atty. Gen. and Hunter & Wharton by John V. Hunter, III, Raleigh, for plaintiff.

Joyner & Howison by Walton K. Joyner and Edward S. Finley, Jr., Raleigh, for defendant.

HUSKINS, Justice.

We first turn to the contention of the Rating Bureau that the proposed rates were 'deemed' approved under G.S. 58--131.1 upon failure of the Commissioner, in writing, to disapprove the rates within 60 days after submission.

G.S. 58--131.1 codified from Chapter 380 of the 1945 Session Laws, reads as follows:

'No rating method, schedule, classification, underwriting rule, bylaw, or regulation shall become effective or be applied by the Rating Bureau until it shall have been first submitted to and approved by the Commissioner. Provided, that a rate or premium used or charged in accordance with a schedule, classification, or rating method or underwriting rule or bylaw or regulation previously approved by the Commissioner need not be specifically approved by the Commissioner. Every rating method, schedule, classification, underwriting rule, bylaw or regulation submitted to the Commissioner for approval shall be deemed approved, if not disapproved by him in writing within 60 days after submission.'

In clear language this statute provides that a proposed rate is deemed approved if the Commissioner does not act within 60 days after the submission of the proposal to disapprove it in writing. Operation of the 'deemer' provision can be averted only by the approval or disapproval of the Commissioner within 60 days.

The Commissioner contends, however, that G.S. 58--27.1(c) and G.S. 58--27.2(a) require public hearings on proposed rate adjustments before the Commissioner may act upon the proposal and therefore a proposed change in rates cannot be 'deemed approved' upon the lapse of 60 days when there has been no public hearing. The cited statutes provide in pertinent part as follows:

'The insurance advisory board shall . . . promulgate rules and regulations to provide for the holding of public hearings before the Commissioner of Insurance . . . on such proposals, to revise an existing rating schedule the effect of which is to increase or decrease the charge for insurance or to set up a new rating schedule, as are subject to the approval of the Commissioner and as, is the judgment of the board, are of such nature and importance as to justify and require a public hearing.' G.S. 58--27.1(c)

'Whenever any statutory or licensed insurance rating bureau or any insurance company making its own rate filings makes any proposal to revise an existing rating schedule, the effect of which is to increase or decrease the charge for insurance, or to set up a new rating schedule, and such rating schedules are subject to the approval of the Commissioner, such bureau or company shall file its proposed change and supporting data with the Commissioner who shall thereafter, before acting upon any such proposal, order a public hearing thereon, if such hearing is required by the rules and regulations adopted by the insurance advisory board . . ..' G.S. 58--27.2(a).

Pursuant to the quoted statutes the insurance advisory board adopted the following regulation:

'1. Any rate adjustment or proposal involving a general revision of an existing rating schedule which the Commissioner or the Advisory Board finds upon investigation involves a material change in the rate level, or the setting up of a new rating schedule of a material nature for a kind of insurance or for a separately rated major subdivision thereof, shall be subject to a public hearing prior to action thereon by the Insurance Commissioner.'

See Comr. of Insurance v. Rating Bureau, 291 N.C. 55, 229 S.E.2d 268 (1976).

The Commissioner argues that inaction which activates the deemer provision of GS 58--131.1 is, in reality, 'action' on his part because it results in approval of the proposed rates. Therefore, he reasons, a public hearing is required before the deemer provision can be triggered. This ingenious argument sets the mandates of the deemer provision in direct conflict with the public hearing provisions and, the Commissioner notes, since the statutory requirement for a public hearing is the more recent enactment of the Legislature, to the extent of any conflict between the deemer and the hearing provisions, the latter must prevail. This principle of statutory construction is sound, Comr. of Insurance v. Rating Bureau, supra, but it is also true that statutes dealing with the same subject matter must be construed In pari materia and harmonized, if possible, to give effect to each. Comr. of Insurance v. Automobile Rate Office, 287 N.C. 192, 214 S.E.2d 98 (1975); Person v. Garrett, Comr. of Motor Vehicles, 280 N.C. 163, 184 S.E.2d 873 (1971); Redevelopment Commission v. Bank, 252 N.C. 595, 114 S.E.2d 688 (1960). See 7 Strong's N.C. Index 2d, Statutes § 5 and cases there cited. Any irreconcilable ambiguity should be resolved so as to effectuate the true legislative intent. Comr. of Insurance v. Automobile Rate Office, supra; Duncan v. Carpenter, 233 N.C. 422, 64 S.E.2d 410 (1951). With these rules of statutory construction in mind, we turn to the allegedly conflicting statutes to determine whether the deemer provision is viable in the absence of a public hearing.

Close examination of the public hearing requirement, G.S. 58--27.2(a), and the deemer provision, G.S. 58--131.1, reveals that the two statutes create no irreconcilable conflict. For the reasons which follow, we hold that, correctly construed, the two statutes are not in conflict and may be harmonized to give effect to each.

In establishing the rate-making procedures, the Legislature provided three methods by which the Commissioner may dispose of proposed rate changes, to wit: (1) He may approve the proposed rate adjustment; (2) he may disapprove it; or (3) he may do neither for 60 days and the proposal is thereupon deemed approved. G.S. 58--131.1. To avoid the automatic operation of the deemer provision, the Commissioner must approve or disapprove the proposal in writing within 60 days after submission. Approval or disapproval necessarily contemplates Action by the Commissioner, and a public hearing is required prior to such action upon a proposed material rate change. G.S. 58--27.2(a).

Rate adjustment proposals may be Temporarily resolved by the third alternative left to the Commissioner by the General Assembly. When no action is taken upon a proposed rate adjustment within 60 days after submission, the law provides that the proposal 'shall be deemed approved.' This deemer provision does not require a hearing. A hearing is prerequisite to valid action by the Commissioner, whereas no action by the Commissioner automatically triggers the deemer provision.

Moreover, when the deemer provision is construed In pari materia with the statutes calling for a public hearing, it functions in conjunction with such requirements to provide procedural due process in rate adjustment proceedings.

A primary consideration of the Legislature in adopting the rate-making scheme contained in Chapter 58 of the General Statutes was to ensure that rates fair to both the insured and the insurer be established. G.S. 58--131.2. For this reason it adopted requirements that material rate adjustments may be implemented only after a full hearing on the merits. Such a requirement, standing alone, cannot ensure fair rates because factors influencing rates may, and do, frequently change. It is therefore important that the rate-making process be not only fair but also prompt. The records of recent cases before this Court reveal instances where not only proposed rate increases but also proposed Rate reductions have been arbitrarily delayed so long that the proposals became obsolete before any action thereon was taken by the Commissioner. See, for example, Comr. of Insurance v. Rating Bureau, supra.

Thus the deemer provision is addressed to the problem of promptness. By requiring action within 60 days, it prevents arbitrary and unreasonable delays which wreck the delicate balance of the rate-making process. By encouraging prompt hearings and active investigation by the Commissioner, the 'deemer' acts as a necessary catalyst to the system and thus, rather than being in conflict with the hearing requirement, is a necessary adjunct to it.

Applying these legal principles to the facts before us, we hold that under the deemer provision of G.S. 58--131.1, the proposed rates were deemed approved on 19 September 1975, 60 days after the initial filing. The Commissioner's disapproval on 18 September 1975 was invalid because no public hearing had been held.

Similarly, we find no merit in the contention of the Commissioner that his action in setting a hearing date tolled the running of the 60-day period. Nothing in the statute suggests such interpretation. The plain language of the deemer provision compels a contrary conclusion.

If conducting the required public hearing within 60 days of the filing taxes the Commissioner's time, G.S. 58--27.1(c), and the rules adopted by the insurance Advisory Board pursuant thereto, permit the hearing to be held before the Commissioner or 'any person employed by the Insurance Department authorized by the Commissioner to act in his stead.'

We must now determine the status of the proposed rates which were deemed approved on 19 September 1975. Since the 'deemer' provision operates in conjunction with the hearing provisions, it cannot stand alone as a final resolution of the proposal. Final resolution comes only after a valid approval or disapproval by the Commissioner. We hold, therefore, that where, as here, the deemer provision is triggered by failure of the Commissioner to validly...