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PHYSICIANS MUTUAL INSURANCE COMPANY v. HERBERT S. DENENBERG (11/01/74)

decided: November 1, 1974.

PHYSICIANS MUTUAL INSURANCE COMPANY, APPELLANT,
v.
HERBERT S. DENENBERG, INSURANCE COMMISSIONER OF THE COMMONWEALTH OF PENNSYLVANIA, APPELLEE



Appeal from the Order of the Insurance Commissioner in case of In Re: Physicians Mutual Insurance Company, Order of January 11, 1974.

COUNSEL

Robert J. Demer, with him Thomas R. Balaban and Shaffer, Calkins & Balaban, for appellant.

Andrew F. Giffin, Assistant Attorney General, with him Barton Isenberg, Assistant Attorney General, and Israel Packel, Attorney General, for appellee.

President Judge Bowman and Judges Crumlish, Jr., Kramer, Wilkinson, Jr., Rogers and Blatt. Judge Mencer did not participate. Opinion by Judge Crumlish, Jr.

Author: Crumlish

[ 15 Pa. Commw. Page 511]

Physicians Mutual Insurance Company (Appellant), a Nebraska company, which holds a certificate of authority to do business in Pennsylvania, filed copies of seven insurance policy forms with the Pennsylvania Insurance Department (Department) during the years 1969 through 1971. All of the forms and the accompanying rates of premiums charged were approved for issue and sale in Pennsylvania.*fn1 Following the respective dates of approval, Appellant issued and sold the policies in the Commonwealth at the premium rates which had been filed. Each of these policies provided for an initial premium of one dollar ($1.00) for the first month of coverage, regardless of the type of risk insured.

On September 13, 1973, Appellant received a letter from an employe of the Department dated September 7, 1973, wherein it was notified that approval of the seven policies was withdrawn on the authority of Section 354 of the Insurance Company Law of 1921, Act of May 17, 1921, P.L. 682, as amended, 40 P.S. § 477b. The stated reasons for withdrawal of approval were: (1) nominal initial premium is discriminatory, (2) application of the nominal initial premium is not in accord with actuarial principles acceptable to the Department. Subsequently Appellant received a letter from an employe of the Department which purported to amend the September 7, 1973 letter citing Section 353, 40 P.S. § 477a; Section 354, 40 P.S. § 477b; Section 616, 40 P.S.

[ 15 Pa. Commw. Page 512]

§ 751; Section 626, 40 P.S. § 761 "and other applicable sections" as justification for the withdrawal. Then came a series of procedural joustings which are unimportant in resolving the issues and uninteresting to the legal scholar. Before us now for consideration is an appeal from the adjudication of the Insurance Commissioner affirming the revocation of approval of Appellant's forms.

Initially, Appellant argues that the Insurance Commissioner had no authority under Section 354, 40 P.S. § 477b to withdraw approval of policy forms which had been approved previously. Section 354 provides in relevant part:

"It shall be unlawful for any insurance company . . . doing business in this Commonwealth, to issue, sell, or dispose of any policy, contract or certificate, covering life, health, accident, personal liability, fire, marine, title, and all forms of casualty insurance, or contracts pertaining to pure endowments or annuities, or any other contracts of insurance . . . until the forms of the same have been submitted it and formally approved by the Insurance Commissioner, and copies filed in the Insurance Department . . . .

"Such approval shall become void upon any subsequent notice of disapproval from the Insurance Commissioner, or upon any subsequent withdrawal of license or refusal of the Insurance Commissioner to relicense any such company . . . .

"Upon any disapproval, the Insurance Commissioner shall notify the insurer in writing, specifying the reason for such disapproval; and within thirty (30) days from the date of mailing of such notice to the insurer, such insurer may make written application to the Insurance Commissioner for a hearing thereon, and such hearing shall be held within thirty (30) days after receipt ...


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