Appeal from the Order of the Insurance Commissioner, dated July 22, 1975, in case of Coal Mine Compensation Rating Bureau of Pennsylvania, Occupational Disease Rate Filing of September 30, 1974, Docket No. R74-10-5.
John M. Elliott, with him Steven L. Friedman, Constance B. Foster, and, of counsel, Dilworth, Paxson, Kalish & Levy, for appellants.
Linda S. Lichtman, Assistant Attorney General, with her Andrew F. Giffin, Assistant Attorney General, for appellees.
Wilbur S. Legg, with him Lord, Bissell & Brook; Thomas R. Balaban ; and Shaffer, Calkins & Balaban, for amicus curiae, Coal Mine Compensation Rating Bureau of Pennsylvania.
President Judge Bowman and Judges Crumlish, Jr., Kramer, Wilkinson, Jr., Mencer and Blatt. Judge Rogers did not participate. Opinion by President Judge Bowman. Concurring and Dissenting Opinion by Judge Crumlish, Jr. Judge Kramer joins in this concurring and dissenting opinion.
[ 26 Pa. Commw. Page 351]
The Coal Mine Compensation Rating Bureau of Pennsylvania (Bureau), intervening appellee, is a statistical and rating association approved by the Insurance Commissioner pursuant to Section 654 of The Insurance Company Law of 1921, Act of May 17, 1921, P.L. 682, as amended, 40 P.S. § 814.
On September 20, 1974, the Bureau filed with the Insurance Department for approval a new rate schedule for coal mine occupational disease insurance to be effective for the period July 1, 1974 to June 30, 1975 (referred to herein as the 1974 rate filing). It is the approval of this rate filing which is the subject of this appeal by intervenor before the Commissioner.*fn1
The Commissioner gave notice of the filing to interested persons and scheduled a hearing thereon for November 25, 1974. Prior to this date, the Pennsylvania Coal Mining Association and a number of surface coal mine operators (appellants) petitioned to and were allowed to intervene in the rate proceedings over the objection of the Bureau but were denied the right to cross-examine Bureau witnesses in the course
[ 26 Pa. Commw. Page 352]
of the hearing; a ruling which produced an "appeal" to this Court and resulted in an Order of this Court allowing said cross-examination. This particular point is not involved in the present appeal. Hearings were completed on April 22, 1975. On July 22, 1975, the Commissioner issued his adjudication and order approving the rates as filed. It is from this order that this appeal was taken by the intervenors before the Commissioner. The Bureau has been allowed to intervene as an appellee in this appeal.
While appellants are essentially concerned with the rates applicable to them as surface coal mine operators and not the rates applicable to subsurface coal mine operators, they do attack basic elements of the rate structure thereby generally attacking the adjudication and order.
In their brief, appellants identify five questions on appeal. However, three of them and the numerous arguments advanced in support thereof raise two basic issues. In his adjudication and order, did the Commissioner err as a matter of law and is the adjudication and order supported by substantial evidence? Another question presented -- the propriety of the rates as including within the rate structure nonmining employees of the insured such as truck drivers -- was not raised before the Commissioner and will not be considered on appeal. A fifth question asserts that the provisions of the Federal Black Lung Benefits Act and the amended The Pennsylvania Workmen's Compensation Act imposing liability for benefits upon "the last responsible operator" are violative of appellants' property rights under the Federal and Pennsylvania constitutions.
Section 654 of The Insurance Company Law of 1921 is the statutory law by which risks may be classified, premium rates established and rate filings are to be submitted to the Insurance Commissioner with respect
[ 26 Pa. Commw. Page 353]
to workmen's compensation insurance and other coverages under related statutes affording protection to employees for occupational diseases or injury. Classification of risks, underwriting rules, premium rates and schedule or merit rating plans for such insurance coverage are to be proposed annually by rating bureaus approved by the Commissioner, such rates to be on an "equitable and impartial basis." Rate filings are subject to the approval of the Commissioner, and he is authorized to amend or modify a rate filing incident to such approval. Insurers may only issue policies classifying risks and charge premiums consistent with an approved rate filing.
Substantial changes in the Federal and State statutory law pertaining to so-called black lung coverage brought about by the Federal Black Lung Benefits Act of 1972, 30 U.S.C. § 901 et seq., and amendments to The Pennsylvania Workmen's Compensation Act by Section 1 of the Act of December 6, 1972, P.L. 1627, 77 P.S. §§ 27.1(q), 412, effective December 6, 1972, precipitated a series of rate filings by the Bureau, intervening appellee, to provide insurance coverage to employers under this legislation. The first of such filings was approved for a one year period beginning July 1, 1973 and ending June 30, 1974. It was not the subject of an appeal or other administrative or judicial review proceedings. It provided for a composite Federal and State black lung rate of $13.09 per $100.00 of payroll, and required carriers to escrow a percentage of premiums for possible rebate to insureds based upon actual claims experience. Carriers were also directed to report actual claims within ninety days of the end of a policy year. The alleged failure or refusal of the carriers to report actual claims experience for this year incident to the 1974 rate proceedings and the approval of the 1974 rate filing by the Commissioner without a continuation of the actual
[ 26 Pa. Commw. Page 354]
claims experience rebate provisions of the 1973 approved rates are among other reasons asserted by appellants as warranting our reversal of the Commissioner's adjudication and order. As approved, the composite rate for 1974 is $18.54 per $100.00 of payroll*fn2 contrasted with the prior rate of $13.09 per $100.00 of payroll.
In Nationwide Mutual Insurance Co. v. Denenberg, 15 Pa. Commonwealth Ct. 24, 324 A.2d 878 (1974), we adopted a scope of review on appeals from approved rate filings as originally pronounced by Judge Woodside in Pennsylvania Insurance Department v. Philadelphia, 196 Pa. Superior Ct. 221, 173 A.2d 811 (1961):
"'Where an administrative agency is clothed with discretion in the discharge of its duty, the court will not interfere unless the record clearly establishes that there has been a violation of positive law or an arbitrary, capricious or unreasonable determination due to the absence of substantial evidence to support the findings. Mutual Supply Company Appeal, 366 Pa. 424, 426, 77 A.2d 612 (1951); Blue Mountain T. & T. Co. v. Pa. P.U.C., 165 Pa. Superior Ct. 320, 67 A.2d 441 (1949); Insurance Company of North America v. Commissioner of Insurance, 327 Mass. 745, 101 N.E.2d 335 (1951).
"'As stated in Blumenschein v. Pittsburgh Housing Authority, 379 Pa. 566, 573, 109 A.2d 331 (1954): ". . . it has been established as an elementary principle of law that courts will not review the actions of governmental bodies or administrative tribunals involving acts of discretion, in the absence of bad faith,
[ 26 Pa. Commw. Page 355]
fraud, capricious action or abuse of power; they will not inquire into the wisdom of such actions or into the details of the manner adopted to carry them into execution. It is true that the mere possession of discretionary power by an administrative body does not make it wholly immune from judicial review, but the scope of that review is limited to the determination of whether there has been a manifest and flagrant abuse of discretion or a purely arbitrary execution of the agency's duties or functions. That the court might have a different opinion or judgment in regard to the action of the agency is not a sufficient ground for interference; judicial discretion may not be substituted for administrative discretion."' 196 Pa. Superior Ct. at 237, 173 A.2d at 819." 15 Pa. Commonwealth Ct. at 30-31, 324 A.2d at 881.
It was further observed in that same case:
"'Insurance rate making is a technical, complicated and involved procedure carried on by trained men. It is not an exact science. Judgment based upon a thorough knowledge of the problem must be applied. Courts cannot abdicate their duty to examine the evidence and the adjudication, and to interpret and apply the law, but they must recognize the value of the judgment of an Insurance Commissioner who is specializing in the field of insurance and the efficacy of an adjudication supported by evidence of experts who devoted a lifetime of service to rate making.' 196 Pa. Superior Ct. at 237-238, 173 A.2d at 819." 15 Pa. Commonwealth Ct. at 31, 324 A.2d at 881.
In this case, we would add that the technical, complicated and involved procedure of insurance rate making is aggravated by the want of actual experience in this the second year of rate making for coverage of expanded benefits for black lung claims under both Federal and State law. The ...