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PENNSYLVANIA MANUFACTURERS' ASSOCIATION INSURANCE COMPANY v. WILLIAM J. SHEPPARD (05/19/77)

decided: May 19, 1977.

PENNSYLVANIA MANUFACTURERS' ASSOCIATION INSURANCE COMPANY, PETITIONER
v.
WILLIAM J. SHEPPARD, INSURANCE COMMISSIONER OF PENNSYLVANIA. RESPONDENT



Original jurisdiction in case of Pennsylvania Manufacturers' Association Insurance Company v. William J. Sheppard, Insurance Commissioner of Pennsylvania.

COUNSEL

Roland Morris, for petitioner.

John H. Isom, Assistant Attorney General, with him Guy J. DePasquale, Assistant Attorney General, and Robert P. Kane, Attorney General, for respondent.

President Judge Bowman and Judges Crumlish, Jr., Kramer, Wilkinson, Jr., Mencer, Rogers and Blatt. Opinion by Judge Rogers.

Author: Rogers

[ 30 Pa. Commw. Page 188]

The Pennsylvania Manufacturers' Association Insurance Company (PMA) filed a Petition for Declaratory Judgment and Equitable Relief in this Court, naming the State Insurance Commissioner as respondent. It seeks that we declare an order of the Insurance Commissioner that PMA contribute the sum of $713,866.32 to the State's Workmen's Compensation Security Fund to be invalid; that we declare that PMA has by a payment of $497,422.05 into the Fund fully discharged its present obligation; and that the Insurance Commissioner be enjoined from any effort to collect more money from PMA. The Insurance Commissioner has filed an answer asserting the correctness of his action calling upon PMA to contribute $713,866.32 to the Fund. Each party filed a motion for summary judgment pursuant to Pa. R.C.P. No. 1035. We agree with the parties that there is no genuine issue as to any material fact and will dispose of the case by overruling PMA's motion and granting that of the Insurance Commissioner.

The case is a one-time affair occasioned by amendments made to an Act known as the Workmen's Compensation Security Fund Act, Act of July 1, 1937, P.L. 2532, as amended, 77 P.S. § 1051 et seq. The Act prior to the amendments which we will shortly describe had created two public Funds, the first, "The Stock Workmen's Compensation Security Fund,"*fn1 and the second, "The Mutual Carrier and Reciprocal Exchange Workmen's Compensation Security Fund."*fn2 The Act stated in the case of each Fund that it was established "for the purpose of assuring to persons entitled thereto the compensation provided by the Workmen's Compensation Law for employments insured"*fn3 in insolvent

[ 30 Pa. Commw. Page 189]

    stock companies and insolvent mutual carriers or reciprocal exchanges. The same purpose was expressed in the title of the Act as one "[t]o establish funds to provide security for the payment of benefits in the event of the insolvency of an insurance carrier authorized to write workmen's compensation insurance . . . and to provide for the administration thereof."*fn4 Section 5 of the Act, 77 P.S. § 1055, before the amendment hereinafter described, provided:

For the privilege of carrying on the business of workmen's compensation insurance in this Commonwealth, every stock company shall pay into the stock fund on the first day of September, one thousand nine hundred and thirty-eight, a sum equal to one per centum of its net written premiums as shown by the return hereinbefore prescribed for the period ending June thirtieth, one thousand nine hundred and thirty-eight, and thereafter each such stock company upon filing each annual return shall pay a sum equal to one per centum of its net written premiums for the period covered by such return. When the aggregate amount of all such payments into the stock fund, together with accumulated interest thereon, less all its expenditures and known liabilities, becomes equal to five per centum of the loss reserves of all stock companies for the payment of benefits under the Workmen's Compensation Law as of June thirtieth next preceding, no further contributions to said fund shall be required to be made: Provided, however, That whenever thereafter the amount of said fund shall be reduced below five per centum of such loss reserves as of said date, by reason of payments from and known liabilities of said stock fund or by reason

[ 30 Pa. Commw. Page 190]

    of an increase of the loss reserves of all stock companies, then such contribution to said fund shall be resumed from such date as the commissioner shall prescribe, and shall continue until such fund, over and above its known liabilities, shall be equal to five per centum of such reserves.

Section 8 of the Act, 77 P.S. § 1058, before amendment, was identical to Section 5 except that in the former the phrase "mutual carrier and reciprocal exchange" is substituted for the phrase "stock company," and the phrase "mutual fund" is substituted for "stock fund."

Extensive amendments to the Act were made by the Act of October 18, 1975, P.L. 419. Section 5 was amended so as to read as follows:

For the privilege of carrying on the business of workmen's compensation insurance in this Commonwealth, every stock company, mutual carrier and reciprocal exchange shall pay into the fund on the first day of September, one thousand nine hundred and thirty-eight, a sum equal to one per centum of its net written premiums as shown by the return hereinbefore prescribed for the period ending June thirtieth, one thousand nine hundred and thirty-eight, and thereafter each such stock company, mutual carrier and reciprocal exchange upon filing each annual return shall pay a sum equal to one per centum of its net written premiums for the period covered by such return. When the aggregate amount of all such payments into the fund, together with accumulated interest thereon, less all its expenditures and know[n] liabilities, becomes equal to five per centum of the loss reserves of all stock companies, mutual carriers and reciprocal exchanges for the payment of

[ 30 Pa. Commw. Page 191]

    benefits under the Workmen's Compensation Law as of June thirtieth next preceding, no further contribution to said fund shall be required to be made: Provided, however, That whenever thereafter the amount of said fund shall be reduced below five per centum of such loss reserves as of said date, by reason of payments from and known liabilities of said fund or by reasons of an increase of the loss reserves of all stock companies, mutual carriers and reciprocal exchanges, then such contribution to said fund shall be resumed from such date as the commissioner shall prescribe, and shall continue until such fund, over and above its known liabilities, shall be equal to five per centum of such reserves.

Section 8 was repealed. As a result of these and other changes the former "Stock Fund" and "Mutual Fund" were combined into one fund. The 1975 amendments were declared effective ...


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