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CAPITAL BLUE CROSS v. COMMONWEALTH PENNSYLVANIA (04/04/78)

decided: April 4, 1978.

CAPITAL BLUE CROSS, PETITIONER
v.
COMMONWEALTH OF PENNSYLVANIA, INSURANCE DEPARTMENT, RESPONDENT. BLUE CROSS OF WESTERN PENNSYLVANIA, PETITIONER V. COMMONWEALTH OF PENNSYLVANIA, INSURANCE DEPARTMENT, RESPONDENT. BLUE CROSS OF LEHIGH VALLEY, PETITIONER V. COMMONWEALTH OF PENNSYLVANIA, INSURANCE DEPARTMENT, RESPONDENT



Appeals from the Order of the Insurance Commissioner in case of In Re: 65-Special Agreements; Blue Cross of Western Pennsylvania Rate Filing No. 1-HSA-1966; Blue Cross of Lehigh Valley Rate Filing No. 7-V-76; Capital Blue Cross Rate Filing No. 76-1, Docket No. R 77-1-2.

COUNSEL

Rod J. Pera, with him McNees, Wallace & Nurick, for petitioner, Capital Blue Cross.

Edward L. Springer, with him Springer & Perry, for petitioner, Blue Cross of Western Pennsylvania.

J. Jackson Eaton, III, with him Robert G. Tallman, and Butz, Hudders & Tallman, for petitioner, Blue Cross of Lehigh Valley.

John H. Isom, Assistant Attorney General, with him Robert P. Kane, Attorney General, for respondent.

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

Author: Disalle

[ 34 Pa. Commw. Page 585]

These are petitions for review brought by Capital Blue Cross (Capital), Blue Cross of Western Pennsylvania (Western), and Blue Cross of Lehigh Valley (Lehigh) from the Order and Adjudication of the Insurance Commissioner of the Commonwealth of Pennsylvania

[ 34 Pa. Commw. Page 586]

(Commissioner), William G. Sheppard, dated June 10, 1977, and docketed at Docket No. R77-1-2, in which the requested rate increases for an insurance plan, referred to as "65-Special" Agreements, were disapproved.

The "65-Special" Agreement, as approved by the Department of Insurance, provides coverage to subscribers over age 65, and complements the Federal Medicare Program for such persons age 65 or over by paying on their behalf of the hospital in-patient and out-patient deductible and co-insurance amounts not covered by Medicare. Certain additional benefits not included in Medicare coverage, are also provided. As originally approved by the Department of Insurance, the "65-Special" Agreement was a financially self-sustaining contract.

The requested rate increases that are presently before this Court were based primarily on the increase in the Medicare deductible announced by the U.S. Seccretary of Health, Education and Welfare on September 30, 1976. The requests were as follows: Capital, on October 21, 1976, requested a rate increase from $4.30 to $5.00 per subscriber per month; Western, on September 16, 1976, as subsequently amended on October 25, 1976, requested a rate increase from $5.30 to $7.05 per subscriber per month; and Lehigh, on October 25, 1976, requested a rate increase from $4.25 to $5.00 per subscriber per month. A public informational hearing concerning the "65-Special" filings were held on November 15, 1976, by the Pennsylvania Insurance Department. Thereafter, on December 14, 1976, the Commissioner notified Capital, Western, and Lehigh that the rate applications were disapproved and that each filer had a right to a formal hearing to be held in accordance with the Administrative Agency Law, Act of June 4, 1945, P.L. 1388, as amended, 71 P.S. § 1710.1 et seq. An administrative hearing was

[ 34 Pa. Commw. Page 587]

    held on February 2, 3 and 4, 1977. On June 10, 1977, the Commissioner disapproved the rate filings, stating in his Adjudication that the proposed filings did not meet the requirements for approval pursuant to 40 Pa. C.S. § 6124(a) since they did not contain a factor for community rating.

These petitions for review were thereupon filed. Notwithstanding the denial by this Court of the Insurance Department's motion for consolidation by Order dated July 28, 1977, since the issues and applicable law are ...


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