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PENNSYLVANIA STATE ASSOCIATION TOWNSHIP SUPERVISORS v. COMMONWEALTH PENNSYLVANIA (03/19/80)

decided: March 19, 1980.

PENNSYLVANIA STATE ASSOCIATION OF TOWNSHIP SUPERVISORS, PETITIONER
v.
COMMONWEALTH OF PENNSYLVANIA, INSURANCE DEPARTMENT AND WILLIAM J. SHEPPARD, INSURANCE COMMISSIONER, RESPONDENTS. PENNSYLVANIA COMPENSATION RATING BUREAU, INTERVENOR



Appeal from the Order of the Insurance Commissioner in case of In Re: Workmen's Compensation Insurance Rate Filing of the Pennsylvania Compensation Rating Bureau, Proposal C-241, Docket No. R78-7-5.

COUNSEL

Thomas L. Wenger, of Wix, Wenger & Weidner, for petitioner.

David T. Kluz, Assistant Attorney General, with him Norman J. Watkins, Deputy Attorney General, and Edward G. Biester, Jr., Attorney General, for respondents.

Robert L. Pratter, with him Barbara Adams and A. John May, of Duane, Morris & Heckscher, for intervenor.

President Judge Bowman and Judges Crumlish, Jr., Wilkinson, Jr., Mencer, Blatt, Craig and MacPhail. Judges Rogers and Williams, Jr. did not participate. Opinion by Judge MacPhail. President Judge Bowman did not participate in the decision in this case.

Author: Macphail

[ 50 Pa. Commw. Page 206]

The Pennsylvania State Association of Township Supervisors (Association), a statutorily authorized association of governments of townships of the second class in Pennsylvania,*fn1 appeals to this Court from an adjudication and order of the Pennsylvania Insurance Commissioner (Commissioner) granting a Workmen's Compensation Insurance Premium Rate Proposal filed by the Pennsylvania Compensation Rating Bureau (Bureau). The Bureau, a private association consisting of 232 private insurers and the State Workmen's Insurance Fund, has intervened in this appeal.*fn2 The Association raises three issues for our consideration: (1) whether the administrative proceeding resulting in the challenged order was tainted by an impermissible commingling of prosecutorial and judicial functions, (2) whether the Commissioner's review of the proposed rate filing was "adequate and sufficient," and (3) whether the exercise of the rate making function by the Commissioner constituted an improper delegation of the legislative function. For the reasons which follow, we affirm.

[ 50 Pa. Commw. Page 207]

Section 654 of The Insurance Company Law of 1921 (Act), Act of May 17, 1921, P.L. 682, as amended, 40 P.S. ยง 814, sets forth the statutory scheme concerning the classification of risks, underwriting rules, premium rates, and schedule and merit rate plans for insurance of employers and employees required pursuant to various statutory insurance plans. Here we are concerned with proposed premium rates for workmen's compensation insurance. Such rates are to be filed annually by rating bureaus which are subject to the supervision and examination of the Commissioner. Proposed rates are subject to the approval of the Commissioner who is authorized by Section 654 to modify, amend, or approve them. No insurance policy may issue except in accordance with rates proposed by a bureau and approved by the Commissioner. Pennsylvania Coal Mining Association v. Insurance Department, 471 Pa. 437, 443, 370 A.2d 685, 688 (1977); Insurance Department v. Pennsylvania Coal Mining Association, 26 Pa. Commonwealth Ct. 348, 352-53, 363 A.2d 823, 825 (1976).

On June 28, 1978, the Bureau filed proposed rates requesting a rate increase of 35.3 per cent for workmen's compensation insurance premiums. Notice of the filing was published at 8 Pa. B. 1963 (1978). The filing was amended on August 9, 1978 to reduce the premium increase requested to 34.9 per cent. Notice of the amended filing was given at 8 Pa. B. 2326 (1978). The monetary amount of the proposed increase was $244,900,000. A formal rate hearing was scheduled to begin before Hearing Examiner Albert J. Strohecker, III on August 29, 1978. Numerous Petitions for Intervention, including one by the Association, were filed by employers who would be affected by the proposed rate increase. Before the final order was entered by the Commissioner, all Intervenors, with the exception of the Association, had withdrawn

[ 50 Pa. Commw. Page 208]

    or were eliminated from these proceedings. Public hearings on the proposed increase were held on August 29 and 30, 1978. On September 1, 1978, the Commissioner entered an interlocutory order modifying the filing and granting a rate increase of $183,000,000. Following the entry of the interlocutory order, the Hearing Examiner conducted at least eight more days of hearings on the proposed rate increase. The Association was at all times represented by counsel at the hearings. The Association, however, presented no direct testimony and cross-examined only the witness appearing on behalf of the Pennsylvania Insurance Department (Department). It did not cross-examine the Bureau's witness who testified extensively in support of the rate increase, nor did it submit a brief following the close of the hearings. The Commissioner entered the order here at issue on November 28, 1978 and on December 27, 1978, the Association filed its Petition for Review with this Court.

Before addressing the Association's arguments, we must consider the Bureau's contention that the Association "failed to exhaust its administrative remedies" and, therefore, is entitled to no judicial relief. In essence, the Bureau argues that by failing to make appropriate motions and objections before the Hearing Examiner, by playing a limited role in the hearings, and by failing to file a brief before the Commissioner, the Association has waived the issues it now raises in this appeal. The Bureau's contention is arguably ...


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