Appeal from the Order of the Pennsylvania Insurance Commissioner, in case of In Re: Appeal of Kevin E. and Penny M. Kudasik, Docket No. PI87-7-1.
Susan Hileman Malone, with her, Richard DiSalle and Michael L. Brenner, Rose, Schmidt, Hasley & DiSalle, Of Counsel: Vance C. Gudmundsen, Erie Insurance Exchange, for petitioner.
Richard J. Enterline, Assistant Counsel, with him, Karen Gantt, Assistant Counsel, Theodie L. Peterson, III, Chief of Litigation and Linda J. Wells, Chief Counsel, for respondent.
Judges Colins and McGinley, and Senior Judge Kalish, sitting as a panel of three. Opinion by Judge Colins.
[ 121 Pa. Commw. Page 501]
The Erie Insurance Exchange (petitioner) petitions for review of a December 16, 1987, order of the Insurance Commissioner (Commissioner), which reinstated an automobile insurance policy issued to Kevin and Penny Kudasik (insureds). We reverse.
[ 121 Pa. Commw. Page 502]
On May 26, 1984, Mr. Kudasik, while a passenger in an automobile not insured by petitioner, was arrested for possession of marijuana. Mr. Kudasik was placed on probation without verdict by the Court of Common Pleas of Somerset County. On May 12, 1987, petitioner mailed a notice to the insureds pursuant to Section 5 of the Act of June 5, 1968, P.L. 140, as amended, referred to herein as Act 78, 40 P.S. § 1008.5, advising them that it would not be renewing their coverage effective July 1, 1987, because of a substantial increase in moral hazard as a result of Mr. Kudasik's marijuana possession.
Within a month of receiving the notice, and more than two and one-half years after he was placed on probation, Mr. Kudasik's record was expunged. By letter dated June 23, 1987, the insureds requested that the Pennsylvania Insurance Department (Department) investigate petitioner's non-renewal of the policy. The Department upheld the non-renewal. The insureds were then granted an administrative hearing.
The Commissioner, on December 16, 1987, reversed the Department's determination. The Commissioner ordered the policy reinstated and, further, directed the Bureau of Consumer Affairs to conduct an investigation into whether the petitioner's decision not to renew the policy was a retaliatory measure for the insureds' filing a lawsuit against another of petitioner's policyholders.*fn1 This appeal follows.
[ 121 Pa. Commw. Page 503]
In reviewing a decision of the Insurance Commissioner, we must determine whether constitutional rights were violated, an error of law was committed, or the findings of fact are unsupported by substantial evidence. Travelers Indemnity Co. of America v. Insurance Page 503} Department, 63 Pa. Commonwealth Ct. 542, 440 A.2d 645 (1981).
The petitioner first argues that the Commissioner did not have jurisdiction over this matter. Petitioner mailed the notice of non-renewal to the insureds on May 12, 1987. The insureds did not request review of this decision until June 23, 1987, forty-two (42) days after the date of the ...