[J-76-2017]

IN THE SUPREME COURT OF PENNSYLVANIA

MIDDLE DISTRICT

SAYLOR, C.J., BAER, TODD, DONOHUE, DOUGHERTY, WECHT, MUNDY, JJ.

GREGORY G. SKOTNICKI,

Appellant

v.

INSURANCE DEPARTMENT,

Appellee

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No. 12 MAP 2017

Appeal from the Order of the 

Commonwealth Court at No. 156 CD 

2015, dated August 17, 2016 Affirming 

the PA Insurance Commissioner's 

Adjudication and Order dated January 

15, 2015 at No. P14-07-019.

SUBMITTED: August 25, 2017

OPINION

JUSTICE BAER DECIDED: December 19, 2017

Pursuant to the regulations that implement The Unfair Insurance Practices Act

(“Act 205”), 40 P.S. §§ 1171.1-1171.15, an insured can appeal to the Insurance 

Commissioner (“Commissioner”) of Appellee Pennsylvania Insurance Department 

(“Department”) when an insurer decides to cancel or not renew the insured’s 

homeowners’ insurance policy.

1

 31 Pa.Code § 59.7. When an insured pursues such an 

appeal, the Commissioner, through the Department’s Bureau of Consumer Services 

(“Consumer Services”), initially investigates the matter and issues an investigative 

 

1 Act 205 “prohibits persons from engaging in an unfair method of competition or an 

unfair or deceptive act or practice in the business of insurance.” Toy v. Metro. Life Ins. 

Co., 928 A.2d 186, 191 n.6 (Pa. 2007) (citing 40 P.S. § 1171.4). The Commissioner 

enforces Act 205 and “is empowered to impose administrative and civil penalties and 

injunctions upon insurers who violate its provisions.” Id. The regulations that implement 

Act 205 can be found at 31 Pa.Code § 59.1-59.13. For ease of discussion, we will refer 

to these regulations generally as “the Regulations.”
[J-76-2017] - 2

report to the parties. 31 Pa.Code § 59.7(b) & (c). The parties then can submit written 

comments to the Commissioner or request a formal administrative hearing. Id. at 

§ 59.7(c) & (d). Ultimately, the Commissioner disposes of the appeal by entering an 

order. Id. at § 59.7(f). 

This matter requires the Court to consider whether, in the context of such an 

appeal, an insurer is collaterally estopped from litigating issues that were previously 

discussed in an investigative report that Consumer Services supplied in an earlier and 

separate appeal involving the same parties, when the Commissioner never entered a 

final order in the earlier appeal. For the reasons that follow, we hold that, for purposes 

of the doctrine of collateral estoppel, an investigative report does not constitute a final 

adjudication on the merits of any issue. Accordingly, an insurer is not collaterally 

estopped from litigating issues in the scenario described above. Because the 

Commonwealth Court reached the proper result in this case, we affirm that court’s 

order.

The background underlying this matter can be summarized as follows.2 

Appellant Gregory G. Skotnicki (“Skotnicki”) owns a home which he has insured since 

2003 with a policy he purchased from Phoenix Insurance Company (“Phoenix”).

3

 In 

July of 2013, Skotnicki’s dog bit a neighbor. Phoenix accepted liability for the

neighbor’s claim and paid $42,500 in damages.

 

2 At the outset, it is worth noting that the regulation which governs the procedure for

appealing an insurer’s decision to cancel or not renew a policy is rather straight-forward. 

In this matter, two such appeals occurred, but they did not proceed in a way that 

comports with the regulation. The parties’ arguments, as well as the decisions of the 

Commissioner and Commonwealth Court, align with the appeal process that actually 

occurred in this case, not with the procedure contemplated by the regulation, which 

makes it challenging to provide a comprehensible summary of the background 

underlying this matter. 

3 Skotnicki has proceeded pro se throughout the litigation of this matter. He continues 

to represent himself in this appeal.
[J-76-2017] - 3

In a notice dated April 22, 2014, Phoenix informed Skotnicki that his 

homeowners’ policy would not be renewed effective May 29, 2014. The notice 

explained the reason for non-renewal as follows: “There is a substantial change or 

increase in hazard in the risk assumed by the company subsequent to the date the 

policy was first issued, as described below: There is an animal or pet that has bitten or 

injured.” N.T., 9/30/2014, Exhibit S1. Skotnicki appealed the non-renewal, requesting

that the Commissioner review the matter pursuant to the Regulations. 

On May 28, 2014, Consumer Services issued an “Investigation Report Order.”4 

In the report, it found that Phoenix violated Act 205, declaring, in pertinent part, as 

follows:

It is our finding that the company, by its actions, is in violation of Act 

205. The consumer provides a narrative explaining how this dog bite 

occurred. Phoenix did not comment on the circumstances surrounding 

this dog bite in the response dated May 12, 2014. Our Department 

requested the company’s narrative and details of the claim on May 21, 

2014 and to date we have no record of a response.

Based on the insured’s narrative this appears to have been a 

provoked dog bite incident[.] As the company has not justifiably proven 

any increase in hazard, the company is directed to continue the policy with 

no lapse in coverage.

N.T., 9/30/2014, Exhibit S2, at 1. 

The report also informed Phoenix that, if it wished to dispute the determination, 

then Phoenix could request a formal administrative hearing within 10 days of the 

issuance of the report. Id. at 2; see 31 Pa.Code § 59.7 (c) & (d) (stating that, if the 

insurer or insured desires a formal administrative hearing, such request shall be made 

 

4

It is unclear why Consumer Services characterized the report as an order. As 

previously noted, the Regulations require the Commissioner initially to respond to an 

insured’s appeal by issuing an “investigative report,” not an order. See 31 Pa.Code 

§ 59.7(c) (explaining that “[u]pon completion of the investigation, a copy of the 

investigative report will be supplied to both the insured and the insurer”). We further 

observe that the investigative process is delegated to Consumer Services. 
[J-76-2017] - 4

within 10 days of receipt of the investigative report). The footer on the second page of 

the report noted, “[B]e advised that this communication does not constitute an 

adjudication under the Administrative Agency Law.” N.T., 9/30/2014, Exhibit S2, at 2.

Phoenix requested a formal hearing with the Commissioner, and Melinda Fisher 

Kaufman was appointed to act as the presiding officer. However, a hearing did not 

occur. Instead, on June 19, 2014, Presiding Officer Kaufman entered an “order” stating 

that Phoenix requested to withdraw the appeal.

5

 Presiding Officer Kaufman’s “order”

granted that request and further noted that the matter would be marked closed and 

discontinued.6 No formal order thereafter was entered by the Commissioner.

On June 18, 2014, Phoenix provided Skotnicki with a second notice, informing 

him that his homeowners’ policy would be cancelled effective July 25, 2014 (as opposed 

to non-renewal of the policy, which was the gist of the initial proceedings between the 

parties).

7

 This notice explained the reason for cancellation as follows: “There is a 

substantial change or increase in hazard in the risk assumed by the company 

subsequent to the date the policy was first issued, as described below: There is an 

 

5

The Regulations do not expressly grant presiding officers the authority to enter orders

or allow insurers to withdraw appeals. Instead, the Regulations contemplate that only 

the Commissioner can enter final orders disposing of these appeals. See 31 Pa.Code 

§ 59.1(f) (“Upon completion of a hearing, if held, or upon receipt of the written 

comments, the Insurance Commissioner will issue an Order in conformance with his 

findings.”); see also id. at § 59.7(e)(2) (explaining that, if a hearing is held, it will be 

recorded and that “[s]uch tape will be retained for a period of 90 days following issuance 

of the Insurance Commissioner’s final order in the case”). 

6 A representative from Phoenix would later explain that Phoenix purported to withdraw 

the appeal because it recognized that its notice of non-renewal was insufficient, as it 

made no reference to the fact that Skotnicki’s dog had bitten the neighbor without 

provocation. N.T., 9/30/2014, at 39.

7

 In the interim, for reasons that do not impact this appeal, Phoenix did not extend 

Skotnicki’s original policy; rather, it provided him with a new policy. The parties do not, 

however, appear to dispute that a continuation in coverage occurred. 
[J-76-2017] - 5

animal or pet on the residence premises that has exhibited dangerous propensities by 

biting a person without provocation.” N.T., 9/30/2014, Exhibit T-1. Skotnicki again 

appealed, requesting the Commissioner’s review of the cancellation of his policy.

On July 14, 2014, Consumer Services issued an investigative report,8addressing 

Skotnicki’s second appeal which challenged Phoenix’s cancellation of his policy. In this 

report, Consumer Services stated that, following its investigation, it determined that 

Phoenix met the requirements of Act 205 and that Phoenix, therefore, could cancel the 

policy. Investigative Report, 7/14/2014, at 1. The report informed Skotnicki that he 

could request a formal administrative hearing. Id. Further, like the report issued in 

response to Skotnicki’s appeal involving the non-renewal of his policy, this report 

contained a footer stating, “[B]e advised that this communication does not constitute an 

adjudication under the Administrative Agency Law.” Id. at 2.

Skotnicki requested a formal administrative hearing, and the Commissioner again 

appointed Melinda Fisher Kaufman as the presiding officer. The hearing took place on 

September 30, 2014. At the hearing and in his subsequently submitted brief, Skotnicki 

presented several arguments in support of his position that Phoenix wrongfully 

cancelled his homeowners’ policy. Relevant to the appeal currently before this Court, 

Skotnicki contended that the doctrine of collateral estoppel barred Phoenix from 

relitigating whether: (1) Phoenix violated Act 205; (2) the dog bite was provoked; and 

(3) an increase in hazard occurred. Skotnicki’s Memorandum in Support of his Appeal 

for the Wrongful Termination of his Homeowners’ Insurance Policy (“Skotnicki 

Memorandum”), 12/1/2014, at 9. 

Skotnicki pointed out that the elements of collateral estoppel are:

 

8

Interestingly, Consumer Services labeled this report as an “Investigative Report,” not 

an “Investigative Report Order.” See, supra, n.4.
[J-76-2017] - 6

(1) the issue decided in the prior adjudication was identical with the one 

presented in the later action; (2) there was a final judgment on the merits;

(3) the party against whom the plea is asserted was a party or in privity 

with a party to the prior adjudication; and (4) the party against whom it is 

asserted has had a full and fair opportunity to litigate the issue in question 

in a prior action. 

Skotnicki Memorandum at 9 (quoting Safeguard Mut. Ins. Co. v. Williams, 345 A.2d 664, 

668 (Pa. 1975)). In arguing that all of the elements of collateral estoppel were met in 

this case, Skotnicki insisted that Phoenix had a full and fair opportunity to litigate all of 

the issues that it raised in this matter during the litigation of Skotnicki’s first appeal from 

Phoenix’s notice of non-renewal. Id. According to Skotnicki, Consumer Service’s May 

18, 2014 “Investigative Report Order” became a final adjudication and judgment on the 

merits when Presiding Officer Kaufman entered her order on June 19, 2014, which 

granted Phoenix’s motion to withdraw the appeal of the non-renewal of his policy. Id. at 

9-10.

Regarding the merits of Phoenix’s decision to cancel Skotnicki’s policy, the 

parties presented competing evidence at the hearing as to whether the dog bite was 

provoked. In support of his position that the dog bite was provoked, Skotnicki presented 

testimony from his wife, as well as his own testimony. In support of its position that the 

dog bite was unprovoked, Phoenix presented testimony from the claims adjuster who 

handled Skotnicki’s dog-bite claim and from one of its senior product specialists.

On January 15, 2015, the Commissioner entered an “Adjudication and Order.” 

See 31 Pa.Code § 59.7(f) (“Upon completion of a hearing, if held, or upon receipt of the 

written comments, the Insurance Commissioner will issue an Order in conformance with 

his findings.”). Relevant to Skotnicki’s assertion of the collateral estoppel doctrine, the 

Commissioner initially stated that, by regulation, the “formal record” in this setting is 

defined as:

The filings and submittals in a matter or proceeding, a notice or agency 

order initiating the matter or proceeding, and if a hearing is held, the 
[J-76-2017] - 7

following: the designation of the presiding officer, transcript of hearing, 

exhibits received in evidence, exhibits offered but not received in 

evidence, offers of proof, motions, stipulations, subpoenas, proofs of 

service, references to the agency head and determinations made by the 

agency head thereon, certifications to the agency head and anything else 

upon which action of the presiding officer or the agency head may be 

based; but not including a proposed testimony or exhibits not offered or 

received in evidence.

Adjudication and Order, 1/15/2015, at 10-11 (quoting 1 Pa.Code § 31.3). The 

Commissioner then emphasized that “the administrative hearing held in response to an 

appeal from an Investigative Report is a de novo proceeding.”9 Id. at 11.

In explaining its reasons for rejecting Skotnicki’s collateral estoppel claim, the 

Commissioner concluded that Consumer Services’ May 28, 2014 “Investigative Report 

Order” did not create a formal record, did not constitute a separate cause of action in 

which any issues were litigated, and did not result in a final judgment on the merits. Id. 

The Commissioner further suggested that, even though the April 22, 2014 notice of nonrenewal and the June 18, 2014 notice of cancelation contain similar language, “the 

review of the first does not impact review of the latter.” Id. Thus, in the Commissioner’s 

view, Skotnicki failed to establish that collateral estoppel applied to his second appeal. 

Id. Regarding the merits of the appeal, it is sufficient to note that the Commissioner 

determined that the dog bite was unprovoked and, therefore, that Phoenix’s cancellation 

of Skotnicki’s homeowners’ policy did not violate Act 205. 

Skotnicki filed a petition for review in the Commonwealth Court. In that petition, 

Skotnicki, inter alia, renewed his claim regarding the doctrine of collateral estoppel. 

Skotnicki maintained that the Commissioner’s holding that no formal record was created 

 

9

The Regulations make no mention of parties being able “to appeal” from an 

investigative report. Rather, according to the Regulations, after the parties receive the 

investigative report, they can submit comments to the Commissioner or request a formal 

administrative hearing. 31 Pa.Code § 59.7(c) & (d). The Commissioner ultimately must 

dispose of the matter by order. Id. at § 59.7(f).
[J-76-2017] - 8

in the first appeal from the notice of non-renewal is belied by the facts and law. Petition 

for Review, 2/11/2015, at 6. Skotnicki also took the position that, by withdrawing the

appeal before a formal hearing occurred, Phoenix agreed to be bound by the terms and 

conditions of the May 28, 2014 “Investigative Report Order,” which concluded that the 

dog bite incident was provoked and that Skotnicki’s homeowners’ policy should continue 

to provide coverage without a lapse (i.e., Phoenix’s non-renewal of the policy was 

disallowed). Id. 

Skotnicki later filed a brief in support of his petition for review further developing

his argument that the Commissioner erred by rejecting his claim regarding the doctrine 

of collateral estoppel. Skotnicki pointed out that the General Rules of Administrative 

Practice and Procedure (“GRAPP”), 1 Pa.Code §§ 31.1-35.251, defines “Adjudication” 

as an “order, decree, decision, determination or ruling by an agency affecting personal 

or property rights, privileges, immunities, duties, liabilities or obligations of the parties to 

the proceeding in which the adjudication is made.” Skotnicki’s Amended Brief to the 

Commonwealth Court at 17 (quoting 1 Pa.Code § 31.3). Skotnicki contended that this 

definition bolsters his position that everything the parties filed in his first appeal from the 

notice of non-renewal created a record from which Phoenix could have fully exercised 

its rights; yet, according to Skotnicki, Phoenix chose to withdraw the appeal and allow 

the May 28, 2014 “Investigative Report Order” to stand “not by itself but by the June 19, 

2014 Order issued by the Presiding Officer.” Id. at 17.

In its responsive brief, the Department insisted that the essential elements of 

collateral estoppel were not met. First, the Department asserted that the initial 

proceeding involved the non-renewal of a policy and that the second proceeding 

concerned a different matter - cancellation of a policy. Department’s Commonwealth 

Court Brief at 24-26. Second, the Department suggested that neither the May 28, 2014 
[J-76-2017] - 9

“Investigative Report Order” nor Presiding Officer Kaufman’s June 19, 2014 order 

constituted a final judgment on the merits. Id. at 26. 

The Commonwealth Court affirmed the Commissioner’s Adjudication and Order, 

rejecting Skotnicki’s collateral estoppel claim and concluding that the Commissioner’s 

decision on the merits was correct. Skotnicki v. Ins. Dep’t, 146 A.3d 271 (Pa. Cmwlth. 

2016). Regarding the issue of collateral estoppel, the court began its analysis by 

explaining that, pursuant to 31 Pa.Code § 59.7(e)(4),10 the Department’s formal 

administrative hearings are de novo. Id. at 283. The court then asserted that “nothing 

in the Department’s Regulations or GRAPP makes the Commissioner bound solely by 

the May 28, 2014 Investigative Report Order.” Id.

Next, the Commonwealth Court concluded that the doctrine of collateral estoppel 

does not apply in this case. After reiterating the elements of that doctrine, the court 

stated that it is undisputed that both reviews conducted by Consumer Services involved 

Phoenix and Skotnicki and that both parties had a full and fair opportunity to litigate 

Phoenix’s termination of homeowners’ coverage following the July 3, 2013 dog bite 

incident. However, according to the court, “the decisions differed in that one action 

progressed only through a first-level [Consumer Services’] review, while the other was 

subjected to a de novo hearing at which additional evidence was accepted.” Id.

(footnote omitted).

The Commonwealth Court further highlighted that, in the May 28, 2014 

“Investigative Report Order,” Consumer Services made clear that limited information 

informed its decision that the dog bite was provoked. Id. at 283-84. Thus, the court 

 

10 Subsection 59.7(e)(4) of the Regulations provides, “All relevant evidence of 

reasonable probative value will be admitted into the record of the proceeding and 

reasonable examination and cross-examination shall be permitted.” 31 Pa.Code 

§ 59.7(e)(4).
[J-76-2017] - 10

concluded, collateral estoppel did not bar the Commissioner from reaching a different 

result after a formal hearing, which included additional evidence and credibility 

determinations. Id. at 284.

In closing, the Commonwealth Court opined that, contrary to Skotnicki’s 

contention that the May 28, 2014 “Investigative Report Order” was an adjudication, 

Consumer Services clearly stated therein: “[B]e advised that this communication does 

not constitute an adjudication under the Administrative Agency Law.” Id. The court 

asserted, “Certainly, if the Commissioner was bound by [Consumer Services’]

investigative reports, the second-level de novo review afforded by Section 59.7(e)(4) of 

the Department’s Regulations would have little value. Accordingly, Skotnicki’s 

argument cannot stand.” Id.

Skotnicki subsequently filed a petition for allowance of appeal, which this Court 

granted, limited to the following issue: “Whether the Commonwealth Court erred in its 

conclusion that the Department is not bound by the May 28, 2014 Department 

Investigative Report Order directing [Phoenix] to continue [Skotnicki’s] coverage without 

a lapse in coverage?” Skotnicki v. Ins. Dep’t, 169 A.36 24 (Pa. 2017). 

In his brief to this Court, Skotnicki contends that, in concluding that the 

Commissioner was not bound by Consumer Services’ initial “Investigative Report 

Order,” the Commonwealth Court overlooked that this report was part of the “formal 

record” in the appeal from the notice of non-renewal. Skotnicki’s Brief at 9-10. Citing to 

1 Pa.Code 31.3, Skotnicki submits that a formal administrative hearing is unnecessary 

to establish a formal record for purposes of the Commissioner’s review of an insurer’s 

decision not to renew a policy. Id. at 10. Skotnicki further suggests that the May 28, 

2014 “Investigative Report Order” was an “adjudication,” as that term is defined in 

GRAPP, regardless of the fact that the report contains language stating that it does not 

constitute an adjudication under the Administrative Agency Law. Skotnicki maintains
[J-76-2017] - 11

that, despite this language, investigative reports clearly impact parties’ substantive 

rights and that parties are afforded due process to protect those rights. Id. at 10-11. In 

Skotnicki’s view, because Phoenix was afforded due process leading up to the issuance 

of the “Investigative Report Order,” Phoenix was bound by the findings of the report 

when it abandoned the initial appeal. Id. at 11.

Next, Skotnicki contends that the Commonwealth Court erred by holding that the 

doctrine of collateral estoppel does not apply in this case because the court’s 

conclusion was based on the mistaken belief that Phoenix did not appeal the initial 

“Investigative Report Order,” dated May 28, 2014, to the Commissioner. Id. at 11. 

According to Skotnicki, Phoenix’s appeal, in seeking a formal hearing, of the 

“Investigative Report Order” made the report a final adjudication when Phoenix 

withdrew the appeal. Id. at 11-12. Skotnicki suggests that Phoenix “had a right to a 

formal administrative hearing and it took advantage of that right when it appealed the 

[‘Investigative Report Order’].” Id. at 12. Skotnicki asserts that, because Phoenix 

decided to forgo that hearing, the matter should have been decided on the basis of the 

parties’ written comments and the investigative report. Id. at 12 (quoting 31 Pa.Code 

§ 59.7(d) (stating that, if no formal hearing is held, then “the matter will be decided on 

the basis of the written comments and investigative report”)).

Lastly, Skotnicki renews his argument that all of the traditional elements of the 

doctrine of collateral estoppel were met in this case. Specifically, Skotnicki maintains 

that: (1) the same issue of fact, i.e., whether the dog bite was provoked, was litigated in 

both appeals; (2) the parties were identical in both appeals; (3) the initial appeal ended 

with a final judgment on the merits of the issue of fact; and (4) Phoenix had a full and 

fair opportunity to litigate the merits of that issue. Id. at 12-13. For these reasons, 

Skotnicki asks this Court to reverse the Commonwealth Court’s order.
[J-76-2017] - 12

In its brief to this Court, the Department explains that Consumer Services’ firstlevel review of an insured’s appeal results in an investigative report. Department’s Brief 

at 8-10. According to the Department, regardless of the outcome of this report, the 

Commissioner must ultimately decide the merits of the insured’s appeal de novo when a 

hearing is requested and occurs. In other words, the Commissioner owes no deference 

to Consumer Services’ findings and conclusions when a hearing takes place. Id. at 10-

13. Indeed, the Department asserts that Consumer Services does not create a formal 

record during its review and that its reports specifically state that they do not constitute 

adjudications. Id. at 14.

The Department next avers that the Commonwealth Court correctly concluded 

that collateral estoppel does not apply to Consumer Services’ investigative reports. Id.

at 20-29. As to this case, the Department suggests that the issue decided in Skotnicki’s 

first appeal was not identical to the issue decided in Skotnicki’s second appeal because 

the appeals addressed different notices issued by Phoenix and these notices contained 

different language. Id. at 22-23. Further, the Department takes the position that neither 

the May 28, 2014 “Investigative Report Order” nor the June 19, 2014 order granting 

Phoenix’s request to withdraw the initial appeal amount to a final judgment on the merits 

of whether the dog bite was provoked. In this regard, the Department is of the opinion 

that, because the Commissioner had not received any response from Phoenix at that 

point in the appeal process, the provocation issue had not actually been litigated. Id. at 

23-29. In the Department’s view, Phoenix “did not have a full and fair opportunity to 

litigate an issue before [Consumer Services], and therefore, the May 28, 2014 

Investigative Report Order . . . is not binding on the Commissioner in any future de novo

hearings.” Department’s Brief at 29. Accordingly, the Department requests that this 

Court affirm the order of the Commonwealth Court. 
[J-76-2017] - 13

It is well-settled that the doctrine of collateral estoppel precludes relitigation of an 

issue settled in a previous action if:

(1) the issue decided in the prior case is identical to the one presented in 

the later action; (2) there was a final adjudication on the merits; (3) the 

party against whom the plea is asserted was a party or in privity with a 

party in the prior case; (4) the party or person privy to the party against 

whom the doctrine is asserted had a full and fair opportunity to litigate the 

issue in the prior proceeding; and (5) the determination in the prior 

proceeding was essential to the judgment. 

Office of Disciplinary Counsel v. Kiesewetter, 889 A.2d 47, 50-51 (Pa. 2005). 

“Collateral estoppel relieves parties of the cost and vexation of multiple lawsuits,

conserves judicial resources, and, by preventing inconsistent decisions, encourages 

reliance on adjudication.” Id. at 51.

To determine whether Consumer Services’ investigative report triggered

application of collateral estoppel, we begin and end our analysis by examining whether 

the report constitutes a final adjudication of the merits of an insured’s appeal, when the 

Commissioner did not enter an order disposing of the appeal. Such an issue presents a 

question of law. Like all questions of law, our standard of review is de novo, and our 

scope of review is plenary. In re Vencil, 152 A.3d 235, 241 (Pa. 2017). To the extent 

that the answer to this question can be found in the Regulations which implement Act 

205, we observe that, generally speaking, the best indicator of the intent of regulations 

is the plain language thereof. Freedom Med. Supply, Inc. v. State Farm Fire & Cas. 

Co., 131 A.3d 977, 983 (Pa. 2016). Accordingly, we begin by examining the language 

of the Regulations.

Section 59.6 of the Regulations outlines the items that insurers must include in 

their notices of cancelation and non-renewal of homeowners’ insurance policies. 31 

Pa.Code § 59.6. The next section of the Regulations is entitled “Appeal procedure.” Id.

at § 59.7. Subsection 59.7(a) states that an insured may request in writing that the 

Commissioner review an insurer’s act of cancelling or refusing to renew the insured’s 
[J-76-2017] - 14

policy. Id. at § 59.7(a). When the Commissioner receives such a request, the insured 

and the insurer receive notification that an investigation has begun and that they may be 

contacted to secure additional information. Id. at § 59.7(b). 

Importantly, Subsection 59.7(c) of the Regulations explains, “Upon completion of 

the investigation, a copy of the investigative report will be supplied to both the insured 

and the insurer. Within ten days of receipt of the report either party may submit written 

comments for consideration by the Insurance Commissioner.” Id. at § 59.7(c). At that 

point, the insurer or insured can request a formal administrative hearing. If a party asks 

for a hearing, then a hearing is scheduled as soon as possible. Id. at § 59.7(d). 

However, if a hearing is not requested, then the matter will be decided by the 

Commissioner on the basis of the written comments and investigative report. Id.

The next provision of the Regulations explains the procedures to be followed at a

formal administrative hearing. Id. at § 59.7(e). For purposes of this appeal, it is 

sufficient to note that the procedures allow the parties to admit relevant evidence into 

the record and to engage in cross-examination. Id. at § 59.7(e)(4). The procedures 

also provide that GRAPP “may be used where conducive to speedy and fair 

proceedings.” Id. at § 59.7(e)(5). Lastly, the Regulations expressly state, “Upon 

completion of a hearing, if held, or upon receipt of the written comments, the Insurance 

Commissioner will issue an Order in conformance with his findings.” Id. at 59.7(f).

This regulatory scheme grants to an insured a mechanism to appeal to the 

Commissioner when an insurer issues notice that it intends to not renew or cancel the 

insured’s policy. When an insured takes advantage of this appeal procedure, the 

Commissioner should initiate an investigation and, after completing that investigation, 

provide the parties with “the investigative report.” At that point, the parties are faced 

with a choice before the Commissioner issues an order deciding the fate of the appeal: 
[J-76-2017] - 15

(1) submit comments for the Commissioner’s consideration; or (2) request a formal 

administrative hearing. 

If no formal hearing is requested, then the Commissioner will enter an order 

which decides the matter based upon the parties’ written comments and the 

investigative report. If a hearing occurs, then the Commissioner will enter an order 

which decides that matter based upon the evidence submitted at the hearing. Thus, 

regardless of whether a hearing is held, it is not until the Commissioner enters an order 

that any issue implicated in the appeal is finally adjudicated on its merits. 

Despite Consumer Services’ apparent practice of labeling some of its 

investigative reports as orders, the Regulations indicate that “the investigative report” 

provided by the Commissioner, through Consumer Services, appears to be simply what 

it purports to be - a report explaining the outcome of an investigation. These 

investigative reports perhaps arguably fall within the Administrative Code’s definition of 

“Adjudication” insomuch as the reports represent an agency’s tentative “decision” or 

“determination” affecting the “obligations of the parties to the proceeding in which the 

adjudication is made.” 1 Pa.Code § 31.3. However, even to the extent that an 

investigative report would fall within this definition of “adjudication,” the Regulations 

make clear that, within this scheme, a final adjudication on the merits of an appeal does 

not occur until the Commissioner enters his or her final order in the matter.

As noted above, the doctrine of collateral estoppel precludes relitigation of an 

issue if, inter alia, “there was a final adjudication on the merits[.]” Kiesewetter, 889 A.2d 

47, 50-51 (Pa. 2005). Here, the issues in Skotnicki’s initial appeal from the notice of 

non-renewal of his policy were tentatively decided in his favor in the “Investigative 

Report Order” issued by Consumer Services on May 28, 2014. However, the merits of 

those issues were not adjudicated to finality because the Commissioner never entered 
[J-76-2017] - 16

an order as contemplated by the Regulations.11 Rather, Presiding Officer Kaufman 

permitted Phoenix to withdraw the appeal and entered an “order” discontinuing and 

closing the matter. 

Neither the “Investigative Report Order” nor Presiding Officer Kaufman’s “order” 

constituted a final adjudication of the merits of the issues presented in Skotnicki’s initial 

appeal; accordingly, they did not operate to estop collaterally Phoenix from litigating any 

issue in the appeal from the notice of cancellation. Thus, the Commonwealth Court 

reached the correct result in this matter. Consequently, we affirm that court’s order, 

which allowed to stand the Commissioner’s determination that Phoenix did not violate 

Act 205 by cancelling Skotnicki’s homeowners’ insurance policy.

Chief Justice Saylor and Justices Todd, Donohue, Dougherty, Wecht and Mundy 

join the opinion.

 

11 As mentioned above, in the “Investigative Report Order,” Consumer Services 

explicitly informed Skotnicki that its tentative decision regarding his appeal did not 

constitute an adjudication. N.T., 9/30/2014, Exhibit S2, at 2 (“[B]e advised that this 

communication does not constitute an adjudication under the Administrative Agency 

Law.”).