Opinion ID: 2179594
Heading Depth: 1
Heading Rank: 3

Heading: The Basic Rates

Text: The AFL-CIO contends that the Superintendent exceeded his authority and violated the statutory standards for rate approval by estimating the systemic impact of insurer mismanagement. In the absence of concrete data regarding the impact of insurer mismanagement, the AFL-CIO argues, the Superintendent was required to deny NCCI's filing altogether, require NCCI to prepare operating cost data that demonstrably excludes all costs attributable to mismanagement, or conduct his own thorough investigation of the systemic impact of carrier mismanagement. We disagree. 24-A M.R.S.A. § 2363(7)(E) provides that the Superintendent may not approve an increase or decrease in rates unless he finds that the information supplied in the filing and sworn testimony is accurate and sufficient to meet the requirements of [the statutory standards for rate approval]. Sections 2363(7)(B)(6) and (8) further require the Superintendent to consider evidence of carrier management efficiency in assessing the reasonableness of the proposed rate increases. The statute does not specify what kinds of evidence the Superintendent should consider in attempting to quantify the cost of mismanagement and appears to give the Superintendent considerable authority to exercise his own judgment in this area. Clearly, the statute does not require the Superintendent to reject the NCCI's filing in its entirety whenever he finds evidence of mismanagement. [4] Rather, the Superintendent is instructed to make appropriate adjustments in determining a rate that is just and reasonable. 24-A M.R.S.A. § 2363(7)(A). The Public Advocate conducted a study of carrier efficiency which revealed evidence of mismanagement, including poor servicing practices, insufficient safety inspections and settling claims for excessive amounts, in approximately 30 percent of the companies writing workers' compensation insurance in Maine. The Superintendent accepted the accuracy of the Public Advocate's empirical evidence but rejected the Public Advocate's estimate of the impact of mismanagement upon the entire workers' compensation system. Using his own experience as a guide, the Superintendent estimated that a 1.5 percent penalty would be adequate to compensate the system for the extra costs attributable to mismanagement. The Superintendent did not indicate what methodology he used to reach this estimate, nor did he point to any specific data in the record to support it. And, he candidly admits that his finding regarding the systemic impact of mismanagement is a rough estimate. It is inaccurate to suggest, however, as the AFL-CIO does, that the Superintendent's finding was made up out of whole cloth. The Superintendent's finding was based upon concrete factual evidence presented by the Public Advocate. The Superintendent appropriately used his own judgment to quantify the systemic impact of this evidence. It is unclear what benefit would have been gained by further factfinding on this issue because, in the final analysis, the judgment of an expert familiar with the working of the system would be required. We are satisfied that the Superintendent acted within the scope of his authority in exercising his judgment on this issue and his finding will not be disturbed on appeal. Cf. LaGasse, 497 A.2d at 1118; Central Maine Power, 455 A.2d at 38-39. The AFL-CIO has cited no evidence indicating the overall rate increases approved by the Superintendent are otherwise unreasonable or unjust. Cf. Central Maine Power, 455 A.2d at 39.