Opinion ID: 2572529
Heading Depth: 1
Heading Rank: 4

Heading: The circuit court's determinations

Text: On appeal to the circuit court, Allstate argued that the Commissioner erred because he (1) violated the statutory scheme by improperly applying HRS § 431:10C-207 to rate making, (2) exceeded his authority by engaging in impromptu rulemaking, and (3) issued a final order that was arbitrary and capricious. On April 20, 2000, the circuit court issued its decision and order affirming the October 15, 1999 final order of the Commissioner. The circuit court determined that HRS § 431:10C-207 prohibits discrimination in underwriting and rate making, basing its decision on the language and context of HRS § 431:10C-207. The circuit court first noted that, in 1993, the legislature amended HRS chapter 431 (specifically, HRS § 431:10C-111) to prohibit nonrenewal of an insurance policy based on the same categories as contained in HRS § 431:10C-207 (with the exception of credit bureau rating); [5] the legislature included this amendment in the same act in which it repealed the take all comers provision. 1993 Haw. Sess. L., Special Session, Act 4, § 3 at 11. Allstate had argued that the specific inclusion of a statutory prohibition on nonrenewal meant that the legislature intended to permit insurers to discriminate in underwriting. However, the circuit court found no redundancy in having HRS § 431:10C-207 apply broadly to underwriting and rate making, even with the existence of HRS § 431:10C-111, because HRS § 431:10C-111 applies only if an insurer bases its decision not to renew a policy solely on a prohibited classification; in contrast, HRS § 431:10C-207 prevents an insurer from relying in whole or in part on a prohibited category. (Emphasis added). The circuit court also determined that the placement of HRS § 431:10C-207 within Part II of Article 10C (instead of its pre-1987 placement within the General Provisions section) did not affect HRS § 431:10C-207's applicability to underwriting and rate making. Furthermore, the circuit court concluded that HRS § 431:10C-207, which prohibits discrimination in any standard or rating plan, applies to underwriting and rate making because the term `standard' must mean something other than `rating plan' under proper statutory construction. Therefore, the circuit court affirmed the Commissioner's Order upholding the Chief Deputy Insurance Commissioner's Cease and Desist Order. Allstate appealed to this court on June 6, 2000.