Opinion ID: 1933492
Heading Depth: 1
Heading Rank: 5

Heading: Are the Transitional Assessments Imposed on Insurance Companies Authorized Under FAIRA as Regulatory Measures?

Text: Despite the magnitude of the problems confronting the Commissioner, we are unable to infer that the Legislature would have intended to confer such authority on the Commissioner. The power to raise revenue or to tax is among the most fundamental of governmental powers. We note that one of the key features of the Fair Act was the integrated system of assessments and surcharges imposed on various participants in the industry: insurance companies, attorneys, body shops, health-care providers, and motorists. N.J.S.A. 17:33B-58 to -63. The JUA Act had made no provision for the possibility of a deficit operation. FAIRA, however, provides that the private insurance member companies bear the deficit of the MTF in proportion to their depopulation shares. N.J.S.A. 17:33B-11.d. In one sense, then, raising revenue from the member companies in a manner inconsistent with the Act (that is, based on their failure to achieve quotas of market share) would appear to conflict with the specific language of FAIRA. In a broader sense, that the Legislature would have delegated its revenue-raising authority to the Commissioner appears highly unlikely to us. Consider, for example, if the Commissioner had sought to emulate the model for recouping the JUA deficit and had proposed in the MTF's plan of operation an increase in fees to be charged to attorneys or auto repair shops. Such charges had been thought reasonably necessary to defray the JUA deficit. We would undoubtedly say that such measures would exceed what is necessary for the operation of the facility. The need not to give a statute any greater effect than its language allows is particularly compelling in the context of considering the power to tax. Kingsley v. Hawthorne Fabrics, Inc., 41 N.J. 521, 528, 197 A. 2d 673 (1964). Rarely does the Legislature extend revenue-raising authority with regulatory authority. When it does, it closely hems in the grant of authority. See Public Serv. Elec. & Gas Co. v. New Jersey Dep't of Envtl. Protection, 101 N.J. 95, 104, 501 A. 2d 125 (1985) (finding that Legislature authorized the agency to administer cost-based permit program, not a revenue-raiser). In addition, we note that in meeting a constitutional challenge to the anti-pass through feature of the Commissioner's assessments, the Department of Insurance stated in a brief to the Appellate Division: [T]hat portion of the allocated MTF loss caused by the insurer's failure to satisfy its depopulation obligation should be [sic] not be recoverable in rates and it is consistent to treat that portion as non-recoverable for the same reasons that fines, penalties or punitive damage awards are not recoverable. The economic consequences of a company's imprudent or wrongful actions should not be borne by its ratepayers. The argument does suggest that the intended economic effect of the transitional assessments is a charge in the nature of a penalty. Even were the Commissioner to have authority to craft a revenue-raising program, he would be required to follow administrative procedures commensurate with the implementation of such a program. See Holmdel Builders Ass'n v. Township of Holmdel, 121 N.J. 550, 583 A. 2d 277 (1990) (holding that agency's authority to implement development fee program under Fair Housing Act would have to be exercised under rulemaking power with standards to be established for imposition of such fees). We recognize that the MTF more resembles a business organization than a traditional agency of state government, and that procedures set forth under FAIRA were followed. Nevertheless, Holmdel Builders does suggest that standards would have to be set for the imposition of regulatory fees that are perhaps more extensive than the failure, without more, to meet an assigned quota. Because we conclude that the Legislature did not authorize revenue-raising authority for the Commissioner, we need not resolve the procedural aspect of this issue.