Opinion ID: 1923690
Heading Depth: 2
Heading Rank: 7

Heading: application of the test of rationality

Text: I conclude that whether the issue before the court is viewed as a review of an issue of fact or as a review of agency discretion or policy, the scope of review is substantially similar, because the essence of the standards applicable to each is the requirement of reasonableness or rationality. 1 Davis, Administrative Law Treatise sec. 6.6, p. 468 (2d ed. 1978). [26] This court has said that the substantial evidence in light of the record test in almost any case converges with the concept of reasonableness and rationality, the usual expression of the scope of judicial review of quasi-legislative acts. Westring v. James, 71 Wis.2d 462, 477, 238 N.W.2d 695 (1975). See also Assoc. Industries of NYS, Inc. v. U.S. Dept. of Labor, 487 F.2d 342, 350 (D.C. Cir. 1973). I turn now to determine whether the rule passes the test of rationality. The Commissioner's emphasis in her regulations on the cost surrender index is based on the factual predicate  which as we noted previously is undisputed and unchallenged  that most policies are terminated prior to death and that in most cases the SCI and the NCPI point in the same direction. Considering these facts, the Commissioner concluded that a regulation emphasizing the Cost Surrender Index, requiring a single index in the Summary, and discussing all the indices in the Guide, has merit on the grounds of simplicity. The circuit court reviewed the rule and concluded that the Commissioner erred in several respects in the direction of over simplification. It is good to make things simple, says the circuit court, but it is misleading to make things simpler than they are. It is a close question whether the Summary and Guide are simple or simpler. Reasonable minds could reach different conclusions. The majority admits that the record demonstrates that various actuarial experts disagreed concerning the issue of whether the . . . documents would mislead prospective purchasers of whole life policies as to their comparative costs. ( Supra, p. 104). The majority, however, burrows deeper in its review of the rule and concludes that the Commissioner's approach in determining what information should be furnished to the consumer is inherently flawed because the Commissioner has been guided by what actually happens to most policies rather than by what most consumers intend to do with the policy when buying it. The majority requires the Commissioner to draft the Guide and Summary to reflect the intention of the majority of purchasers to hold the policy until death. [27] To the majority of this court then the point . . . [is] that it is the consumer's intent at the time of purchase . . . that should determine what information must be disclosed in order to enable them to make an intelligent and informed purchase decision. ( Supra, p. 112) Even if the point has merit I think it obvious that the majority's conclusion is a policy determination for the agency not for the court. If nothing more, this statement illustrates the necessity for agency review, not de novo judicial decision making. For the challenge is foreseeable that were the Commissioner to base her rule on the grounds the majority suggests, she would mislead the consumer by predicating the rule on a consumer fantasy rather than on the facts of life insurance. The court is to review the Commissioner's rule to determine if the quasi-legislative task was carried out in a manner calculated to negate the dangers of irrationality and if, on the basis of the evidence presented, her rule makes sense and is defensible. Upon a review of the record I conclude that the Commissioner's rule is the result of considered and careful study after long hearings. The Commissioner's decisional process cannot be characterized as being filled with gaps, mistakes or slipshod reasoning. It is for the Commissioner, not this court, to choose which experts to believe and to predict consumer needs. The court need not conclude that the administrator's policy is the best policy or even the preferable one. Where reasonable minds may differ as to which of several measures should be chosen, courts should defer to the appropriate agency. Mourning v. Family Publications Service, 411 U.S. 356, 371 (1973). The Commissioner's rule is not patently unreasonable. It is not void of rational basis. It is not the result of an unconsidered, willful or irrational choice. The Commissioner has given a rational explanation for her decision; her decision is supported by expert opinion. The area of life insurance cost disclosure is a difficult one, and across the country regulatory agencies and insurance companies are groping for answers. [28] I might have drafted the rule in the same manner as the Commissioner or I might have drafted it differently. But I am not the Commissioner of Insurance. The record is adequate to support the Commissioner's exercise of discretion. The rules promulgated by the Commissioner are designed to operate in the future in a multitude of transactions. At this time there is no magical formula that will assure that the consumer understands the cost of the policy. The Commissioner should be free to experiment with various rational regulatory approaches and should be able to reexamine regulatory approaches, abandoning or changing those that prove defective and retaining those that function well. The rules are published in the Administrative Code, not in concrete. The rules can be changed if they do not work. The Commissioner and the industry agree that something needs to be done to improve disclosure of cost to the consumer. I would give the rules a chance in the marketplace. For the reasons set forth, I dissent.