Opinion ID: 4529246
Heading Depth: 2
Heading Rank: 3

Heading: The Suicide-Exclusion Standard

Text: ¶28 As an initial matter, we note that no one disputes that the Compact authorized the Commission to adopt regulations with the force and effect of law that would be binding on the compacting states, including Colorado. See § 24-60-3001, art. IV, § 1. The question before us, however, is whether the Colorado legislature could properly delegate to the Commission the power to adopt a suicide-exclusion Standard that effectively overrides a Colorado statute. We conclude that the legislature could not do so. 14 ¶29 Section 10-7-109 “reflects a longstanding public policy in Colorado that disfavors suicide exclusions.” Renfandt v. N.Y. Life Ins. Co., 2018 CO 49, ¶ 44, 419 P.3d 576, 584. Thus, although the statute allows the assertion of suicide as a defense to payment on life insurance policies, it limits the right to assert that defense to the first year of the policy. § 10-7-109. ¶30 The Commission’s suicide-exclusion Standard, however, expands this limitation and allows insurers who sell Commission-approved policies in Colorado to assert suicide as a defense to payment for the first two years of the policy. Standards, at § 3(Y)(3). In this way, the Standard effectively overrides Colorado statutory law for insurers doing business here. ¶31 In our view, delegating to the Commission the authority to adopt a Standard that so circumvents the clear language of section 10-7-109 is to confer legislative powers on the Commission, and pursuant to the authorities discussed above, the General Assembly may not properly do this. See, e.g., Graham Furniture, 331 P.2d at 510 (“To hold that the clear words of the statute can be circumvented by a regulation adopted by the Commission is to ignore their plain meaning and confer legislative powers on the Commission.”). And this is so even though, under the Compact, the Colorado Commissioner of Insurance is a member of the Commission and may have voted in favor of the Standard. If the Commissioner believes that the Commission should enact a regulation that conflicts with 15 Colorado statutory law, then he must request action from the Colorado General Assembly because only that body may legislatively override one of its own enactments. ¶32 In reaching this conclusion, we are not persuaded by Amica’s and its amici’s various arguments to the contrary. We address these arguments in turn. ¶33 First, we disagree with Amica’s assertion that because the Compact provided a means for the General Assembly to opt out of any Standard enacted by the Commission, see § 24-60-3001, art. VII, §§ 3–6, the legislature did not improperly delegate its legislative authority to the Commission. As an initial matter, we note that the facts here present a legitimate question as to whether the Compact’s opt-out provisions were effective, given that the Commission could give notice of a proposed Standard and the Standard could take effect while the legislature was not in session. See id. We need not address this question, however, because even if the opt-out provisions were effective, we have seen no applicable authority excusing an improper delegation of legislative authority merely because the legislature could adopt or reject an administrative agency’s legislative action after the fact, and neither Amica nor its amici cite any such authority. Indeed, in our view, the General Assembly’s after-the-fact opt-out could not excuse the Commission’s improper legislative action here because the opt-out would apply only prospectively, see id. at art. VII, § 5, thus leaving in place the improper 16 Standard in the period between its adoption and the General Assembly’s decision to opt out. ¶34 Second, neither Estate of Liebhardt v. Tasher, 290 P.2d 1107 (Colo. 1955), nor People v. Peterson, 734 P.2d 118, 119–21 (Colo. 1987), on which Amica relies, authorizes the General Assembly to delegate to an administrative agency the power to adopt regulations that override a state statute. ¶35 In Liebhardt, 290 P.2d at 1108, we stated, “Rules and regulations adopted by a department of government, unless expressly or impliedly authorized by statute, are without force or effect if they add to, change or modify existing statutes.” Relying on this language, Amica contends that our General Assembly can, in fact, delegate to an administrative agency the authority to alter a statute. Amica, however, reads our statement in Liebhardt out of context and fails to recognize how the principle set forth in that case has been consistently applied. ¶36 In Liebhardt, Liebhardt’s aunt died, leaving a large portion of her estate to him. Id. at 1107. Within three years of the aunt’s death, however, Liebhardt also died, leaving as his sole heirs his widow and son. Id. At the time, a Colorado statute provided for a credit on taxes to be paid upon the transfer of certain property (in Liebhardt, to the widow and son) if, within the prior three years, the transferor (Liebhardt) had paid taxes on the same property when the property was transferred to him. Id. at 1108. Although the statute reflected a clear legislative 17 intent to allow credit for the full amount of the tax imposed if the previously imposed tax exceeded that amount, the Colorado Inheritance Tax Commissioner had devised a formula of his own to compute the tax credit, and this formula resulted in a reduction of the credit due under the statute. Id. at 1108–09. We concluded that the Commissioner lacked the authority to enforce the regulation adopting his formula, stating: Rules and regulations adopted by a department of government, unless expressly or impliedly authorized by statute, are without force or effect if they add to, change or modify existing statutes. To permit such a proportionate reduction as that made by the Commissioner in the instant case would in effect give legal sanction to a power he does not possess, viz.: authority to amend or add to legislative enactments concerning inheritance and succession taxes. Id. at 1108. ¶37 Accordingly, Liebhardt does not allow an agency to alter a statute, as Amica contends. Indeed, it concluded the opposite. Moreover, when read in context, the language on which Amica relies reflects nothing more than the fact that administrative agencies have the power to implement legislative standards if the legislature authorizes them to do so. And the cases that followed Liebhardt, which Amica also cites, simply reiterate this point. See, e.g., Graham Furniture, 331 P.2d at 510 (citing Liebhardt and concluding that an administrative commission cannot set up a regulation that is contrary to a clear statutory mandate); Adams v. Colo. Dep’t of Soc. Servs., 824 P.2d 83, 86, 89 (Colo. App. 1991) (referencing the Liebhardt 18 standard and concluding that the regulatory scheme at issue was not in conformity with the agency’s enabling statute and was therefore without force and effect); Lorance v. Colo. State Bd. of Exam’rs of Architects, 532 P.2d 382, 384 (Colo. App. 1974) (citing Liebhardt and concluding that the regulatory board at issue had exceeded its authority by expanding the statutory definition of fraud and deceit to encompass conduct not covered by the statute). ¶38 Similarly, in Peterson, 734 P.2d at 119–21, a statute allowed the State Department of Highways to set multiple speed limits applicable to various vehicle types or weights if the Department determined, on the basis of a traffic investigation or study, that the speed specified was greater or less than was “reasonable or safe” under the road and traffic conditions. Id. at 120 (quoting the statute now codified at section 42-4-1102(1)(a), C.R.S. (2019)). The pertinent question before us was whether such a provision constituted an improper delegation of legislative authority to the Department. Id. We concluded that it did not because we believed, based on the authority discussed above, that the delegation to the Department contained adequate standards and safeguards to protect against the uncontrolled exercise of discretionary power by it. Id. at 120–21. In particular, the statute required that the alternative speed limits be “reasonable and safe” and provided that the Department could only act after traffic surveys and investigations established that an alteration of the speed limit 19 was necessary. Id. at 121. Accordingly, Peterson did not allow an administrative agency to adopt a regulation in conflict with a state statute. Instead, the statute at issue set forth certain standards and delegated to the Department the authority to implement such standards. As set forth above, we have long permitted such delegations of authority. See, e.g., Cottrell, 636 P.2d at 709; Lepik, 629 P.2d at 1082. ¶39 Third, we are not persuaded that because the Standard only applies to Commission-approved policies, whereas section 10-7-109 would continue to apply to policies approved by the Colorado Commissioner of Insurance, the Commission’s suicide-exclusion Standard does not conflict with the statute. As noted above, section 10-7-109 applies to “any life insurance policy issued by any life insurance company doing business in this state.” (Emphases added.) Accordingly, whether approved by the Commission or by the Colorado Commissioner of Insurance, the statute applies as long as the policy was issued by an insurer doing business here. The Commission’s suicide-exclusion Standard therefore conflicts with section 10-7-109. ¶40 Fourth, we reject Amica’s contention that the interstate nature of the Commission here distinguishes this case from the above-described authorities regarding intrastate delegations of authority to administrative agencies. Although, to be sure, regulations adopted pursuant to an interstate compact can at times override conflicting state law, the cases that have so concluded have 20 involved interstate compacts that were approved by acts of Congress, and these cases have relied on federal preemption or supremacy clause principles. See, e.g., Frontier Ditch Co. v. Se. Colo. Water Conservancy Dist., 761 P.2d 1117, 1123 (Colo. 1988) (noting that the Compact at issue was part of federal law, having been approved by an act of Congress, and was thus preemptive of any conflicting state law on the same subject). These cases do not assist Amica here, however, because Congress has not approved the Compact at issue, and Amica cites no law supporting its apparent position that any interstate compact can supersede conflicting state law. To the contrary, all of the cases on which Amica relies to support its argument involved congressionally approved compacts and thus implicated federal preemption principles. See, e.g., Port Auth. Trans-Hudson Corp. v. Feeney, 495 U.S. 299, 301 (1990) (concerning a congressionally approved compact between New York and New Jersey); State ex. rel Dyer v. Sims, 341 U.S. 22, 24–25 (1951) (concerning a congressionally approved compact among eight states to control pollution in the Ohio River); Hinderlider v. La Plata River & Cherry Creek Ditch Co., 304 U.S. 92, 95 (1938) (concerning a congressionally approved river compact between Colorado and New Mexico); Frontier Ditch, 761 P.2d at 1123 (concerning a congressionally approved river compact between Colorado and Kansas). Thus, we are not persuaded that the legislature has the authority to 21 delegate to interstate agencies powers that it cannot constitutionally delegate to intrastate agencies. ¶41 Finally, we are unpersuaded by Amica’s argument that our conclusion here would limit the effectiveness of interstate compacts that are not approved by Congress. In this case, we conclude only that, in the context of an interstate compact that has not been approved by Congress, the Colorado legislature may not delegate to an interstate administrative agency the power to adopt regulations that conflict with Colorado statutory law because under longstanding Colorado law, such a delegation amounts to the improper delegation of legislative power. We express no opinion on any other form of interstate compact.