Opinion ID: 202647
Heading Depth: 4
Heading Rank: 3

Heading: Reserve Fund: the Overstated Funds

Text: 87 Our determination that the JUA has not alleged a property interest in the Duplicate Premiums does not extend to the remainder of the Reserve Fund—the Overstated Reserve Funds—which consists of the cushion set aside by the JUA to ensure that the Reserve was large enough to meet all of the requests for reimbursement by insureds who purchased private insurance. As noted earlier, the $73 million Reserve held back by the Commonwealth allegedly contained approximately $10 million in excess funds—money that, as it turned out, was not needed for reimbursement because fewer individuals than estimated had purchased their own policies, which meant, in turn, that less of the Reserve than anticipated constituted Duplicate Premiums. 88 According to the JUA, since the [Overstated Reserve Funds] came from the [JUA] and do not, in fact, belong to others, they should have been accounted for as income for the [JUA]. Flores Galarza contends that since these funds are merely portions of the Reserve, which, in turn, is merely an accounting tool for allocating the Duplicate Premiums, the JUA has no proprietary interest[] in the[se] moneys. 89 The Statement of Motives section of the 2002 Amendment, which was in place prior to Flores Galarza's appropriation of the Overstated Reserve Funds in November 2002, explicitly provides that the $73 million Reserve consists of funds that do not belong to it [the JUA] as the result of the double payment of insurance premiums by some drivers. The 2002 Amendment therefore requires the JUA to immediately transfer to the Secretary the funds known in its annual statement as `Funds Retained by the Insurer Belonging to Others'— that is, the $73 million Reserve—and to continue doing so every two years. There is, however, no carve-out for the cushion portion of the Reserve that consists of Overstated Funds. In fact, the 2002 Amendment provides that the Reserve funds transferred to the Secretary necessarily include any reserve excess, and that this reserve excess may be used as resources in the General Fund. P.R. Laws Ann. tit. 26, § 8055(l). 90 The JUA argues, in essence, that to the extent the Amendment directs the transfer of the Overstated Reserve Funds to the Commonwealth, the provision effects a taking of the JUA's property. Under Law 253, the JUA is obliged to insure drivers who might otherwise be uninsurable; the premiums for that insurance are initially collected by the Secretary. The JUA argues that all of those collected funds, other than the Duplicate Premiums, constitute the Earned Premiums and thus belong to it. Indeed, the Insurance Commissioner's adjustment of the Reserve percentage in 2001 to more accurately reflect the percentage of traditionally insured vehicle owners indicates the Commonwealth's recognition that the JUA is entitled to any funds above the amount representing Duplicate Premiums. Notably, the Amendment identifies the funds to be transferred to the Commonwealth every two years as funds Belonging to Others. Presumably, any such funds that do not belong to others belong to the JUA. We therefore conclude that the JUA has alleged the taking of a constitutionally protected property interest in the Overstated Reserve Funds.