Opinion ID: 2634942
Heading Depth: 1
Heading Rank: 6

Heading: Application of the San Juan Cellular Test

Text: The first prong of the San Juan Cellular test, that is, whether a regulatory agency assesses the fee, 967 F.2d at 686, is satisfied in the present matter because the charges at issue were assessed by the commissioner of the insurance division of the DCCA. The insurance commissioner is vested with the authority to enforce the Insurance Code, HRS title 24, which regulates the insurance industry. See HRS § 431:2-201(b) (1993). The second prong, which asks whether the agency places the money in a special fund, San Juan Cellular, 967 F.2d at 686, is also satisfied because the assessments were placed into a special fund, namely, the IRF, by the insurance commissioner; the IRF later merged into the CRF and was intended to be utilized to reimburse the insurance division for the cost of regulating the insurance industry. See HRS § 431:2-215(c). The third prong of the San Juan Cellular test requires a more searching inquiry. It evaluates whether the money is not used for a general purpose but rather to defray the expenses generated in specialized investigations and studies, for the hiring of professional and expert services and the acquisition of the equipment needed for the operations provided by law for the [payor]. 967 F.2d at 686 (brackets omitted); see also Bidart Bros. v. California Apple Com'n, 73 F.3d 925, 931 (9th Cir.1996) (articulating the third prong of the San Juan Cellular test as whether the assessment is expended for general public purposes, or used for the regulation or benefit of the parties upon whom the assessment is imposed). HIC asserts that the insurance commissioner's assessments, as a whole, represent unconstitutional taxes under Medeiros. In particular, HIC points to the expenditures by the insurance commissioner for: (1) general overhead of the insurance division, the DCCA, and the DBF; (2) the cash reserve accumulated by the insurance division; and (3) the monies transferred to the general fund as being violative of the user-fee test in Medeiros. Inasmuch as we are not applying the Medeiros test here, we will instead review these expenditures under the third prong of the San Juan Cellular test to determine whether they were expended for general public purposes, or used for the regulation or benefit of the parties upon whom the assessment is imposed. See Bidart Bros., 73 F.3d at 931.