Court Opinion

ID: 5077333
Source: CourtListenerOpinion
Date Created: 2021-10-01 11:34:34.789969+00
Date Added: 2024-06-11T08:20:04.109873
License: Public Domain

GANT, Justice,
dissenting.
The majority opinion herein almost completely ignores the law and the facts of this case, and I feel compelled to dissent. Blue Cross and Blue Shield of Kentucky, Inc. is a domestic mutual health insurance company subject to the provisions of KRS 304.24-010, et seq. and KRS 304.17-380. The latter statute controls rate filings and specifically states:
Each insurer issuing health insurance policies for delivery in this state shall, before use thereof, file with the commissioner its premium rates and classification of risks pertaining to such policies. The insurer shall adhere to its rates and classifications as filed with the commissioner. The insurer may change such filings from time to time as it deems proper.
Under this provision, mutual health companies must file their premium rates and classifications only before the use thereof, and there is no statutory provision which allows the commissioner to review and approve or disapprove rate schedules.
Faced with this fact, the commissioner sought to rely on KRS 304.14-130, which *634statute pertains only to policy forms. This statute reads:
(1) The commissioner shall disapprove any form filed under KRS 304.14-120 or withdraw any previous approval thereof, only on one or more of the following grounds:
* * * * * *
(d) As to an individual health insurance policy, if the benefits provided therein are unreasonable in relation to the premium charged.
Pursuant to this narrowly granted authority to approve policy forms, a regulation was enacted to define the phrase “reasonableness of benefits in relation to the premium charged,” viz. 806 KAR 17:070. Section (5) provides:
(2) Benefits shall be deemed reasonable in relation to the premium charged provided both the following loss ratios meet the above standards for new forms.
The regulation sets out the method of calculating anticipated loss ratios. Under 806 KAR 17.070, Section 5(1), 55% is the anticipated loss ratio for the proposed rate to meet the standard of reasonableness. In other words, if for every dollar of premium collected, 55 cents is paid back out in benefits, the “benefits shall be deemed reasonable in relation to premiums” and the form shall be approved.
The majority opinion ignores the plain language of 806 KAR 17:070, Section 2(b), which sets out the information to be filed, as follows:
(1) Brief description of the type of policy, benefits, renewability, general marketing method, issue age limits ... and the anticipated loss ratios of its original rates.
* * * * * *
(5) Brief description of how revised rates were determined, including the general description and source of each assumption used.
The appellee herein, Blue Cross and Blue Shield of Kentucky, Inc., followed the regulation and filed its premium rates for three policyholder classifications. These applications showed, respectively, an 83.1% anticipated loss ratio and an 87.4% anticipated loss ratio, each being far in excess of the mandated 55% loss ratio test.
A public hearing was called, the notice identifying only the 55% loss ratio test as the subject of the hearing. Hearings were conducted, and all the testifying actuaries, including one actuary provided by the inter-venor herein — the Office of the Attorney General — testified that the loss ratios anticipated were well in excess of 55% and averaged approximately 85%. There was no evidence from any source at these hearings to refute this testimony.
The commissioner issued his Findings of Fact, Conclusions of Law and Order disapproving all three rate findings, and gave two reasons. First, he held that the filings constituted “unfair trade practices” under KRS 304.12-130. Second, he found that Blue Cross and Blue Shield of Kentucky, Inc. had failed to provide adequate information on its cost allocation procedures.
There are basically two things wrong with this Order. First, KRS 304.12-130 has nothing to do with “fair trade practices,” which are not mentioned in the statute. This statute, as set out before, relates only to the relation of benefits to the premium charged. The “fair trade practice” connotation had never been mentioned in any hearing, notice, or previous dealings with the commission or the hearing officer.
Second, the denial based on inadequate information is what the circuit judge, in reversing the commissioner, denominated “something of a ruse.” The regulations herein quoted from 806 KAR 17:070 call for a brief description as set out in the portions quoted above. These conditions were complied with, the filing for each class being approximately 32 pages in length. Also, Blue Cross and Blue Shield of Kentucky, Inc. provided all additional information requested by the hearing officer or the commissioner, and an examination of the record discloses all that information was available to both the commissioner and the intervenor. The commissioner’s Order at no point identified any record request for *635information with which Blue Cross and Blue Shield did not comply.
I would affirm the Franklin Circuit Court, which held that (1) KRS 304.17-380 does not give the commissioner the authority to disapprove rates; (2) KRS 304.14-130 expressly and specifically states the only grounds, which were ignored by the commissioner, for disapproval of policy forms; (3) no unfair trade practices prohibited in KRS 304.12-130 were even mentioned at the hearings, and there is no evidence of any intent by the legislature to include unfair trade practices under this subtitle, and, (4) the record reveals that all information was provided by Blue Cross and Blue Shield of Kentucky, Inc.
I would affirm the Franklin Circuit Court.
VANCE, J., joins in this dissent.