Court Opinion

ID: 4645480
Source: CourtListenerOpinion
Date Created: 2020-12-22 15:12:46.618881+00
Date Added: 2024-06-11T08:00:52.916467
License: Public Domain

[J-12-2020] [MO: Dougherty, J.]
                     IN THE SUPREME COURT OF PENNSYLVANIA
                                   MIDDLE DISTRICT

    MICHAEL WILLIAM WOODFORD AND                :   No. 65 MAP 2019
    OPTIONS INSURANCE AGENCY,                   :
                                                :   Appeal from the Order of the
                       Appellants               :   Commonwealth Court at No. 1005
                                                :   CD 2018 dated January 4, 2019,
                                                :   Reconsideration Denied February
                v.                              :   15, 2019, Affirming in Part and
                                                :   Reversing in Part the Decision of the
                                                :   PA Insurance Department at No.
    COMMONWEALTH OF PENNSYLVANIA                :   SC16-11-001 dated June 21, 2018
    INSURANCE DEPARTMENT,                       :
                                                :   ARGUED: March 11, 2020
                       Appellee                 :

                                  CONCURRING OPINION

JUSTICE DONOHUE                                          DECIDED: December 22, 2020

        A section of the Insurance Department Act (“Act”), 40 P.S. §§ 1-326.7,1 permits

insurance producers like Appellants to charge a fee in addition to a commission “for the

sale, solicitation or negotiation of a contract of insurance for commercial business.” 40

P.S. § 310.74(a).2 I concur in the result reached by the Majority and join Justice Wecht’s

concurring opinion that the plain text unambiguously precludes Appellants from charging

a fee to private consumers. I write separately, however, because neither the Majority nor

Justice Wecht address the first question on which we granted review, namely, whether

1   40 P.S. §§ 1-326.7, Act of May 17, 1921, P.L. 789.
2 This part of the Act was added by Act of December 6, 2002, P.L. 1183, and is codified
as Section 674-A within the Act.
the Commonwealth Court erred by deferring to the agency’s legal analysis of the meaning

of 40 P.S. § 310.74(a).3

       We granted review to address whether the Commonwealth Court erred “when it

afforded deference to the Insurance Department's interpretation of an ambiguous statute

3 The Majority contends that this discussion is unwarranted and “decline[s] to issue an
advisory opinion on a non-dispositive question.” Majority Op. at 26 n.17. Respectfully,
the deference issue is non-dispositive only because the Majority has assiduously avoided
discussing the process by which the Commonwealth Court analyzed the statutory
language.
The Majority finds support in GE Energy Power Conversion France SAS, Corp. v.
Outokumpu Stainless Steel USA, LLC, __ U.S. __, 140 S.Ct. 1637, 1647 (2020) (citing
Edelman v. Lynchburg Coll., 535 U.S. 106, 114-15 n.8 (2002)). According to the Majority,
these “precedents make clear” that discussing deference is unnecessary. Id.
I respectfully disagree. In the GE Energy Power case, the Court examined the plain
language meaning of a treaty, and observed that “We have never provided a full
explanation of the basis for our practice of giving weight to the Executive's interpretation
of a treaty.” 140 S. Ct. at 1647. Here, we are not dealing with deference to the executive
branch. And in Edelman, the United States Supreme Court granted review to determine
whether an agency’s interpretation of a statute contradicted the plain text. Notably, the
intermediate appellate court, unlike the Commonwealth Court here, properly examined
the plain language for itself. See Edelman v. Lynchburg Coll., 228 F.3d 503, 508 (4th Cir.
2000), rev'd, 535 U.S. 106 (2002) (“Having concluded that application of the … regulation
in this case contravenes Congress's intent, as expressed through the plain language of
the statute, we need not proceed further. Step two of the Chevron analysis does not
come into play, and we do not apply the … regulation.”). The High Court disagreed with
the Court of Appeals regarding the plain language analysis, and the Edelman footnote
cited by the Majority was appended to its observation that the agency’s position was one
“we would adopt even if there were no formal rule and we were interpreting the statute
from scratch. Because we so clearly agree with the [agency], there is no occasion to
defer and no point in asking what kind of deference, or how much.” Edelman v. Lynchburg
Coll., 535 U.S. at 114 (2002) (footnote omitted).
Edelman therefore offers no support for the Majority’s avoiding the issue on which we
granted review. Unlike the Commonwealth Court here, the intermediate appellate court
in Edelman properly analyzed the plain language before deference was even considered.
The language cited by the Majority simply reflected that any deference owed to the
underlying agency view became irrelevant in light of its plain language analysis. In
contrast, we accepted review to ask whether the Commonwealth Court erred in
deferring to the agency.

                           [J-12-2020] [MO: Dougherty, J.] - 2
that was penal in nature instead of strictly construing the statute against the Insurance

Department, as required by Pennsylvania law?” Woodford v. Pennsylvania Ins. Dep't,

217 A.3d 192 (Pa. 2019). In lieu of addressing whether the panel appropriately deferred

to the agency’s interpretation, the Majority leaves for another day whether a court may

afford “special deference,” Majority Op. at 26, to a non-judicial body’s interpretation of a

statute.

       In my view, the primary reason for this Court’s grant of discretionary review was to

address the Commonwealth Court’s mode of analysis, which involves a broader question

of law that extends beyond the instant dispute of what the plain text of 40 P.S. § 310.74(a)

means. While the statutory issue of first impression we have resolved is among the

reasons warranting discretionary review, absent the additional layer of whether the

Commonwealth Court erred in its deferential approach I question whether our intervention

would otherwise have been warranted. As to the broader issue, the Commonwealth

Court, when faced with whether and when deference to an agency interpretation is

appropriate in a future case, will surely continue to follow its law on that point. I would

address that issue as contemplated by our allocatur grant and conclude that the

Commonwealth Court’s methodology is incompatible with foundational Pennsylvania law

on determining the meaning of an enactment of our General Assembly.

                                           I.
     Reviewing courts cannot defer to an agency’s view that a statute is ambiguous

       To begin, the Commonwealth Court’s error goes beyond the question of whether

a court must afford “special deference” to an agency’s view of what a statute means as a

matter of law. Here, the Commonwealth Court deferred to the agency’s determination

that the statute was ambiguous.

                           [J-12-2020] [MO: Dougherty, J.] - 3
      The notion of “special deference” is taken from the United States Supreme Court’s

decision in Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837 (1984).

The Chevron Court established a two-step approach when courts review statutory

interpretations conducted by federal agencies.

             First, always, is the question whether Congress has directly
             spoken to the precise question at issue. If the intent of
             Congress is clear, that is the end of the matter; for the court,
             as well as the agency, must give effect to the unambiguously
             expressed intent of Congress. If, however, the court
             determines Congress has not directly addressed the precise
             question at issue, the court does not simply impose its own
             construction on the statute, as would be necessary in the
             absence of an administrative interpretation. Rather, if the
             statute is silent or ambiguous with respect to the specific
             issue, the question for the court is whether the agency's
             answer is based on a permissible construction of the statute.

Id. at 842–43 (footnotes omitted).

      Whether deference to an administrative agency is warranted when a statute is

ambiguous has generated significant disagreement amongst members of the Court, as

later discussed. Notwithstanding, an analysis of the Commonwealth Court’s opinion

illustrates that its approach in these matters is even more deferential than Chevron

because it merged the two steps. That is, the panel did not first examine the statutory

language to determine if there is an actual ambiguity. Instead, the court deferred to the

agency’s view that an ambiguity existed.4

4    I therefore respectfully disagree with Justice Wecht’s conclusion that the
Commonwealth Court’s deference to the Department is “entirely moot.” Concurring Op.
at 5. The Commonwealth Court did not analyze whether an ambiguity existed and, absent
correction from this Court, will continue to apply a standard of review that I submit is
contrary to law.

                           [J-12-2020] [MO: Dougherty, J.] - 4
       As indicated by the Commonwealth Court’s opinion, individuals within the agency

initially found that the statutory language unambiguously precluded producers like

appellant from charging fees to private consumers. “The Department takes the position

that the specific authorization of fees for commercial business implicitly but clearly

precludes such fees for consumers.”        Woodford, 201 A.3d at 904.         However, the

Commissioner, the head of the Department, disagreed with the Department’s position.

Id. The Commissioner reached this result by applying statutory construction principles.

“Applying rules of statutory construction, the Commissioner determined the Act did not

clearly prohibit charging fees to consumers in addition to commissions[.]” Id. at 904.

Notwithstanding, the Commissioner ultimately opted to resolve this conflict by deferring

to the views of the agency staff that the statute was unambiguous. Id. (explaining that

the Commissioner “accord[ed] deference to the Department's construction of the Act”).

The Commonwealth Court, in turn, deferred to that view as a reasonable interpretation

of the statutory text, in part because the Commissioner declined to penalize Appellants

for their past practices. “Instead, the Commissioner directed only that [Appellants] cease

imposing such fees in the future. This limited directive was reasonable in addressing an

issue of first impression. …” Id. at 904-05.

       A court cannot defer to an agency’s view that a statute is ambiguous, and by doing

so it abdicates the judiciary’s duty to say what the law is. Obviously, an agency could

circumvent otherwise clear statutory language by simply declaring that an ambiguity

existed, expecting a reviewing court to reflexively adopt the same view. It is for the court,

and not for the agency, to decide in the first instance if the relevant language is actually

ambiguous. The Commonwealth Court’s failure to examine the language contradicted

                            [J-12-2020] [MO: Dougherty, J.] - 5
the teaching of Chevron itself, as the panel did not engage in any analysis whatsoever to

determine whether the term “commercial business” was ambiguous.                    What the

Commonwealth Court found was that the term was ambiguous because the agency

thought it was ambiguous (despite the internal division within the agency on that point).

No such deference is permitted by Chevron.

              The judiciary is the final authority on issues of statutory
              construction and must reject administrative constructions
              which are contrary to clear congressional intent. If a court,
              employing traditional tools of statutory construction,
              ascertains that Congress had an intention on the precise
              question at issue, that intention is the law and must be given
              effect.

Chevron, 467 U.S. at 843 n.9.

       The Commonwealth Court could not accept the agency’s interpretation, no matter

how reasonable, if that interpretation conflicted with clear legislative intent. In fact, this

principle is not limited to agency interpretations of a statute but extends to an agency’s

reading of its own regulations. See Kisor v. Wilkie, ___ U.S. ___, 139 S. Ct. 2400, 2415

(2019) (plurality) (“But if the law gives an answer—if there is only one reasonable

construction of a regulation—then a court has no business deferring to any other reading,

no matter how much the agency insists it would make more sense.”). Then, and only

then, does a court proceed to determine whether the agency’s determination is worthy of

deference. Id. (“If genuine ambiguity remains, moreover, the agency’s reading must

still be ‘reasonable’.”) (emphasis added). It is therefore clear that the Commonwealth

Court erred by failing to address the question of whether an ambiguity actually existed.

See also Harmon v. Unemployment Comp. Bd. of Review, 207 A.3d 292 (Pa. 2019) (first

determining that the statute “is thus obviously susceptible to two or more reasonable

                            [J-12-2020] [MO: Dougherty, J.] - 6
interpretations and as such it is ambiguous” before discussing agency deference)

(quotation marks and citation omitted).

       The only discernible justification for applying a broad level of deference comes

from the Commonwealth Court’s recitation of the standard of review. The panel stated,

“In addition, in a case involving a complex statutory scheme, courts exercise greater

caution in substituting their discretion for the expertise of the Commissioner, acting as the

agency head of the Department. Statutory and regulatory interpretations of a regulatory

agency are accorded great deference.” Id. at 902 n.3 (citing Grimaud v. Pa. Ins. Dep't,

995 A.2d 391 (Pa. Commw. 2010)). In Grimaud, the Commonwealth Court similarly

observed in a footnote that “because this case involves a statutory scheme that is

complex, we must exercise greater caution in substituting our discretion for the expertise

of the Commissioner, acting as the agency head of the Pennsylvania Insurance

Department.    Grimaud, 995 A.2d at 400 n.8 (citing Graduate Health Sys., Inc. v.

Pennsylvania Ins. Dep't, 674 A.2d 367, 370 (Pa. Commw. 1996)). These cited cases

make clear that the Commonwealth Court believes that it should generally defer to an

agency when the statutory scheme is complex, without accounting for the various

permutations in which said deference can occur. A couple of examples will suffice. For

instance, the Graduate Health case cited Carlson Mining Company v. Department of

Environmental Resources, 639 A.2d 1332 (Pa. Commw. 1994), for the proposition that

“[s]tatutory and regulatory interpretations of a regulatory agency should be accorded great

deference.” Graduate Health also cited Nationwide Mutual Insurance Co. v. Foster, 599

A.2d 267 (Pa. Commw. 1991), for the point of law that “[w]here the statutory scheme is

complex, the reviewing court must be even more cautious in substituting its discretion for

                            [J-12-2020] [MO: Dougherty, J.] - 7
the expertise of an administrative agency.” Foster, meanwhile, said that “[a]n agency's

interpretation is entitled to great judicial deference. Also, where the statutory scheme is

complex a reviewing court must be even more cautious in substituting its discretion for

the expertise of the administrative agency.” 599 A.2d at 270 (citing SmithKline Beckman

Corporation v. Commonwealth, 482 A.2d 1344, 1353 (Pa. Commw. 1984)). These cases

suggest that a complex statutory scheme requires deference beyond “great judicial

deference.”

       Moreover, an agency’s interpretation of a statute is quite different from its

interpretation of its regulations.5   “Issues surrounding judicial deference to agency

interpretations of their own regulations are distinct from those raised in connection with

judicial deference to agency interpretations of statutes enacted by Congress.” Kisor v.

Wilkie, ___ U.S. ___, 139 S. Ct. 2400, 2425 (2019) (Roberts, C.J., concurring in part).

The Commonwealth Court’s cited standard of review suggests that judicial deference

takes only one guise, at least when the statutory scheme is complex.

       Its failure to independently examine the text for any ambiguity is all the more

problematic given that the Commonwealth Court’s basis for deferring to the agency is that

the Commissioner deserves deference because she is acting as the head of the agency

and applying her expertise. Yet we know that the Commissioner here disagreed with

agency staff, as she thought that the statutory language was ambiguous. It is unclear

5   These issues can be further subdivided. For example, the standards applied for
reviewing interpretations of agency material depends on the precise material at issue.
See Harmon v. Unemployment Comp. Bd. of Review, 207 A.3d 292, 299 (Pa. 2019)
(explaining that there are “two types of agency interpretations which are accorded
different levels of deference,” i.e. published rules and regulations versus “guidance
documents” like manuals, policy statements, and advisories). The Commonwealth
Court’s cited standard of review glosses over these issues.

                           [J-12-2020] [MO: Dougherty, J.] - 8
which view actually represents the Department’s “official” position, as the Commissioner

ultimately adopted the very views that her expertise should have overruled.

       Taken together, the Commonwealth Court erroneously cited a broad standard of

review that required deference to the agency’s conclusion on ambiguity and nebulously

suggests that the court was permitted, or even required, to simply accept an agency’s

view without any legal analysis of its own regardless of the particular issue involved.

                                           II.
    An agency’s interpretation of an ambiguous statute is limited to persuasive value

       The foregoing analysis addresses the Commonwealth Court’s error in merging

Chevron’s first two steps. As to the second step, in my view, the Commonwealth Court’s

decision to defer, as a matter of law, to the Commissioner’s interpretation of the statute

is unsupported by Pennsylvania law. And while the Majority declines to address whether

we must defer to the agency’s view, our grant of allowance of appeal anticipated a general

consideration of the Commonwealth Court’s announced standard of review.

       This issue has generated significant disagreement amongst members of the Court,

as demonstrated by our recent decision in Harmon v. Unemployment Comp. Bd. of

Review, 207 A.3d 292 (Pa. 2019). See id. at 300 (observing that precedent permits

granting “some measure         of   value   to   [agency]   interpretations under certain

circumstances”) (Dougherty, J., joined by Baer and Todd, JJ.); id. at 308 (Saylor, C.J.,

concurring) (“A pervading question in this field, of course, is how much deference is due

in any given context.”); id. at 310 (Donohue, J., concurring) (“I reject any rule of

construction that would require courts to abdicate our judicial role to administrative

agencies.”); id. (Wecht, J., concurring) (“I do not agree that reviewing courts should afford

what often amounts to unqualified deference—i.e., Chevron deference—to an executive-

                            [J-12-2020] [MO: Dougherty, J.] - 9
branch agency's interpretation of an ambiguous statute.”) (footnote omitted); id. at 313

(Mundy, J., dissenting) (“As noted by Chief Justice Saylor in his concurring opinion, some

deference is due[.]”). See also Com., Dep't of Educ. v. Empowerment Bd. of Control of

Chester-Upland Sch. Dist., 938 A.2d 1000, 1014 (Pa. 2007) (Baer, J., concurring) (“While

I agree that the Secretary enjoys a great deal of latitude in administering the Code, I do

not believe that . . . administrative interpretations forwarded for the first time in connection

with adversarial litigation, are entitled to any more weight than any other litigant's

argument[.]”)

       When a reviewing court finds that a statute is ambiguous, in my view an agency’s

interpretation is entitled to deference only in the sense of a recognition that the agency’s

view should be considered for its persuasive value. This position is distinct from deferring

to the agency’s view as a matter of law. Kisor, 139 S. Ct. at 2424 (“[T]here is a difference

between holding that a court ought to be persuaded by an agency's interpretation and

holding that it should defer to that interpretation under certain conditions.”) (Roberts, C.J.,

concurring in part). Pennsylvania law materially differs from federal law on this point.

While we both seek to ascertain legislative intent and use various maxims and canons of

statutory construction to do so, our General Assembly has specifically addressed, through

its enactment of the Statutory Construction Act, 1 Pa.C.S. §§ 1501-1991, the impact of

administrative interpretations when reviewing ambiguous statutes. “When the words of

the statute are not explicit, the intention of the General Assembly may be ascertained by

considering, among other matters . . . . [l]egislative and administrative

interpretations of such statute.” 1 Pa.C.S. § 1921(c)(8) (emphases added). This point

is significant insofar as the Chevron doctrine is

                            [J-12-2020] [MO: Dougherty, J.] - 10
             rooted in a background presumption of congressional intent:
             namely, “that Congress, when it left ambiguity in a statute”
             administered by an agency, “understood that the ambiguity
             would be resolved, first and foremost, by the agency, and
             desired the agency (rather than the courts) to possess
             whatever degree of discretion the ambiguity allows.” Smiley v.
             Citibank (South Dakota), N. A., 517 U.S. 735, 740–741, 116
             S.Ct. 1730, 135 L.Ed.2d 25 (1996). Chevron thus provides a
             stable background rule against which Congress can legislate:
             Statutory ambiguities will be resolved, within the bounds of
             reasonable interpretation, not by the courts but by the
             administering agency. See Iowa Utilities Bd., 525 U.S., at 397,
             119 S.Ct. 721. Congress knows to speak in plain terms when
             it wishes to circumscribe, and in capacious terms when it
             wishes to enlarge, agency discretion.

City of Arlington, Tex. v. F.C.C., 569 U.S. 290, 296 (2013). The existence of Section

1921(c)(8) of the Statutory Construction Act establishes that our General Assembly

legislates against a different backdrop. If a court finds that a statute is ambiguous, the

General Assembly has dictated that the ambiguity will be resolved by the courts, with the

agency’s interpretation as one of eight non-exclusive factors to be considered. Thus, our

General Assembly, unlike Congress, has spoken in plain terms. See Nicole B. v. Sch.

Dist. of Philadelphia, ___ A.3d ___, 2020 WL 5542091, at *5 (Pa. Sept. 16, 2020) (“Our

General Assembly, unlike our federal counterpart, has dictated explicit considerations via

the Act regarding how to discern its statutory intent.”). As I have previously stated, “the

Act conspicuously and correctly does not instruct courts to defer to agency interpretations

(or to any other factor listed in section 1921(c)) when engaging in an interpretative

analysis.” Harmon, 207 A.3d at 309 (Donohue, J., concurring). We cannot give “special

deference” to an agency’s interpretation of an ambiguous statute, and suggestions to the

contrary rest on grander statements, like those relied upon by the Commonwealth Court

                          [J-12-2020] [MO: Dougherty, J.] - 11
in this case, than our law actually permits. Per the Statutory Construction Act, we may

consider, but not defer to, agency interpretations of statutes.

       Nothing in our Administrative Agency Law suggests that the role of statutory

construction was otherwise delegated to agencies, assuming arguendo that the judicial

power to say what the law is could be transferred. The subchapter dictating judicial review

of Commonwealth agency decisions states:

              The court shall hear the appeal without a jury on the record
              certified by the Commonwealth agency. After hearing, the
              court shall affirm the adjudication unless it shall find that the
              adjudication is in violation of the constitutional rights of the
              appellant, or is not in accordance with law, or that the
              provisions of Subchapter A of Chapter 5 (relating to practice
              and procedure of Commonwealth agencies) have been
              violated in the proceedings before the agency, or that any
              finding of fact made by the agency and necessary to support
              its adjudication is not supported by substantial evidence. If the
              adjudication is not affirmed, the court may enter any order
              authorized by 42 Pa.C.S. § 706 (relating to disposition of
              appeals).

2 Pa.C.S. § 704 (emphasis added). The “in accordance with law” language naturally

encompasses an appellate court applying the Statutory Construction Act, which, in turn,

explicitly states that the agency’s interpretation is entitled only to consideration.

       Relatedly, Chevron itself did not cite the federal Administrative Procedures Act

(“APA”), which instructs a court as follows: “To the extent necessary to decision and when

presented, the reviewing court shall decide all relevant questions of law, interpret

constitutional and statutory provisions, and determine the meaning or applicability of the

terms of an agency action.” 5 U.S.C.A. § 706. There is a question of “whether Chevron

was faithful to the text of the [APA], which it did not even bother to cite.” United States v.

                            [J-12-2020] [MO: Dougherty, J.] - 12
Mead Corp., 533 U.S. 218, 241 (2001) (Scalia, J., dissenting).6 See also Baldwin v.

United States, ___ U.S. ___, 140 S. Ct. 690, 691 (2020) (Thomas, J., dissenting from

denial of writ of certiorari) (“[Chevron] rests on the fiction that silent or ambiguous statutes

are an implicit delegation from Congress to agencies. Chevron is in serious tension with

the Constitution, the APA, and over 100 years of judicial decisions.”) (citation omitted).

But we need not address those criticisms of Chevron; we need only recognize that the

Statutory Construction Act provides clear direction from the General Assembly that the

judicial branch is responsible for ascertaining the meaning of an ambiguous statute, with

an agency’s interpretation merely one of many factors warranting consideration. Our

courts cannot recognize a Chevron-like “implicit delegation” to agencies to determine the

meaning of an ambiguous statute without ignoring the Statutory Construction Act.

                                             Conclusion

       Absent from the Commonwealth Court’s opinion is any statutory analysis of the

phrase “commercial business” in Section 674-A of the Act.               We should take this

opportunity to correct the Commonwealth Court’s error and hold that the nebulous

standard of review employed in this case was contrary to our judicial duty to say what the

law is. While I adhere to my view that a court can consider, but not defer to, an agency’s

interpretation of an ambiguous statute, there should be no doubt that a court must first

determine for itself whether an ambiguity actually exists.

6 Justice Scalia noted that it “could be argued . . . that the legal presumption identified by
Chevron left as the only ‘questio[n] of law’ whether the agency's interpretation had gone
beyond the scope of discretion that the statutory ambiguity conferred.” United States v.
Mead Corp., 533 U.S. 218, 241 n.2 (2001) (Scalia, J. dissenting).

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