Court Opinion

ID: 9692772
Source: CourtListenerOpinion
Date Created: 2023-08-25 16:05:11.608277+00
Date Added: 2024-06-11T18:19:36.791905
License: Public Domain

Eldridge, J,

dissenting:

The majority concludes that § 234A of the Insurance Code 1 is “aimed at discrimination against individuals or classes of individuals.” Yet the Court somehow also concludes that physicians seeking professional liability or *145malpractice coverage do not constitute a class of individuals covered by § 234A. I would hold that medical malpractice coverage for physicians fits precisely in the term “class of risk” as used in § 234A.
This Court has once before taken a very narrow view of the scope of coverage of § 234A. In Insurance Comm’r v. Allstate Ins., 268 Md. 428, 302 A. 2d 200 (1973), the Court held that an earlier version of § 234A was restricted to prohibiting discrimination only on the basis of factors such as race, religion, sex, national origin and place of residency. The legislative reaction to that decision was swift and decisive. The General Assembly enacted Ch. 752 of the Acts of 1974. The Legislature stated in the preamble of Ch. 752 that: “[T]he general welfare of the People of Maryland . . . is inadequately assured . . . merely upon a showing by insurers . . . that their underwriting decisions are made without reasons based . . . upon considerations as race, color, religion or creed, sex, national origin or place of residency and the like . . . .” The Legislature further determined that “the general welfare . . . requires that all underwriting decisions of insurers ... be made solely on the basis of a reasonable application to relevant facts of underwriting principles, standards and rules that can be demonstrated objectively to measure the probability of a direct and substantial adverse effect upon losses or expenses of the insurer in light of the approved rating plan or plans of the insurer then in effect . . . .” (Emphasis supplied.) Ch. 752 amended § 234A of Art. 48A by adding the two sentences which appear at the end of subsection (a) as it now stands:
“No insurer, agent or broker shall cancel or refuse to underwrite or renew a particular insurance risk or class of risk for any reason based in whole or in part upon race, color, creed or sex of an applicant or policy-holder or for any arbitrary, capricious, or unfairly discriminatory reason. . . . No insurer, agent or broker may cancel or refuse to underwrite or renew a particular insurance risk or *146class of risk except by the application of standards which are reasonably related to the insurer’s economic and business purposes. At any hearing to determine whether there has been a violation of this section, the burden of persuasion shall be upon the insurer to demonstrate that the cancellation, or refusal to underwrite or renew is justified under the standards so demonstrated.”
The intent of the Legislature, that “all underwriting decisions” be based on underwriting criteria having a reasonable relation to the insurer’s economic and business purposes, is in conflict with the Court’s limitation in this case of the applicability of § 234A. This is particularly troublesome in view of the Legislature’s explicit broadening of the scope of § 234A in response to our decision in Allstate.
The majority’s holding is based on an arbitrary denomination of medical malpractice coverage as being a “line of insurance” rather than a “class of risk.” 2 In making this important choice of terms, the majority rejects the Insurance Commissioner’s determination that medical malpractice is a “class of risk” within the line of insurance of “liability other than automobile.” This is indeed a “technical” definition, as the majority labels it, which the Commissioner in the exercise of his expert judgment has made. When reviewing questions arising in a complex area such as the regulation of insurance, we should give significant weight to determinations made by expert administrative bodies. A. Davis, Administrative Law § 30.09, at 243 (1958). The majority offers no basis in law or fact for preferring their presumably nontechnical formula to the Commissioner’s “technical” definition of a “line of insurance.”
*147If, as the majority suggests, § 234A is meant only to prevent discrimination against individuals as such or individuals who happen to be grouped together on the basis of their individual traits or accident records, then the phrase “class of risk” is essentially without meaning, except to represent the plural of “risk.” The term “class of risk” must refer to more than just individuals who can be grouped together because they each represent a risk greater than other individuals receiving the same type of coverage. Logically, a “class of risk” should include all persons covered by a particular type of insurance. The majority’s definition of “class of risk” would leave these persons at the mercy of insurers, so long as individuals within these groups were not discriminated against. For example, the majority’s reasoning would apply § 234A to require a business purpose in the case where a pediatrician’s coverage was cancelled while other pediatricians’ coverage was not, but the majority’s reasoning would deny application of § 234A where all pediatricians had their coverage cancelled, but all obstetricians continued to be covered, if the insurer merely labelled coverage of the pediatricians as a different “line of insurance” than coverage of obstetricians.3
*148Therefore, I would hold that medical malpractice insurance is a “class of risk” within the meaning of § 234A. As § 234A by its clear terms applies to refusals to renew a “class of risk,” the statutory provision is fully applicable in this case. Under § 234A, St. Paul has the burden of showing that its suspension of writing medical malpractice insurance was not arbitrary and was based on the application of standards which are reasonably related to its economic or business purposes. However, I would not hold, as the Insurance Commissioner - suggests, that § 234A gives the Commissioner authority to reject the properly presented claims of insurers that they do not find it economically feasible to continue insuring a certain class of risk. Neither the language nor the history of § 234A supports the proposition that hearings undertaken to evaluate a claim brought under § 234A are to be transformed into rate hearings. If, after a final rejection of a rate increase request, an insurer believes that continued coverage of a certain class of risk cannot be maintained without economic disadvantage or loss to it, then § 234A does not authorize the Commissioner to require that the insurer continue coverage of that class of risk. Section 234A does not allow the Commissioner to force insurers, against their will, indefinitely to continue covering a particular class of risk.
However, in this case St. Paul did not • exhaust the administrative remedies available to it with regard to the rate increase it sought. St..Paul was granted a 45.9% rate increase, effective January 4, 1974. It informed the Maryland Medical and Chirurgical Faculty that if it could not obtain another rate increase, it would cease writing medical malpractice insurance. Shortly thereafter it sought another increase of 48%. The Commissioner tentatively rejected this request. St. Paul did not seek further adminstrative consideration of this requested rate increase. The Insurance Code, Art. 48A, § 242B (1), provides that if an insurer is aggrieved by a pre-hearing decision of the Commissioner such as was made here, then the insurer may request a hearing and the Commissioner “shall” grant a hearing and consider his prior action. The section goes on to *149provide that the Commissioner, after the hearing, shall affirm, reverse or modify his prior action, specifying the reasons therefor.4 St. Paul did not pursue its remedy under this section. Rather, the company immediately announced that it would cease medical malpractice coverage.
This action by St. Paul was “arbitrary” within the meaning of that term as used in § 234A. Moreover, St. Paul’s action was not “reasonably” related to the insurer’s stated business purpose within the meaning of § 234A. The insurer’s stated business purpose was that it could not obtain a rate increase, but it failed to pursue its administrative remedy to obtain such increase. If St. Paul had gone through the complete administrative procedure available to it and then withdrawn from writing medical malpractice insurance, the Commissioner would not be able on § 234A grounds to reject *150St. Paul’s business decision that a rate increase could not be obtained which would allow it to continue in business. In such an eventuality, the action of St. Paul in withdrawing from the field of medical malpractice insurance could not be said to be “arbitrary” and would be “reasonably related” to its “business purpose,” as those terms are used in § 234A.
However, the company’s precipitous action, in failing to explore fully the possibilities available to it with regard to an increase in rates, deprived the Commissioner and the public of the ability to determine whether the company’s claim that it could not obtain rate relief was correct. Thus, the Commissioner could determine that St. Paul’s action was arbitrary, and he was not, at that point, obligated to accept St. Paul’s business judgment with regard to its inability to continue writing medical malpractice coverage.
I would affirm the order of the Baltimore City Court that St. Paul Fire and Marine Insurance Company renew Dr. Levine’s policies and “continue to accept the business of physicians’ and surgeons’ liability insurance in the State of Maryland.”

. Maryland Code (1972 Eepl. Vol., 1974 Supp.), Art. 48A, § 234A.

. The majority make much of the fact that if physicians professional liability is seen as a class of risk, companies not writing it would have to justify their refusal to do so. This argument is a “strawman,” however, since a company not writing such insurance need do no more than to state that it had determined that it has no economic or business reason to do so. Sec. 234A does not give the Insurance Commissioner authority to second guess the business decisions of insurance company officials.

. That “class of risk” does not mean groups of individuals within a certain type of insurance coverage who possess a particular personal characteristic or accident record is indicated by § 242(c)(4) of Article 48A. Subsection (c)(4) of § 242 provides:
“Risks may be grouped by classifications for the establishment of rates and minimum premiums. Classification rates may be modified to produce rates for individual risks in accordance with rating plans which establish standards for measuring variations in hazards or expense provisions, or both. The standards may measure any difference among risks that can. be demonstrated objectively to have a probable effect upon losses or expenses. . . .”
This provision, which allows rates to be based on certain characteristics of the insureds covered by a particular type of insurance, indicates that the Legislature did not intend the term “class of risk” in § 234A to have the meaning ascribed to it by the majority. If the Legislature had intended to convey the meaning claimed by the majority, it would have used instead the phrase “classification of risks” in order to make § 234A consistent with § 242 (c)(4). It is a fundamental rule that different parts of a statute should be construed in a manner making them consistent and harmonious, if possible. Coerper v. Comptroller, 265 Md. 3, 6, 288 A. 2d 187 (1972); Unsatisfied Fund v. Bowman, 249 Md. 705, 709, 241 A. 2d 714 (1968).

. Section 242B (1) states:
“Any insurer or rating organization aggrieved by any order or decision of the Commissioner under this subtitle made without a hearing, may within thirty (30) days after notice of the order to the insurer or organization, make written request to the Commissioner for a hearing thereon. The Commissioner shall hear such party or parties within twenty (20) days, after receipt of such request and shall give not less than ten (10) days’ written notice of the time and place of the hearing. The hearing shall be concluded within fifteen (15) days from the commencement thereof; provided, however, that the Commissioner, upon application with notice to the interested parties and for good cause shown, may grant additional time, not exceeding fifteen (15) days. Within twenty (20) days after the conclusion of such hearing the Commissioner shall affirm, reverse or modify his previous action, specifying his reason therefor, and shall give a copy of such order or decision to all interested parties. In the event of the Commissioner’s failure to hold or complete the hearing or to render his order or decision within the period specified herein, the filing or application in issue shall be deemed to meet the requirements of this subtitle and shall be deemed approved.
“The order shall contain specific findings of fact by the Commissioner in relation to the matter before him, such findings to be supported by a preponderance of the evidence on consideration of the record as a whole. Any party may file with the Commissioner proposed findings of fact, to bo accepted or rejected by the Commissioner.
“Pending such hearing and decision thereon the Commissioner may suspend or postpone the effective date of his previous action.
“Nothing contained in this subtitle shall require the observance at any hearing of formal rules of pleading or evidence.”