Court Opinion

ID: 5155061
Source: CourtListenerOpinion
Date Created: 2022-01-02 02:14:11.360701+00
Date Added: 2024-06-11T08:25:16.411544
License: Public Domain

RABINOWITZ, Chief Justice,
with whom BOOCHEVER, Justice, joins, dissenting.
I have concluded that the investigatory measures which were undertaken by the Anchorage Equal Rights Commission are prohibited by virtue of the legislature’s enactment of a comprehensive insurance code.1 In deciding this question, I find it of *146particular significance that the legislature explicitly pre-empted political subdivisions of the state from regulating the insurance business by providing that “[t]he state hereby pre-empts the field of regulating insurers and their general agents, agents and representatives.” 2
Although the majority agrees that AS 21.03.060 does indeed preclude the commission from issuing any orders or rules which could affect the business of insurance, it nevertheless carves out an “investigatory” exception to the pre-emption provisions of AS 21.03.060. The assumption underlying this pre-emption exception strikes me as unpersuasive. I think it somewhat naive to reason that mere investigation by a political subdivision can have no effect on the conducting of the business of insurance. In this case, for instance, one had only to consider the potential impact on the insurance company, which is burdened with the duty to respond to comprehensive interrogatories submitted by the commission, as well as the wide ranging subpoena duces tecum, requiring the production of all books, papers, documents, and things in Allstate’s possession in any way related to the underlying complaint of discrimination. I think it is apparent that the “reasonable” investigative exception to state pre-emption of regulation of the insurance industry adopted by the court today creates the substantial possibility of balkanization of the insurance business within the State of Alaska through conflicting local regulatory efforts. This conclusion is reflective of my further view that the power to investigate in these circumstances is tantamount to the power to regulate.3
*147Thus, I would hold the relevant Anchorage ordinances are substantially irreconcilable with Alaska’s laws governing the regulation of the insurance business 4 and, therefore, that the commission lacked the authority to proceed in the circumstances of this case.

. See AS 21.03.010-21.90.110. In particular, I note that the insurance code expressly prohibits “unfair discrimination” in the issuance of insurance policies. AS 21.36.090(c) provides:
No person may make or permit arbitrary or unfair discrimination between insureds or property having like insuring or risk characteristics, in the premium or rates charged for a policy or contract of property, casualty, surety, marine, wet marine or transportation insurance, or in the dividends or other benefits payable on the insurance, or in the selection of it, or in any other of the terms and conditions of the insurance.
See also AS 21.36.110-120. The director of the Division of Insurance, Department of Com*146merce, has broad powers to remedy statutorily prohibited acts and practices by those in the insurance business. AS 21.36.320-340.

. AS 21.03.060.

. It is significant that the majority cites no cases in support of its holding that investigation, as opposed to regulation, of the insurance industry is within the authority of the local equal rights enforcement agency. The two courts which have directly addressed the issue, however, in the context of a conflict in jurisdiction between two separate state agencies which oversee the insurance business and the elimination of discriminatory practices, have both found that the applicable agency whose purpose is to eliminate discrimination has no authority whatsoever with respect to insurance. Thompson v. IDS Life Ins. Co., 274 Or. 649, 549 P.2d 510, 513 (1976); State, Div. of Human Rights v. Prudential Ins. Co., 273 N.W.2d 111, 112-15 (S.D. 1978). The Prudential case stated that:
This conclusion does not indicate that insurance companies are free to engage in discriminatory practices. On the contrary, the insurance industry is subject to extensive and detailed regulation in Title 58 of our Code. There are provisions to remedy such unfair discrimination by injunction, cease and desist order, criminal prosecution, and civil damages.
Id. at 113 n.4. In Thompson v. IDS Life Ins. Co., 274 Or. 649, 549 P.2d 510, 512 (1976), the court explained:
ORS 659.045 gives the Commissioner of Labor authority to investigate grievances under the Public Accommodations Act. .
If insurance is included within the scope of the Public Accommodations Act, then reading these statutes together with ORS 746.015 and 737.310 means either that the Insurance Commissioner has concurrent authority to eliminate discrimination or that the Insurance Commissioner has been divested of his authority to eliminate discrimination in the insurance industry.
The problem with construing the statutes so as to include insurance under the Public Accommodations Act and to still give effect to ORS 746.015 and 737.310 is that different standards are established. The Insurance Commissioner is instructed to eliminate unfair discrimination, whereas the Public Accommodations Act prohibits ail discrimination. The reason for the different standards, as the plaintiff recognizes in her brief, is that insurance, to some extent, always involves discrimination, to a large degree based on statistical differences and actuarial tables. The legislature specifically intended, in enacting ORS 746.015 and 737.310, to only prohibit unfair discrimination in the sale of insurance policies. Plaintiff concedes that some practices would be upheld by the Insurance Commissioner which would not be upheld by the Labor Commissioner. Such administrative conflict should be avoided. In construing statutes, the practical administrative result is persuasive, [footnote omitted] [citation omitted]
Though the question here is the reconcilability of a municipal rather than the state equal rights commission’s authority to investigate alleged discriminatory practices with the state director of insurance’s authority to prohibit unfair discrimination in the issuance of policies, I think the rationale of the Oregon court is *147nevertheless persuasive. The Anchorage Equal Rights Commission cannot go about its investigation of an insurance company without necessarily overlapping with the state insurance director’s own broad regulatory authority in that area. And the two responsible agencies frequently may be pursuing incompatible objectives. Therefore, investigatory activity, as well as the direct regulation of insurance by order or rule of the commission, must be pre-empted by the state statutory scheme of insurance regulation.

. The test for determining pre-emption of a municipal ordinance by state law is established in Jefferson v. State, 527 P.2d 37, 43 (Alaska 1974) (“The question rests on whether the exercise of authority has been prohibited to municipalities. The prohibition must be either by express terms or by implication such as where the statute and ordinance are so substantially irreconcilable that one cannot be given its substantive effect if the other is to be accorded the weight of law.”) (footnote omitted).