Court Opinion

ID: 9795902
Source: CourtListenerOpinion
Date Created: 2023-08-31 03:41:44.618527+00
Date Added: 2024-06-11T08:40:33.209555
License: Public Domain

Justice RICE
dissenting:
I respectfully dissent. The majority concludes that the Insurance Commissioner may have the implied statutory authority to award attorney fees to several intervenors. Because I find no basis for such authority in this case, I would affirm the court of appeals.
I. FACTS
This case arises out of the 1999 conversion of Rocky Mountain Hospital and Medical Service, d/b/a Blue Cross and Blue Shield of Colorado, from a non-profit to a for-profit corporation. Petitioners, Taylor Hawes and the Colorado Health Care Conversions Project, and their respective attorneys, Kelly, Haglund, Garnsey and Kahn, LLC and the Colorado Center on Law and Policy (collectively, “Petitioners”), seek recovery of attorney fees in connection with their work on the conversion.
In 1996, Blue Cross began planning for a conversion from a non-profit to a for-profit corporation. In response, the General Assembly enacted legislation designed to regulate such a conversion (“conversion statute”). Ch. 300, sec. 1, § 10-16-324,1996 Sess. Laws 1861. The legislation required, among other things, that the converting corporation pay an amount equal to its fair market value to a newly created charitable entity which would be “dedicated to promoting or serving the health care needs of the citizens of Colorado.” § 10-16-324(4)(e)(I)(F), 3 C.R.S. (2002). Petitioners actively lobbied for the passage of the bill and were apparently successful in getting certain provisions into the final version of the legislation.
Over' the course of the next three years, Blue Cross worked to create an acceptable conversion plan. During that time, Petitioners were actively involved in the process by, among other things, participating in public *1025hearings, consulting experts, presenting information to the Commissioner.
On November 5, 1999, the Commissioner of Insurance approved the Blue Cross conversion plan. Blue Cross converted into a for-profit entity and issued shares of stock, all of which were acquired by Anthem West, Inc., a wholly owned subsidiary of Anthem Insurance Companies, Inc. Pursuant to the conversion statute, Anthem paid $155 million (the fair market value of Blue Cross) to the Caring for Colorado Foundation (the “Foundation”), a nonprofit corporation created to receive and use the funds to serve the health care needs of Colorado citizens.
After the conversion, Petitioners applied for an award of attorney fees to be paid from the $155 million which Anthem contributed to the Foundation. Petitioners argued that this amount was a common fund which had been created and enlarged, at least in part, because of their work. Specifically, Petitioners contend that their efforts enhanced the common fund by $55 million. Based on this estimate, Petitioners requested attorney fees of $2.75 million, a figure equal to five percent of this enhancement. In addition, Petitioners requested expert witness fees and out-of-pocket costs totaling approximately $78,000.1
Petitioners contend that their efforts increased the amount of consideration paid by Anthem to the Foundation; that they were instrumental in ensuring that costs of conversion were paid by Blue Cross, rather than the Foundation; and that they caused significant improvements in the governance and organization of the Foundation. For the purpose of this proceeding, we assume that these claims are true.
The Commissioner, after examining the scope of an administrative agency’s equitable powers, concluded that he did not have the statutory authority to award attorney fees to Petitioners. The court of appeals agreed, rejecting Petitioners’ contention that the authority to award attorney fees should be implied from the statute. Hawes v. Colo. Div. of Ins., 45 P.3d 763 (Colo.App.2001).
We granted certiorari to address the question of whether the court of appeals erred when it affirmed the Insurance Commissioner’s conclusion that he was without authority to award attorney fees under the common fund doctrine.
II. THE SCOPE OF AGENCY AUTHORITY
An administrative agency only has the power and authority conferred upon it by the General Assembly; acts which exceed the scope of its delegated powers are void. Flavell v. Dept. of Welfare, 144 Colo. 203, 355 P.2d 941 (1960); City and County of Denver v. Gibson, 37 Colo.App. 130, 546 P.2d 974 (1975).
In addition, an administrative agency is not a court; it is not vested with the same broad equitable power which a court possesses. See 73 C.J.S. Public Administrative Law and Procedure § 33 (1983) (“As a general rule, administrative agencies have no general or inherent judicial powers”); Admiral-Merchants Motor Freight, Inc. v. United States, 321 F.Supp. 353, 359 (D.Colo.1971) (“[A] legislative tribunal cannot exercise common law or equity jurisdiction unless this authority is expressly granted by the Congress.”); Feistman v. Comm’r, 587 F.2d 941 (9th Cir.1978) (“When the Tax Court was an administrative agency, it was without the ancillary equitable powers ordinarily exercised by a true court.”); Ramos v. Dist. of Columbia Dept, of Consumer and Regulatory Affairs, 601 A.2d 1069, 1073 (D.C.1992) (“Administrative law judges only possess narrowly defined statutory and regulatory powers; they do not have the traditional equity power of courts to formulate remedies.”).
Finally, an award of attorney fees under the common fund doctrine is an equitable remedy. See Kuhn v. State, 924 P.2d 1053, 1059 (Colo.1996). The doctrine is an exception to the general rule that each party normally pays his own attorney fees and costs and is grounded in the equitable principles of quantum meruit and unjust enrichment. Id.
*1026Therefore, because administrative agencies lack inherent or common law authority to bestow equitable remedies, and the power to grant attorney fees under the common fund doctrine is, undoubtedly, an equitable power, the Insurance Commissioner only has the authority to award attorney fees in this case if the General Assembly has expressly provided the authority or if such authority can be reasonably implied. I find neither express nor implied authority here.
A. Express Authority
Petitioners concede that the Insurance Commissioner does not have express authority to award attorney fees in this ease.
The office of the Insurance Commissioner was established by the Colorado Constitution. Colo. Const, art. IV, § 23. The general powers and duties of that office are enumerated in section 10-1-108. § 10-1-108, 3 C.R.S. (2002). In addition to the general powers and duties listed in section 10-1-108, the Insurance Commissioner (and the corresponding Division of Insurance) are vested with additional powers and duties in certain circumstances specified throughout C.R.S. Title 10. Finally, the Commissioner is subject to the provisions of the State Administrative Procedure Act. §§ 24-4-101 to -108, 7A C.R.S. (2002).
There is nothing in any of these governing documents — Article IV of the state constitution, Title 10 of the legislative code, or the Administrative Procedure Act — which expressly authorize the Insurance Commissioner to award attorney fees in this context.
The lack of express authority is significant when one considers that the General Assembly has, on frequent occasions, seen fit to expressly authorize other administrative agencies to award attorney fees. See, e.g., § 24-50-125.5, 7A C.R.S. (2002) (state personnel board has authority to award attorney fees to prevailing party where action was brought frivolously, in bad faith, maliciously, or as means of harassment); § S4r-33-124(5), 9 C.R.S. (2002) (mined land reclamation board has authority to award attorney fees as it “deems just and proper”); § 34-60-118.5(6), 9 C.R.S. (2002) (oil and gas conservation commission may award cost of attorney fees to the prevailing party in an administrative proceeding). If the General Assembly intended to empower the Insurance Commissioner to award attorney fees, it knew well how to do so.
B. Implied Authority
Because there is no express authority in this case, the next question is whether the power to award attorney fees may be reasonably implied from the statute. Unlike the majority, I conclude that it may not.
Powers not expressly granted to a regulatory agency will be implied only if such powers are necessary to carry out the agency’s function. Colorado State Bd. of Land Comm’rs v. Colorado Mined Land Reclamation Bd., 809 P.2d 974, 983 (Colo.1991) (“A statutory delegation of authority ... confers ‘all implied powers reasonably necessary to the proper exercise of the delegated power.’ ” (quoting Beaver Meadows v. Bd. of County Comm’rs, 709 P.2d 928, 932 (Colo.1985))); State Farm Mut. Auto. Ins. Co. v. Barnes, 41 Colo.App. 380, 585 P.2d 929 (1978); 2 Am.Jur.2d Administrative Law § 62 (1994).
As such, the resolution of this case depends on the definition of the term, “necessary.” Courts disagree on what powers will be deemed necessary to fulfill an agency’s function. See 2 Am.Jur.2d Administrative Law § 62 (1994); compare Lake County Bd. of Review v. Prop. Tax Appeal Bd., 119 Ill.2d 419, 116 Ill.Dec. 567, 519 N.E.2d 459, 463 (1988) (“[T]he word ‘necessary’ is a word of great flexibility and may mean ... ‘expedient’ or ‘reasonably convenient.’ Further, wide latitude must be given to administrative agencies in fulfilling their duties.”) and Univ. Police Officers Union, Local 567 v. Univ. of Nebraska, 203 Neb. 4, 277 N.W.2d 529 (1979) (“The authority which is necessary [for an administrative agency] to accomplish the pirn-poses of an act must be narrowly construed.”).
In the context of this case, an understanding of what is “necessary” in order for the commissioner to fulfill his function is best gained by reference to the conversion statute itself. By analyzing the Commissioner’s statutory responsibilities, we can determine *1027whether the power to award attorney fees, over and above that expressly provided by the statute, was “necessary” to accomplish the purposes of the Act.
In this case, the Insurance Commissioner’s function was to ensure that the conversion plan was accomplished in accordance with statutory requirements and not contrary to the interests of subscribers, contract holders, and the general public. See § 10-16-324(9), 3 C.R.S. (2002). Throughout the conversion process, the statute assigns the' Commissioner an integral role.
First, the statute requires the converting corporation to file a plan of conversion with the Commissioner. § 10-16-324(3). Subsection (4) of the statute describes the information that must be contained within the conversion plan. § 10-16-324(4). Most importantly, the plan must provide for the payment of reasonable consideration to a charitable “qualifying entity” for the purpose of “serving the health care needs of the citizens of Colorado.” § 10 — 16— 324(4)(e)(I)(F). The amount of payment is deemed to be reasonable if consideration, determined by the Commissioner to be equal to the fair market value of the corporation, is conveyed to the qualifying entity. § 10-16-324(4)(e)(I)(A). In addition, the qualifying entity must be constructed so as to avoid immediate dilution of its stock ownership and ensure its independence from the converting corporation. § 10-16-324(4)(e)(I)(D), (E).
Next, the corporation must provide notice regarding the proposed conversion to all its current subscribers as well as the public at large. § 10-16-324(6). The form and manner of the notice must be approved by the Commissioner. Id.
Finally, the Commissioner must hold a hearing regarding the proposed conversion. § 10-16-324(7). Within sixty days following the hearing, the Commissioner must issue an order approving or disapproving the proposed plan or approving an amended plan. Id.
The Commissioner has significant discretion to ensure that the conversion plan is “fair and reasonable” and not contrary to the interests of “subscribers, contract holders, and the public.” § 10-16-324(9)(b). Because of the complexity involved in a conversion, the General Assembly recognized that the Commissioner and his staff may be ill-equipped to competently and efficiently fulfill the Commissioner’s statutory duties. To alleviate this concern, the legislature created a mechanism to allow the Commissioner to obtain advice from outside experts, including attorneys, at the expense of the corporation:
The commissioner may retain, upon notice to the corporation, any qualified expert, such as attorneys, accountants, actuaries, and financial analysts, not otherwise a part of the commissioner’s staff, to assist in reviewing the proposed plan, with such reasonable expenses incurred during the review to be borne by the corporation.
§ 10-16-324(5), 3 C.R.S. (2002) (emphasis added).
Throughout the conversion process, the Commissioner took advantage of this provision and received the advice of several experts. The Commissioner was assisted by the staff of the Division of Insurance and attorneys within the Attorney General’s office, he received reports from a private actuary and a private financial consultant, and he was advised throughout the proceedings by two certified public accountants (collectively, “Testimonial Staff’).
In light of the fact that the General Assembly specifically provided an avenue for the Commissioner to obtain exactly the sort of expertise and advice the intervenors provided, I cannot conclude that the power to award attorney fees to the intervenors, over and above the fees and costs of the Testimonial Staff, was necessary to allow the Commissioner to fulfill the express mandate of the statute.
In my view, Colorado courts have generally been reluctant to imply administrative agency authority in the absence of clear legislative intent. See, e.g., Bd. of Med. Exam’rs v. Duhon, 895 P.2d 143 (Colo.1995) (Board of Medical Examiners did not have authority to issue subpoena duces tecum other than in the two situations specifically mentioned in the statute); Telluride Reg’l Airport Auth. v. Bd. of Equalization, 789 P.2d *1028201 (Colo.App.1989) (State Board of Equalization did not have authority to revise determination of tax exemption made by county board of equalization); State Farm Mwt. Auto. Ins. Co. v. Barnes, 41 Colo.App. 380, 585 P.2d 929 (1978) (where statute vested authority in the Insurance Commissioner to approve or disapprove a proposed rate increase, Commissioner was without express or implied authority to set a cap on the maximum allowable rate); City and County of Denver v. Gibson, 37 Colo.App. 130, 546 P.2d 974 (1976) (where city charter authorized Civil Service Commission to conduct and supervise tests of eligible candidates for Police Department vacancy, the Commission did not have the authority to order that a certain candidate be promoted); Bd. of Barber Exam’rs v. White, 29 Colo.App. 471, 485 P.2d 928 (1971) (where statute provided for Board control over licensing of barbers, the Board was without authority to issue rules and regulations concerning product demonstrations and training classes).
The majority, however, shows no reluctance to imply broad agency authority in this case. Although the General Assembly established a procedure to provide expert advice to the Commissioner, the majority concludes that this procedure may have been insufficient and that “[sjeparate public interest representation may yield an improved conversion.” Maj. Op. at 1022-1023. However, the issue is not whether the intervenors’ representation may have been useful or helpful; the issue is whether it was necessary for the Commissioner to award them attorney fees, over and above the fees awarded to the Testimonial Staff, in order to accomplish the purpose of the statute.
Moreover, in its eagerness to expand the implied powers of the Insurance Commissioner, the majority fails to provide a discernible standard for determining whether an agency power is “necessary.”2 Instead, the majority simply urges the Commissioner to recognize that the proceeding is “equitable” and to “account for the public interests at stake.” Maj. Op. at 1023. In addition, the Commissioner is advised that the power to award fees is necessary if the intervenors’ work “provided as great or a greater benefit to the conversion proceeding, than did the Testimonial Staff.” Id. This test for determining the scope of an agency’s authority has no support in the language of the statute, its legislative history, or any prior caselaw; rather, this is nothing more than judicial fiat.
III. CONCLUSION
The majority’s broad reading of an agency’s implied powers makes it necessary to remand the case to the Insurance Commissioner for additional factual findings. Because I would continue to adhere to a more strict interpretation of an agency’s implied powers, I believe no such remand is necessary. Based on the record before us, I would rule, as a matter of law, that the Insurance Commissioner lacked authority, either express or implied, to award attorney fees to the Petitioners.
I am authorized to state that Justice KOURLIS joins in this dissent.

. The attorney fees, expert witness fees, and out-of-pocket expenses requested by Petitioners includes compensation for lobbying before the legislature prior to the enactment of the conversion statute.

. While I agree with the majority that the scope of an agency’s implied powers will depend, to some extent, on the particular facts of the case, 1 would not abdicate this court's responsibility to define the limits of an agency’s authority. See Social Security Bd. v. Nierotko, 327 U.S. 358, 369, 66 S.Ct. 637, 90 L.Ed. 718 (1946) ("An agency may not finally decide the limits of its statutory power. That is a judicial function.”).