IN THE COMMONWEALTH COURT OF PENNSYLVANIA
State Farm Mutual Automobile :
Insurance Company, : No. 167 C.D. 2015
: Submitted: August 14, 2015
Petitioner :
:
v. :
:
Commonwealth of Pennsylvania, :
Insurance Department, Theresa D. :
Miller, Acting Insurance :
Commissioner, :
:
Respondents :
BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge
HONORABLE P. KEVIN BROBSON, Judge
HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge
OPINION BY
SENIOR JUDGE FRIEDMAN FILED: September 24, 2015
State Farm Mutual Automobile Insurance Company (State Farm)
appeals from the January 15, 2015, order of the Insurance Department (Department),
Theresa D. Miller, Acting Insurance Commissioner (Commissioner),1 which
determined that State Farm violated what is commonly referred to as Act 68,2 by
improperly cancelling Alanna Dougherty’s automobile insurance policy. The
Commissioner concluded that Act 31 of the Crimes Code (Act 31), 18 Pa. C.S.
1
At the time of the order, Michael F. Consedine was the Commissioner.
2
Act of May 17, 1921, P.L. 682, added by the Act of June 17, 1998, P.L. 464, as amended,
40 P.S. §§991.2001-991.2013.
§6310.4(d), prohibits an insurance company from cancelling an automobile insurance
policy based on a license suspension imposed for underage alcohol consumption. We
affirm.
On May 2, 2014, Dougherty applied for personal automobile insurance
with State Farm. The application contained the following question: “During the
past 6 years have you, the applicant, any household member, or any regular driver
had a license to drive or registration suspended, revoked, or refused?” (State Farm
Ex. 2.) Dougherty answered “no.” (N.T., 8/21/14, at 47.) Effective May 2, 2014,
State Farm issued a temporary binder of insurance to Dougherty.
Upon inspection of Dougherty’s driver’s license history, State Farm
learned that Dougherty’s driver’s license had been suspended for 90 days pursuant to
18 Pa. C.S. §6310.4(a), for underage consumption of alcohol in violation of 18 Pa.
C.S. §6308.3 On May 15, 2014, State Farm issued a notice of cancellation of
Dougherty’s policy effective June 3, 2014. State Farm provided the following reason
for cancellation: “The driver’s license of Alanna Dougherty has been suspended or
revoked within the past 36 months.” (State Farm Ex. 1.) 4
3
The violation did not involve operation of a motor vehicle.
4
Upon terminating Dougherty’s policy, State Farm offered Dougherty insurance coverage
through State Farm Fire and Casualty Company (State Farm Fire), at a higher cost, and Dougherty
accepted the policy. (N.T., 8/21/14, at 43-44.)
Keith Dougherty, Dougherty’s father, claiming to be Dougherty’s lawful assignee, has filed
a notice of intervention with this court seeking a refund on the State Farm Fire policy and damages.
Before the Commissioner, Mr. Dougherty similarly alleged that he was the lawful assignee of his
daughter. The Commissioner determined that the assignment was irrelevant to the proceedings and
informed Mr. Dougherty that he could challenge the ruling on appeal. (Id. at 13-14). Mr.
(Footnote continued on next page…)
2
Dougherty requested that the Department review the policy cancellation.
The Department concluded that State Farm violated Act 68, governing cancellation of
an automobile insurance policy within the first 60 days.
State Farm appealed, requesting a formal hearing pursuant to section
2009(d) of Act 68, 40 P.S. §991.2009(d). The Commissioner appointed Melinda
Fisher Kaufman, Esq., to conduct a hearing, which occurred on August 21, 2014.
On January 15, 2015, the Commissioner issued an adjudication
concluding that State Farm’s decision to cancel Dougherty’s policy violated Act 68.
The Commissioner concluded that in accordance with this court’s previous decisions
in Erie Insurance Company v. Department of Insurance, 684 A.2d 1115 (Pa. Cmwlth.
1996), and State Farm Mutual Automobile Insurance Company v. Department of
Insurance, 598 A.2d 1344 (Pa. Cmwlth. 1991), the provision in Act 31, 18 Pa. C.S.
§6310.4(d), specifically precludes State Farm from cancelling Dougherty’s insurance
policy based on the suspension of her driver’s license for underage alcohol
consumption.
Additionally, the Commissioner determined that State Farm was
precluded from arguing that it was justified in cancelling Dougherty’s insurance
because she misrepresented whether her license had been suspended. The
(continued…)
Dougherty, however, does not challenge or otherwise address the Commissioner’s ruling in his
notice of intervention filed with this court, and this court will only address issues raised by the
parties. See Weigand v. Weigand, 337A.2d 256, 257-58 (Pa. 1975).
3
Commissioner concluded that because State Farm’s notice of cancellation relied
solely on Dougherty’s license suspension, State Farm could not now argue
misrepresentation as a reason for the policy cancellation.
Thereafter, State Farm filed a petition for reconsideration, which the
Commissioner denied. State Farm then filed a petition for review with this court.5
Initially, State Farm contends that this court’s decisions in Erie
Insurance and State Farm, must be reviewed and reconsidered in light of the
Commissioner’s subsequent decision in In re Erie Insurance Exchange (Erie/Pursh),
No. 96-10-012 (1997). We disagree.
An insurer may cancel an automobile policy in accordance with the
statutory provisions of Act 68. Act 68 substantially reenacted Act 78,6 and contains
essentially the same restrictions on termination of automobile insurance policies.
Section 2002(c)(3) of Act 68, 40 P.S. §991.2002(c)(3), provides in part:
(c) Nothing in this article shall apply:
***
(3) To any policy of automobile insurance which has been
in effect less than sixty (60) days, unless it is a renewal
policy, except that no insurer shall decline to continue in
5
Our review is limited to determining whether constitutional rights were violated, whether
an error of law was committed, and whether necessary findings of fact are supported by substantial
evidence. Section 704 of the Administrative Agency Law, 2 Pa. C.S. §704.
6
Act of June 5, 1968, P.L. 140, formerly 40 P.S. §§1008.1-1008.11, repealed by the Act of
June 17, 1998, P.L. 464.
4
force such a policy of automobile insurance on the basis of
the grounds set forth in section 2003(a) and except that if an
insurer cancels a policy of automobile insurance in the first
sixty (60) days, the insurer shall supply the insured with a
written statement of the reason for cancellation.
Section 2003(a) of Act 68, 40 P.S. §991.2003(a), sets forth 14 reasons for which
termination is prohibited. A license suspension is not a prohibited reason for
terminating a policy within 60 days.
However, Act 31 prohibits an insurer from penalizing, in any way, a
person convicted for underage alcohol consumption. Act 31 states that the penalty
for underage use of alcoholic beverages is a license suspension, 18 Pa. C.S.
§6310.4(a). In addition to the imposition of a license suspension, Act 31 further
provides:
(d) Insurance Premiums. – An insurer shall not
increase premiums, impose any surcharge or rate penalty, or
make any driver record point assignment for automobile
insurance, nor shall an insurer cancel or refuse to renew an
automobile insurance policy on account of a suspension
under this section.
State Farm argues, however, that the Department’s regulations provide
that “for purposes of review by the Department in order to determine whether the
action by the insurer is in violation of [Act 68], the cancellation shall be considered to
be a refusal to write.” 31 Pa. Code §61.10(c). State Farm maintains that because it
cancelled Dougherty’s insurance within 60 days, the cancellation is considered a
refusal to write in accordance with 31 Pa. Code §61.10(c). Although 18 Pa. C.S.
§6310.4 does not permit an insurer to “cancel or refuse to renew an automobile
5
insurance policy on account of a suspension under this section,” State Farm argues
that the prohibition does not apply to a refusal to write.
This court previously addressed this argument in State Farm. In State
Farm, we agreed with the Department that “Act 31, unlike Act 78, makes no
distinction between cancellations before or after sixty days. Act 31’s blanket
prohibition against cancellation necessarily includes precluding cancellation within
sixty days.” 598 A.2d at 1346. The suspension of Dougherty’s operating privilege
for underage alcohol consumption is not a permissible basis for the cancellation of
her automobile insurance policy under 18 Pa. C.S. §6310.4(d). See Erie Insurance,
684 A.2d at 1118.
Nonetheless, State Farm argues that this court should rely on the
Commissioner’s decision in Erie/Pursh, wherein the Commissioner determined that
Erie Insurance Exchange did not violate Act 78, the predecessor to Act 68, when it
refused to write an automobile insurance policy for Pursh. We initially note “that
administrative decisions have no precedential value before this [c]ourt.” State Farm
Mutual Automobile Insurance Company v. Department of Insurance, 720 A.2d 1071,
1074 n.5 (Pa. Cmwlth. 1998). Additionally, this court has already decided the issue
presented in this case and “[t]he rule of stare decisis declares that for the sake of
certainty, a conclusion reached in one case should be applied to those which follow, if
the facts are substantially the same, even though the parties may be different.”
Commonwealth v. Tilghman, 673 A.2d 898, 903 n.9 (Pa. 1996).
6
We also note that Erie/Pursh does not mention this court’s decisions in
either Erie Insurance or State Farm. Moreover, in Erie/Pursh the insurance company
did not issue a temporary binder as it did in this case. In Erie/Pursh, the
Commissioner specifically stated that “[b]ecause of [Erie Insurance Exchange’s]
refusal to issue a binder for or subsequently write a policy for Mr. Pursh this case is
not controlled by Act 78 or 18 Pa. C.S. §6310.4(d).” Erie/Pursh at 7. Thus,
Erie/Pursh is factually distinguishable.
Finally, State Farm contends that the Commissioner erred in concluding
that Dougherty’s misrepresentation of her driving record was not material to State
Farm’s review of her application. In accordance with section 2008(b) of Act 68, 40
P.S. §991.2008(b) (emphasis added), an insurer who refuses to issue a policy shall
give the applicant written notice stating “the specific reason or reasons of the insurer
for refusal to write a policy for the applicant.” State Farm specifically notified
Dougherty that it was cancelling her policy because of the suspension, not because of
a misrepresentation. Thus, the Commissioner did not err.
Accordingly, we affirm.
___________________________________
ROCHELLE S. FRIEDMAN, Senior Judge
7
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
State Farm Mutual Automobile :
Insurance Company, : No. 167 C.D. 2015
:
Petitioner :
:
v. :
:
Commonwealth of Pennsylvania, :
Insurance Department, Theresa D. :
Miller, Acting Insurance :
Commissioner, :
:
Respondents :
ORDER
AND NOW, this 24th day of September, 2015, we hereby affirm the
January 15, 2015, order of the Insurance Department, Theresa D. Miller, Acting
Insurance Commissioner.
___________________________________
ROCHELLE S. FRIEDMAN, Senior Judge