Nationwide Mutual Insurance v. Foster

SILVESTRI, Senior Judge,

dissenting.

This case arose out of the non-renewal by Nationwide Mutual Insurance Company (Nationwide) of the automobile insurance policies of James and Carol Berry (Berry) and John Hronakes (Hronakes). The reason given for non-renewal was that a car covered under each of the policies was involved in two accidents within 36 months. The Berrys had on separate occasions struck a guardrail and a pole while the Hronakes’ daughter had on separate occasions slid into a median strip and rear-ended another car. It was undisputed at the hearing that Nationwide did not have to make any payments on the first accidents because in the Berry’s case the amount of damage was less than the deductible and in the Hronakes’ case, there was no damage. Following the hearings, the Insurance Department found *594that Nationwide had violated Section 1008.3(b) of the Insurance Company Law, 40 P.S. § 1008.3(b) by cancelling the policies. The Insurance Commissioner affirmed this decision.1 Finally, the Insurance Commissioner imposed a $1,000 fine on Nationwide in connection with the Hronakes case but not for the Berry case. Nationwide challenges both the Insurance Commissioner’s application of § 1008.3(b) and imposition of the fine.

The relevant statute in question states:

No insurer shall cancel or refuse to renew a policy of automobile insurance on the basis of one accident within the thirty-six month period prior to the upcoming anniversary date of the policy.
40 P.S. § 1008.3(b)

In finding that Nationwide had violated this statute, the Insurance Commissioner interpreted “accident” as being limited to occasions when the insurer has suffered a loss through having to pay a claim or set up a reserve. Under this interpretation, if no payment was made, an “accident” under § 1008.3(b) has not occurred. Since Nationwide only had to make one payment for the Berrys and Hronakeses, the Commissioner felt that only one accident had occurred within the relevant 36-month period and that § 1008.3(b) had been violated.

Section 1903(a) of the Statutory Construction Act of 1972, 1 P.S. § 1903(a) states:

Words and phrases shall be construed according to rules of grammar and according to their common usage: but technical words and phrases and such others as have acquired a peculiar and appropriate meaning or are defined in this part, shall be construed according to such peculiar and appropriate meaning or definition.

See also In re Estate of Stegmaier, 424 Pa. 4, 225 A.2d 566 (1967); Township of Derry, Dauphin County v. Swartz, 21 Pa.Commonwealth Ct. 587, 346 A.2d 853 (1975). “Accident” *595has not been defined in the statute. Therefore, if “accident” has a common meaning it must be used when interpreting the statute. The majority seems to feel that “accident” has several common meanings. However, the various definitions given for this term all essentially refer to an “accident” as encompassing an unexpected or unplanned event. This is an appropriate common meaning of the term.

Black’s Law Dictionary 14 (5th ed. 1979) defines an “accident” in the insurance context as: an event happening without any human agency, or, if happening through such agency, an event which, under the circumstances, is unusual and not expected by the person to whom it happens; ... in its common signification the word means an unexpected happening without intention or design. A number of cases provide similar definitions for “accident.” See Hinkle v. H.J. Heinz Company, 462 Pa. 111, 116, 337 A.2d 907, 910 (1975) (That which distinguishes an accident from other events is the element of being unforeseen, quoting Lacey v. Washburn & Williams Company, 309 Pa. 574, 578, 164 A. 724, 725 (1933)); Springfield Township v. Indemnity Insurance Company of North America, 361 Pa. 461, 463, 64 A.2d 761, 762 (1949) (An accident is an occurrence which proceeds from an unknown cause, or which is an unusual effect of a known cause, and hence unexpected and unforeseen, quoting Lacey v. Washburn & Williams Company, 309 Pa. 574, 578, 164 A. 724, 725 (1933)); Gilbert v. Aronimink Country Club, 214 Pa.Superior Ct. 70, 74, 251 A.2d 724, 726 (1969) (Indicates that the classic definition of “accident” is an event that takes place without one’s foresight or expectation; an undesigned, sudden and unexpected event; chance; contingency.); Lawrence v. Delmont Fuel Company, 193 Pa.Superior Ct. 65, 69, 163 A.2d 684, 686 (1960) (Adopts Webster’s definition as the common-meaning of the term.); Bethlehem Steel Corporation v. Yuhas, 8 Pa.Commonwealth Ct. 302, 306, 303 A.2d 266, 268 (1973)s (An accident is any unforeseen, untoward happening which was not to be reasonably anticipated.)

*596Our search of various sources reveals no indication that an accident must result in payment of a claim or setting up a reserve before it is deemed an “accident”. The question then becomes one of whether the Insurance Commissioner has the power to add that restriction not envisioned by the statute. For the following reasons, that question must be answered in the negative.

Administrative law and procedure affords power to administrative agencies to interpret or construe statutes which they are called upon to administer or enforce. Their interpretations are entitled to consideration and it has even been held, to great weight. Ordinarily, administrative interpretations will be held controlling and followed unless they are clearly wrong or unauthorized. Masland v. Bachman, 478 Pa. 280, 374 A.2d 517 (1977); Spicer v. Department of Public Welfare, 58 Pa.Commonwealth Ct. 558, 428 A.2d 1008 (1981). However, administrative interpretations are not final or binding on the courts, at least where they are plainly erroneous and inconsistent with the statute.

The meaning of “accident” is clear and unambiguous when one considers that the common feature in the various definitions of the term is that the event be unplanned or unexpected. By limiting an “accident” to those occasions where an insurance company must pay a claim or set up a reserve, the Commissioner is improperly adding terms which do not exist in the statute. Courts have struck down similar attempts by agencies to add terms to statutes. Volunteer Firemen’s Relief Association of Reading v. Minehart, 425 Pa. 82, 227 A.2d 632 (1967); Commonwealth v. Di Meglio, 385 Pa. 119, 122 A.2d 77 (1956); McKinley v. State Board of Funeral Directors, 11 Pa.Commonwealth Ct. 241, 313 A.2d 180 (1973).

Weight is only to be given to administrative interpretation when the statute is ambiguous; however, interpretations are not controlling or persuasive if the statute is clear. In re Loeb’s Estate, 400 Pa. 368, 373, 162 A.2d 207, 211 (1960); Federal Deposit Insurance Corporation v. Board of Finance and Revenue, 368 Pa. 463, 84 A.2d 495 (1951). *597Since the statute under consideration is unambiguous, interpretation is improper and the Commissioner’s interpretation of “accident” is neither entitled to any weight nor is it persuasive.

Courts have the power to review administrative interpretations of statutes and may set aside interpretations which are the result of a “misconstruction” of a statute or which are clearly erroneous. In Peoples Natural Gas Company v. Public Utility Commission, 116 Pa.Commonwealth Ct. 512, 542 A.2d 606 (1988) we determined that an agency’s failure to interpret a statute according to its plain-meaning was reversible abuse of discretion. The Insurance Commissioner’s definition of “accident” as being limited to events where the insurance company has to pay a claim or set up a reserve is clearly erroneous, an abuse of discretion, and the addition of a restriction that is not present in the statute. As such it constitutes impermissible and unconstitutional law-making and must be reversed.2

Accordingly, I respectfully dissent and I would reverse the orders of the Insurance Commissioner.

. It should be noted that the Berry case was brought before the Hronakes case and a decision was not handed down until shortly before the Hronakes' hearing.

. In view of our holding, we need not determine whether Nationwide's statistical data should have been considered and also would hold that the imposition of the §1,000 fine on Nationwide was improper.