In Re Rate Filing of Blue Cross Hospital Service, Inc.

Haden, Chief Justice,

dissenting:

This case involved an appeal by the West Virginia Insurance Commissioner from a final order of the Circuit Court of Kanawha County reversing the Insurance Commissioner’s administrative decision which had denied an application for rate increase sought by Blue Cross Hospital Service, Inc.

From beginning to end, the opinion of the majority fails to recognize that this appeal is governed by the *735State Administrative Procedure Act, W. Va. Code 1931, 29A-1-1, et seq., as amended. Decisions of the Insurance Commissioner in contested cases are subject to the Act. See Chapter 29A, id., Article 1, Section 1. Any party adversely affected by such decisions may have judicial review of the Commissioner’s determination as a matter of right. See Chapter 29A, id., Article 5, Section 4. Upon review:

“(g) The court may affirm the order or decision of the agency or remand the case for further proceedings. It shall reverse, vacate or modify the order or decision of the agency if the substantial rights of the petitioner or petitioners have been prejudiced because the administrative findings, inferences, conclusions, decision or order are:
“(1) In violation of constitutional or statutory provisions; or
“(2) In excess of the statutory authority or jurisdiction of the agency; or
“(3) Made upon unlawful procedures; or
“(4) Affected by other error of law; or
“(5) Clearly wrong in view of the reliable probative and substantial evidence on the whole record; or
“(6) Arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion.” (Emphasis supplied). 29A-5-4(g), id.

Implicitly recognizing those standards, the court below determined that the principal issue in the case was “the scope or extent of the administrative inquiry permitted under the statutes upon ... a rate application.” The trial court was very concerned with the Commissioner’s exercise of authority under W. Va. Code 1931, 33-24-6, as amended, to inquire into underlying causes which brought about the Blue Cross rate application and to use those causes in making a final administrative decision that the rates applied for were “excessive”. Dis*736cussing the Commissioner’s method of arriving at his decision, the circuit court opined:

“Undoubtedly, applying the established rule of accepting as true those factual findings made by the administrative tribunal which are supported by credible evidence, there are several administrative practices involved in this Plan which are properly criticized, and some of those practices, according to the Insurance Commissioner (also supported by evidence in the record), have cost the Plan significant amounts of money, and will continue to do so unless definite action is taken by Blue Cross.
“Based upon the foregoing findings, the Insurance Commissioner concluded that the proposed rates were excessive, within the meaning of Code, 33-24-6(c). While the Commissioner’s reasoning in this regard is persuasive, I do not believe that it was the intent of the Legislature, under Code, 33-24-6(c), to have the Commissioner correct such abuses upon a rate filing application.”

This is the crux of the lower court’s decision which held that the Insurance Commissioner’s decision exceeded the statutory authority of that office. Accordingly, the trial court excluded from its consideration all evidence adduced by the Commissioner detailing conflicts of interest, administrative practices, and contractual obligations of the Blue Cross Plan which had placed the Blue Cross Plan in a precarious financial position and necessitated the application for the rate increase. Rejecting that type of evidence as collateral and beyond the legitimate scope of inquiry, the trial court held:

“In view of the limited purpose of the hearing before the Commissioner upon the rate filing, as herein discussed, I am of opinion that the evidence in this record clearly preponderates in favor of the need for an increase in rates.”

On this appeal, the entire Court was of the opinion to and did reverse the legal conclusion of the circuit court *737that the Commissioner had exceeded the authority delegated to his office by the Legislature through the enactment of W. Va. Code 1931, 33-24-1, et seq. This holding is reflected in syllabus point 2. and supported by the salutary decision of Thaler v. Stern, 44 Misc.2d 278, 253 N.Y.S.2d 622 (1964).

Now, having concluded that the trial court was wrong and that the Insurance Commissioner did have the authority to inquire into those factors which caused Blue Cross to seek a rate increase and to employ those factors as a factual basis for a determination that the rate increase applied for was excessive, it astounds me that the Commissioner’s decision was not reinstated by this Court.

In reviewing factual determinations of the administrative agency, this Court should not reverse such determinations unless they are, in the words of the statute: “clearly wrong in view of the reliable, probative and substantial evidence on the whole record ....” W. Va. Code 1931, 29A-5-4(g)(5)., id. This Court recently recognized and held that it would not reverse a finding of fact by an agency whose determinations were subject to the State Administrative Procedure Act unless it was contrary to the evidence or based upon a mistake of law “In other words, the finding must be clearly wrong to warrant our ‘judicial interference.’” Billings v. Civil Service Commission, 154 W. Va. 688, 692, 178 S.E.2d 801, 804 (1971). Accord: Brown v. Civil Service Commission, 155 W. Va., 186 S.E.2d 840, 846 (1972); Caldwell v. Civil Service Commission, 155 W. Va., 184 S.E.2d 625, 628 (1971); Appeal of Prezkop, 154 W. Va. 759, 763, 179 S.E.2d 331, 334 (1971). Without in any manner inpugning the integrity of the Commissioner’s decision, i.e., as being “arbitrary or capricious or precarious or characterized by abuse of discretion or clearly unwarranted exercise of discretion”, this Court gave absolutely no persusasive weight to the twenty-eight page opinion of the Insurance Commissioner in which the Commissioner weighed evidence, made extensive findings of fact and concluded *738as a matter of law that the rates applied for by Blue Cross were excessive within the meaning of W. Va. Code, 33-24-6(c), as amended.

Besides doing grievous harm to the many thousand subscribers to the Blue Cross Plan who now must pay increased premiums for hospital and medical insurance because of the uncontrollable costs and other abuses found and condemned by the Commissioner, this decision does great violence to the principles of administrative law recognized and applied by this Court consistently through the years. West Virginia law unquestionably requires that a court find an administrative agency’s factual determination “clearly (or “plainly”) wrong” before it may reverse that body’s decision on factual matters. See, for example, Mountain Trucking Co. v. Daniels, W. Va., 197 S.E.2d 819 (1973); Brown v. Civil Service Commission, supra; Barnett v. Workmen’s Compensation Commissioner, 153 W. Va. 796, 172 S.E.2d 698 (1970); Wilhite v. Public Service Commission, 150 W. Va. 747, 149 S.E.2d 273 (1966); Partlow v. Workmen’s Compensation Commissioner, 150 W. Va. 416, 146 S.E.2d 833 (1966); Dombrosky v. State Compensation Director, 149 W. Va. 343, 141 S.E.2d 85 (1965); Tate v. State Compensation Director, 149 W. Va. 51, 138 S.E.2d 636 (1964); Burr v. State Compensation Commissioner, 148 W. Va. 17, 132 S.E.2d 636 (1963); United Fuel Gas Co. v. Public Service Commission, 143 W. Va. 33, 99 S.E.2d 1 (1957); Chesapeake & O. R. Co. v. Public Service Commission, 139 W. Va. 161, 81 S.E.2d 700 (1953); Huntington v. State Water Commission, 137 W. Va. 786, 73 S.E.2d 833 (1953); McCloud v. Hix, 137 W. Va. 148, 70 S.E.2d 589 (1952); Walk v. State Compensation Commissioner, 134 W. Va. 223, 58 S.E.2d 791 (1950); Vento v. State Compensation Commissioner, 130 W. Va. 577, 44 S.E.2d 626 (1947); West Central Producers Co-op. Ass’n v. Commissioner of Agriculture, 124 W. Va. 81, 20 S.E.2d 797 (1942); Harrisville v. Public Service Commission, 103 W. Va. 526, 138 S.E. 99 (1927); Huntington v. Public Service Commission, 89 W. Va. 703, 110 S.E. 192.(1921); Mill Creek Coal & Coke Co. v. Public Service Commission, 84 W. Va. 662, 100 S.E. 557 *739(1919); Norfolk & W. R. Co. v. Public Service Commission, 82 W. Va. 408, 96 S.E. 62 (1918).

The impelling reason that this Court has applied the “clearly wrong” standard to factual determinations made by an administrative body inheres in the Constitution. Article V, Section 1, of the West Virginia Constitution, the Separation of Powers Clause, prohibits the judiciary from exercising the functions of the Legislature or its delegate, an administrative agency. It is clear that a court should not exercise original jurisdiction to issue an administrative order nor should it do so under the guise of appeal and trial de novo. Harrison, The West Virginia Administrative Act, 66 W.Va. L.Rev. 159, 185-190 (1964). Where a court assumes jurisdiction to do anything which an agency is required to do, such juridical action involves the exercise of administrative or legislative functions and is unconstitutional under Article V, Section 1, of the West Virginia Constitution. State ex rel. Richardson v. Kanawha County Court 138 W. Va. 885, 78 S.E.2d 569 (1953); City of Huntington v. State Water Commission, 135 W. Va. 568, 64 S.E.2d 225 (1951); Sims v. Fisher, 125 W. Va. 512, 25 S.E.2d 216 (1943); Staud v. Sill & See, 114 W. Va. 208, 171 S.E. 428 (1933); Hodges v. Public Service Commission, 110 W. Va. 649, 159 S.E. 834 (1931). See also, Davis, Judicial Review of Administrative Action in West Virginia—A Study in Separation of Powers, 44 W. Va. L.Q. 270 (1938), and Donley, The Hodges Case and Beyond. A Reply to Professor Davis, 45 W. Va. L. Q. 291 (1939).

In addition to blithely ignoring the judicial standard for administrative review, the decision of the majority leaves the parties to this appeal, and future litigants in rate regulation cases, in a quandary as to whether the Insurance Commissioner retains meaningful regulatory powers over the operation of hospital, medical, and dental service corporations.

To be meaningful, rate regulation must go well beyond the mere arithmetic of a rate calculation or mere recognition that the suppliant insurer is financially embar*740rassed and “needs” to charge higher premiums from subscribers. The legislative policy requires that the Commissioner subject the corporation to “such regulation as may be necessary for the adequate protection” of Blue Cross subscribers. W. Va. Code 33-24-1, as amended.

If this Court concludes, as it has, that the Commissioner has the authority and responsibility “to determine the adequacy and reasonableness of the charges to be paid to the participating hospitals by the hospital service corporation on behalf of its subscribers, (and) ... to ascertain whether or not the hospital service corporation is operated properly and efficiently.” Syllabus Point 2, and the Commissioner has done that in his decision, what, pray tell, renders his decision nugatory?

On the other hand, if abuses, such as: overt conflicts of interest in the service corporation board membership resulting in monetary loss and condemned by Statute (W. Va. Code 1931, 33-4-17, as amended) and management inefficiencies and weaknessess — which foster uncontrollable, excessive charges do not warrant denying a proposed rate increase, what grounds do?

This Court’s opinion may have emasculated, and certainly has confused, the Commissioner’s effectible regulatory power over Blue Cross rates. Left unchallenged, it will reduce the Commissioner to “a mere automaton blindly approving mathematically correct adjustments in the [rate] formula.” Thaler v. Stern, supra, at 630 of the N.Y.S.2d Reporter.

Finally, the statutory citations relied upon in the majority opinion seem, by and large, to be inapposite references for the propositions stated.

For these reasons, I am unable to agree with the decision in this case.