Pittsburgh v. Insurance Department

294 A.2d 892, 448 Pa. 466, 1972 Pa. LEXIS 478

• Court: Supreme Court of Pennsylvania
• Decided: September 22, 1972
• Docket: Appeal, No. 87
• Status: Published

Opinions

Opinion by

Mr. Justice Roberts,

Appellants, the Insurance Commissioner of Pennsylvania and intervenor Blue Cross of Western Pennsylvania,¹ seek reversal of an order of the Commonwealth Court² directing the Insurance Commissioner to hold a hearing subject to the requirements of the Administrative Agency Law³ concerning a proposed rate filing by Blue Cross⁴ and to permit appellees, the City of Pittsburgh and the County of Allegheny, to cross-examine witnesses at such hearing.⁵ We need not reach the question, resolved by the Commonwealth Court, whether the approval of rates by the Insurance Commissioner pursuant to the Nonprofit Hospital Plan Act⁶ is an “adjudication” for purposes of the Administrative Agency Law requiring a trial type hearing.⁷ Instead, we hold contrary to the Commonwealth Court, that appellees the City of Pittsburgh and the County of Allegheny have no standing to challenge the procedures followed by the Insurance Department in approving or rejecting the rate filing submitted by Blue Cross. We therefore reverse the order of the Commonwealth Court.

Blue Cross filed a request on April 3, 1969, with the Insurance Commissioner for approval of an increase of rates charged to its subscribers in twenty-nine counties in Western Pennsylvania. The Insurance Commissioner then announced that a public informational hearing would be held to disclose the basis for the rate filing to interested persons and organizations and to provide such persons and organizations an opportunity to submit relevant information for consideration by the Insurance Department concerning the proposed rate filing.

At the hearing held on May 28 and May 29, 1969, the Insurance Commissioner announced that cross-examination of witnesses could be conducted only by the members of the Insurance Department. The City of Pittsburgh and the County of Allegheny objected to this limitation.⁸ Their objections were overruled. After the hearings and the submission of additional data by Blue Cross, the Insurance Commissioner approved the rate filing on July 13, 1970. The rates were to go into effect on November 1, 1970.⁹

The Nonprofit Hospital Plan Act under which Blue Cross filed its application provides: “The rates charged to subscribers by nonprofit corporations, subject to the provisions of this act . . . shall, at all times, be subject to the prior approval of the Insurance Department. . . . If any such application is not approved by the department, notice thereof shall forthwith be served on the applicant, either personally or by mail. Within thirty days from the date of such notice, the applicant may apply to the court of common pleas of Dauphin County by petition and a rule to show cause why the action of the department should not be set aside, and the application approved.” Act of June 21, 1937, P. L. 1948, §4, 40 P.S. §1404 (emphasis added).¹⁰

The statute in no way requires the Insurance Commissioner to hold a trial type hearing before approving or rejecting the proposed rate filing. Nevertheless it was clearly within the powers of the Insurance Commissioner to hold a public informational hearing. It follows that the Insurance Commissioner was fully authorized to refrain from conducting an adversary trial type hearing by limiting the right of cross-examination to members of the Insurance Department. Furthermore, the Legislature has expressly limited participation in the procedures provided for the approval of rates to the “applicant” for the rate filing (here Blue Cross).

The Legislature provided that only applicants for rate approvals participate in the proceedings before the Insurance Department and only applicants can secure judicial review of the Insurance Department’s rejection of the rate filing in the Commonwealth Court. Act of June 21, 1937, P. L. 1948, §4, 40 P.S. §1404.

The City of Pittsburgh and the County of Allegheny nevertheless contend that as consumers and representatives of consumers¹¹ they have standing to challenge the proceedings conducted by the Insurance Commissioner. Appellees have presented no legal basis or authority for disregarding the express mandate of the Legislature to limit participation in these proceedings to the “applicant” nor are we empowered to ignore this command of the Legislature. Furthermore, we are completely unpersuaded by appellees’ assertions that they have the requisite interest in the Department’s statutory consideration of Blue Cross’ rate filing to afford them legal standing to participate in that process and to cross-examine witnesses. See Man O’ War Racing Assoc., Inc. v. State Horse Racing Commission, 433 Pa. 432, 441-44, 250 A. 2d 172, 176-78 (1969); Louden Hill Farm, Inc. v. Milk Control Commission, 420 Pa. 548, 217 A. 2d 735 (1966); G.S.F. Corporation v. Milk Marketing Board, 4 Pa. Commonwealth Ct. 230, 284 A. 2d 924 (1971).

We are satisfied that the Nonprofit Hospital Plan Act does not accord appellees the rights Avhich they sought to exercise at the informational hearing conducted by the Insurance Department. Accordingly, the order of the Commonwealth Court is reversed.

Mr. Justice Eagen concurs in the result. Mr. Justice Mandeeino took no part in the consideration or decision of this case.

1 Hereinafter referred to as Blue Cross.

2 Pittsburgh v. Insurance Commissioner, 4 Pa. Commonwealth Ct. 262, 286 A. 2d 475 (1971).

3 Act of June 4, 1945, P. C. 1388, §§1 et seq., 71 P.S. §§1710.1 et seq.

4 The rate filing consisted of a request for a rate increase of roughly 12.2% for 21-90 and standards subscription hospital agreements.

5 Because appellees did not request a supersedeas from the Commonwealth Court, the rates approved by the Commissioner have been in effect since November 1, 1970. The Commonwealth Court therefore ordered that the rates remain in effect pending the rehearing ordered by that court, Pittsburgh v. Commissioner, 4 Pa. Commonwealth Ct. 262, 286 A. 2d 475 (1971).

6 Act of June 21, 1937, P. B. 1948, §§1 et seq., 40 P.S. §§1401 et seq.

7 Act of June 4, 1945, P. B. 1388, §§31-36, 71 P.S. §§1710.31-36.

8 The objections were based both on the grounds that this proceeding, was an “adjudication” for purposes of the Administrative Agency Law requiring a trial type hearing and in the alternative that due process required a trial type hearing in these circumstances.

9 See note 5, supra.

10 The portion of section 1404 which provides for judicial review of the Insurance Commissioner’s determination in the Court of Common Pleas of Dauphin County has been repealed by the Appellate Court Jurisdiction Act, Act of July 31, 1970, P. L. 673, §508(a)(59), 17 P.S. §211.508(a) (59) which transfers the jurisdiction in question to the Commonwealth Court.

11 Appellees base their claims of standing both on the fact, that they represent individual subscribers to Blue Cross and that the City of Pittsburgh itself is a “consumer” of Blue Cross services by contributing $350,000 per year to the Blue Cross coverage of its employees as required by its employment contract.