Summary
In McDonnell, the insured's son was involved in two accidents, one involving the insureds' private automobile policy, the other involving a car owned and insured in the name of the insureds' professional association.
Summary of this case from Hallowell v. Pa. Ins. DeptOpinion
Argued December 13, 1985
January 28, 1986.
Insurance — Non-renewal of auto policy — Scope of appellate review — Violation of constitutional rights — Error of law — Findings of fact — Substantial evidence — The Insurance Department Act of 1921 — Two accidents — Two Policies — Burden of proof.
1. In reviewing a decision of the Insurance Commissioner of Pennsylvania, the Commonwealth Court of Pennsylvania must determine whether constitutional rights were violated, an error of law was committed or findings of fact were unsupported by substantial evidence. [383]
2. Under provisions of The Insurance Department Act of 1921, an auto insurer may refuse to renew a policy if there was more than one accident within thirty-six months of the anniversary date of a particular policy, but such provisions do not provide a basis for non-renewal when the two accidents alleged to have occurred involving an insured individual were under two separate policies. [384-5]
3. An auto insurer has the burden of proving compliance with the appropriate provisions of The Insurance Department Act of 1921, concerning non-renewal. [385]
Argued December 13, 1985, before Judges CRAIG and COLINS, and Senior Judge KALISH, sitting as a panel of three.
Appeal, No. 2627 C.D. 1984, from the Order of the Insurance Commissioner of the Commonwealth of Pennsylvania, in case of In Re: Appeal of Michael Ellen McDonnell, File No. 83-260-05269, Aetna Casualty and Surety Company Policy No. 204 SY 5153854PCA, Docket No. PH 83-8-3, dated August 1, 1984.
Insured filed request for review of policy non-renewal with the Pennsylvania Insurance Commissioner. Non-renewal upheld. Request for formal administrative hearing filed and granted. Hearing held. Non-renewal upheld. Insured appealed to the Commonwealth Court of Pennsylvania. Held: Reversed and remanded for reinstatement of cancelled policies.
Michael T. McDonnell, Jr., McDonnell McDonnell, P. A., for petitioners.
Reginia Grayson Jamerson, Assistant Counsel, with her, Hannah Levitt and Paul Laskow, Chief Counsel, for respondent.
Michael and Ellen McDonnell (petitioners) were given notice by Aetna Casualty and Surety Company (Aetna) that their automobile insurance policy would not be renewed because there had been two (2) accidents within thirty-six (36) months of the policy's anniversary date. Both accidents involved petitioners' sixteen year old son.
Petitioners filed a request for review with the Insurance Commissioner of the Commonwealth of Pennsylvania (Commissioner) pursuant to Section 1008.8 of The Insurance Department Act of 1921 (Act), Act of June 5, 1968, P.L. 140, as amended, 40 P. S. § 1008.8 The matter was reviewed by the Insurance Department and on July 25, 1983, the Department upheld the decision of non-renewal. Based on this determination, the petitioners requested a formal administrative hearing as provided for by Section 1008.9 of the Act, 40 P. S. § 1008.9. A hearing was held and on August 1, 1984, the Commissioner ordered that the non-renewal decision be upheld. This appeal followed.
The decision of the Commissioner was based on his conclusion that Aetna did not violate Section 1008.3 of the Act, 40 P. S. § 1008.3, which provides that "[n]o 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." He additionally concluded that petitioners did not meet their burden of proof in showing that the actual reason for non-renewal of the policy was an impermissible one under Section 1008.3(a)of the Act, 40 P. S. § 1008.3(a), which provides that "[n]o insurer shall cancel or refuse to write or renew a policy of automobile insurance for one or more of the following reasons: (1) age . . . (9) sex." Concluding that the existence of a minor male driver in the petitioners' household was not the real reason for the non-renewal, the Commissioner affirmed the non-renewal.
Initially, we note that our review is limited to determining whether or not constitutional rights were violated, errors of law were committed or findings of fact were not supported by substantial evidence. Appeal of Tabas, 81 Pa. Commw. 527, 473 A.2d 1143 (1984); Travelers Indemnity Co. of America v. Insurance Department, 63 Pa. Commw. 542, 440 A.2d 645 (1981); Fioravanti v. Insurance Department, 63 Pa. Commw. 525, 439 A.2d 1272 (1981). It therefore follows that substantial evidence must support the Commissioner's finding of fact that there was more than one accident within the thirty-six month period prior to the upcoming anniversary date of the petitioners' insurance policy. Petitioners here allege that while there were indeed two accidents (more than one accident under the Act), these two accidents occurred on two different insurance policies. The first accident occurred on November 26, 1982, and involved the petitioners' sixteen year old son, who was driving the family automobile, insured on policy number 204845153854PCA. The second accident occurred on April 16, 1983, and also involved the petitioners' son; however, in this accident he was driving an automobile owned by the petitioners' professional association of McDonnell McDonnell, insured under policy number 04FD357938CCA. Section 1008.3 of the Act discusses accidents occurring under "the policy," rather than "an individual's policies," thus clearly indicating the legislative intent that each policy is to be examined for the number of accidents occurring under that policy, rather than an examination of the number of accidents attributable to any individual. The respondent in this case submitted no evidence that the two accidents occurred upon the same policy. Therefore, no substantial evidence exists for the Commissioner's finding of fact that there were two accidents within the thirty-six month period prior to the upcoming anniversary date of the policy.
The Commissioner asserts before this Court that the burden of proof in this case was properly allocated to the petitioners, and that they failed to meet it; therefore, the Commissioner's decision should be upheld. In his decision the Commissioner stated:
Aetna did not have the burden of proof at this hearing and was not obligated to show that the accident in question was due to the fault of Patrick McDonnell [petitioners' son]. On the contrary, since the McDonnells requested a hearing as a result of the Department's initial determination upholding the non-renewal of their automobile policy by Aetna, the McDonnells had the burden of proving that the Department's initial determination was incorrect.
To be sure, Aetna did not have to show "fault," as "fault" is irrelevant when a policy is not renewed on the basis of more than one accident. However, the Commissioner's analysis regarding burden of proof would essentially require either that the insured prove that they had more than one accident within thirty-six months of the anniversary date of the policy and that the non-renewal decision was based on one of the impermissible reasons delineated in Section 1008.3(a) of the Act, 40 P. S. § 1008.3(a), or that they did not have more than one accident on a particular policy in order to prevail.
The insurer here has the burden of proving compliance with the Act concerning non-renewal, such being that they must prove that there was more than one accident within thirty-six months of the anniversary date of a particular policy. Because the insurer did not meet its burden of showing more than one accident on a policy by substantial evidence, we must reverse the order of the Commissioner.
Because we decide this case on the issue of whether there was more than one accident on the policy, we need not address the issue of alleged age and sex discrimination.
ORDER
AND NOW, January 28, 1986, the order of the Insurance Department, Docket No. PH83-8-3, dated August 1, 1984, is hereby reversed, and the matter is remanded to the Insurance Department for the reinstatement of the cancelled policies.