Charles J. Falletta
Jeffrey J. Greenbaum
Sills, Cummis & Gross, PC
Newark, New Jersey
Pro Hac Vice
Debra Lee Hovatter
Angela Linn Beblo
Spilman, Thomas & Battle PLLC
Morgantown, West Virginia
Counsel for the Petitioner
James G. Bordas, Jr.
Christopher J. Regan
Jason E. Causey
Bordas & Bordas, PLLC
Wheeling, West Virginia
Daniel F. Hedges
Mountain State Justice, Inc.
Charleston, West Virginia
Daniel H. Charest
Susman Godfrey LLP
Counsel for Paul W. Lightner,
Defendant Below, Respondent
James D. McQueen, Jr.
Frost Brown Todd LLC
Charleston, West Virginia
Counsel for Amicus Curiae,
The American Financial Services Association
and The Consumer Credit Industry Association
Mary Jane Pickens
Office of the West Virginia Insurance Commissioner
Charleston, West Virginia
Counsel for Amicus Curiae,
West Virginia Insurance Commissioner
SENIOR STATUS JUSTICE McHUGH delivered the Opinion of the Court.
JUSTICE BENJAMIN concurs and reserves the right to file a concurring opinion.
JUSTICE ALBRIGHT not participating.
SENIOR STATUS JUSTICE McHUGH sitting by temporary assignment.
McHugh, Senior Status Justice: (See footnote 1)
Petitioner CitiFinancial, Inc. seeks a writ of prohibition to prevent the Circuit Court of Marshall County from enforcing its order of May 6, 2008, through which Petitioner's motion for partial summary judgment was denied. CitiFinancial argues that the trial court erred in refusing to dismiss claims asserted against Petitioner by Respondent Paul W. Lightner for alleged unreasonable and excessive credit insurance charges. (See footnote 2) Based on its position that the West Virginia Insurance Commissioner (Commissioner) has exclusive jurisdiction over matters involving insurance rates, CitiFinancial argues that these issues must be referred to and resolved by the Commissioner. Upon our careful review of this matter in conjunction with applicable statutory provisions, we determine that the trial court erred in not dismissing those claims pending against CitiFinancial for alleged unreasonable and excessive credit insurance charges. Accordingly, we grant the writ of prohibition sought by CitiFinancial to prevent the enforcement of the denial of its motion for partial summary judgment.
Through this original proceeding, CitiFinancial seeks a writ of prohibition to
prevent the trial court from enforcing its denial of CitiFinancial's motion for partial
summary judgment. Specifically, CitiFinancial seeks a dismissal of the claims pending
against it that involve allegations of unreasonable and excessive credit insurance charges. As an alternative to this requested relief, Petitioner seeks a stay of the underlying matter until the Commissioner can make a determination regarding whether any of the credit insurance charges assessed by CitiFinancial against Respondent Lightner (See footnote 12) were either excessive or unreasonable.
In determining whether to entertain and issue the writ of
prohibition for cases not involving an absence of jurisdiction
but only where it is claimed that the lower tribunal exceeded its
legitimate powers, this Court will examine five factors: (1)
whether the party seeking the writ has no other adequate means,
such as direct appeal, to obtain the desired relief; (2) whether
the petitioner will be damaged or prejudiced in a way that is not
correctable on appeal; (3) whether the lower tribunal's order is
clearly erroneous as a matter of law; (4) whether the lower
tribunal's order is an oft repeated error or manifests persistent
disregard for either procedural or substantive law; and (5)
whether the lower tribunal's order raises new and important
problems or issues of law of first impression. These factors are
general guidelines that serve as a useful starting point for
determining whether a discretionary writ of prohibition should
issue. Although all five factors need not be satisfied, it is clear that the third factor, the existence of clear error as a matter of law, should be given substantial weight.
Against this standard, we proceed to consider whether the trial court erred in refusing to dismiss the claims related to the allegations of unreasonable or excessive credit insurance charges or in refusing to stay the underlying matter pending a resolution of this issue by the Commissioner.
When the insurance is obtained or provided by or
through a creditor, (See footnote 18) the creditor may collect from the consumer
or include as part of the cash price of a consumer credit sale or
as part of the principal of a consumer loan or deduct from the
proceeds of any consumer loan the premium or, in the case of
group insurance, the identifiable charge. The premium or
identifiable charge for the insurance required or obtained by a
creditor may equal, but may not exceed the premium rate filed
by the insurer with the insurance commissioner. . . .
W.Va. Code § 46A-3-109(b)(3) (emphasis supplied and footnote added).
In addition to establishing that permissible insurance charges cannot be more than the premium rate filed by the insurer with the insurance commissioner, the Act specifies that charges for other benefits, including insurance must be reasonable in relation to the benefits. Id., W.Va. Code § 46A-3-109(a)(4). The Act is clear that the determination of whether the charges therefor [insurance] are reasonable in relation to the benefits shall be determined by the Insurance Commissioner of this State. W.Va. Code § 46A-3-109(a)(4).
As a corollary to its clear grant of rate-making authority to the Commissioner, the Legislature gave the Commissioner express and exclusive rule-making authority for the purpose of implementing all of the Act's provisions that relate to insurance. West Virginia Code § 46A-3-109(c) provides:
The Insurance Commissioner of this State shall
promulgate legislative rules in accordance with the provisions
of chapter twenty-nine-a [§§ 29A-1-1 et seq.] of this code to
implement the provisions of this article relating to insurance and the authority of the Insurance Commissioner to promulgate the
rules is exclusive notwithstanding any other provisions of this
code to the contrary.
W.Va. Code § 46A-3-109(c) (emphasis supplied). Pursuant to this statutory authority, the Commissioner has promulgated rules that address, inter alia, the standards by which a determination is made concerning whether an insurance rate is reasonable in relation to the benefits that are provided. See, e.g., C.S.R. § 114-61-6.2 (defining standard as being met by loss ratio of not less than sixty percent or such other loss ratio as designated by the commissioner . . . for credit personal property insurance policies).
If a consumer is charged an amount in excess of what is permitted under the Act, the Legislature has created a remedy for such violations. Under authority of West Virginia Code § 46A-5-101 (1996) (Repl. Vol. 2006), the consumer has a cause of action to recover actual damages and in addition a right in an action to recover from the person violating this chapter a penalty in an amount determined by the court not less than one hundred dollars nor more than one thousand dollars. W.Va. Code § 46A-5-101(1) (emphasis supplied); see also W.Va. Code § 46A-5-101(3) (providing that consumer is not obligated to pay a charge in excess of that allowed by this chapter, and if he has paid an excess charge he has a right to a refund). Citing subsections (1) and (3) of West Virginia Code § 46A-5-101, Respondent Lightner asserts that CitiFinancial violated the CCPA by charging him amounts for credit insurance that violated the Act's requirement that such assessments be reasonable in relation to the benefits provided. W.Va. Code § 46A-3- 109(a)(4). Consequently, he avers that such amounts were necessarily in excess of what CitiFinancial was statutorily permitted to charge him for credit insurance. See W.Va. Code § 46A-5-101(1), (3).
Whether intended or not, the position advanced by Respondent Lightner has the end result of involving the judiciary in issues of insurance rate making. As evidenced by the data Respondent Lightner introduced to defeat CitiFinancial's motion for summary judgment, factual evidence on issues such as loss ratios and rates of return is required to disprove the reasonableness of an established insurance rate. These issues, due to their highly specialized nature, are typically reserved to the Commissioner's bailiwick. See W.Va. Code §§ 33-20-3; 33-20-4, 33-6-30(b). It stands to reason that if a circuit court is allowed to invade this administrative arena and reexamine the issue of whether a given insurance rate is reasonable or excessive, the judiciary will necessarily be substituting its determinations as to permissible insurance rates for those previously determined by the Commissioner and supplanting its opinion in matters expressly delegated to the Commissioner's expertise and jurisdiction. A further peril that cannot be overlooked is that judicial intervention in the rate making area would open the door to conflicting decisions amongst the various circuits regarding what constitutes an unreasonable or excessive charge for credit insurance. In this manner then, the uniformity of regulation that the Legislature has established by delegating all matters involving rate making and rate filings to the Commissioner is certain to be infringed if circuit courts or jurors are permitted to second guess the reasonableness of rates previously approved by the Commissioner. (See footnote 25)
To support his theory that the judiciary has concurrent authority over issues of insurance rate making, Respondent Lightner argues that there is no statutory support for CitiFinancial's contention that the Commissioner has exclusive jurisdiction with regard to such matters. We disagree. Under the comprehensive system established by the Legislature for purposes of regulating the insurance industry there is no question that the Commissioner is charged with overseeing the rates charged for various insurance products. See W.Va. Code § 33-20-3 (listing factors pertinent to insurance rate making); W.Va. Code § 33-20-4 (requiring that insurers comply with filing obligations); see also W.Va. Code § 33-6-8 (requiring Commissioner's approval of insurance-related forms). And, instead of reducing the Commissioner's authority over issues of insurance rate making, an examination of the CCPA demonstrates that the Legislature reaffirmed the Commissioner's authority over this regulatory area.
In the introductory language to West Virginia Code § 46A-3-109, the Legislature announced: [N]othing contained in this section with respect to insurance in any way limits the power and jurisdiction of the Insurance Commissioner of this state in the premises[.] W.Va. Code § 46A-3-109(a)(2) (emphasis supplied). After requiring that permissible charges in consumer transactions must be reasonable in relation to the benefits, the Legislature made it mandatory that whenever the additional charge was for insurance this determination has to be made by the Commissioner:
Provided, That as to insurance, the policy as distinguished from a certificate of coverage thereunder may only be issued by an individual licensed under the laws of this state to sell the insurance and the determination of whether the charges therefor are reasonable in relation to the benefits shall be determined by the Insurance Commissioner of this state[.]
W.Va. Code § 46A-3-109(a)(4) (emphasis supplied). To identify the amount that can be
charged for credit-related insurance, the rate making authority of the Commissioner is called
upon: The premium or identifiable charge for the insurance required or obtained by a
creditor may equal, but may not exceed the premium rate filed by the insurer with the
Insurance Commissioner. W.Va. Code § 46A-3-109(b)(3). In the closing paragraph of this
statutory provision, the Legislature granted the Commissioner exclusive authority to
promulgate legislative rules for the purpose of implement[ing] the provisions of this article
relating to insurance. W.Va. Code § 46A-3-109(c).
Not only are we unable to identify any provision in the Act that supports Respondent Lightner's contention that the Legislature intended to give circuit courts concurrent jurisdiction over issues of insurance rate making, we find to the contrary that the Act is replete with language indicating that the Commissioner's jurisdiction over insurance- related matters was not intended to be altered by the provisions of the CCPA. See W.Va. Code § 46A-3-109(a)(2),(a)(4),(b)(3),(c). As discussed above, the Legislature confirmed its grant of authority to the Commissioner to regulate the rate-making aspects of the insurance industry in each of these referenced statutory provisions. See id. Accordingly, we conclude that in providing for a cause of action that permits the recovery of excess charges included in a consumer credit transaction pursuant to the provisions of West Virginia Code § 46A-3-109 and § 46A-5-101, the Legislature did not authorize the circuit courts to invade the jurisdiction of the Commissioner and conduct a reexamination of insurance rates previously approved by the Commissioner.
Rather than challenging the credit insurance rates through the filing of an action under the CCPA, Respondent Lightner should have sought relief under West Virginia Code § 33-20-5(d). That provision expressly provides the right to a hearing before the Commissioner for the purpose of challenging approved insurance rates. In explanation of his failure to seek such a hearing, Respondent Lightner asserts that he cannot be made whole through such an administrative challenge. While monetary damages cannot be awarded in connection with an administrative hearing held pursuant to West Virginia Code § 33-20- 5(d), that provision is the procedural mechanism established by the Legislature for challenging insurance rates. (See footnote 26) And, in our opinion, the absence of monetary damages does not suggest that an aggrieved party or organization who seeks to challenge insurance rates can bypass the administrative procedures expressly set in place for the purpose of questioning approved insurance rates. (See footnote 27) Even if an individual seeks to pursue monetary relief under the Act, an administrative challenge should occur before recovery is sought under the Act for alleged excessive rate charges. (See footnote 28) Accordingly, we hold that any challenge to an approved insurance rate by an aggrieved person or organization should be raised pursuant to the provisions of West Virginia Code § 33-20-5(d) in a proceeding before the Commissioner. (See footnote 29)
Any ruling issued by the Commissioner on the issue of the reasonableness of insurance rates or compliance with statutory provisions is a final order that is subject to the provisions of the Administrative Procedures Act (APA). See generally W.Va. Code § 29A-5-1 to -5 (Repl. Vol. 2007) (setting forth provisions for contested administrative matters); see C.S.R. § 114-13-8 (providing that every final order entered by Commissioner constitutes final order under APA which is appealable to circuit court); see also W.Va. Code § 33-2-13 (requiring Commissioner to hold hearings upon demand of aggrieved person). Consequently, judicial review of a determination by the Commissioner on the issue of whether insurance rates are reasonable and in compliance with statutory requirements does exist. Such review, however, occurs as a result of the APA and not, as Respondent Lightner sought, through filing a cause of action under the CCPA.
As discussed above, the inclusion of the statutory language that creates a presumption of compliance occurred as part of the Legislature's attempt to strengthen the rate making powers of the Commissioner. See W.Va. Code § 33-6-30(b),(c) (2002 amends). Through its adoption of this statutory language, the Legislature established a procedural mechanism by which insurance rates are presumed to be in compliance with all regulatory requirements upon their approval by the Commissioner. While approved insurance rates are still subject to challenge, the burden for disproving the validity of such rates is placed on the entity who seeks to set the rates aside. See W.Va. Code § 33-20-5(d). Respondent Lightner argues that he should be able to challenge this presumption as part of his cause of action under the CCPA before the circuit court. The inclusion of the presumption within the insurance statutes and as part of legislation specifically enacted to prevent judicial reexamination of approved insurance rates suggests just the opposite. Consequently, we are of the opinion that the presumption of statutory compliance for approved insurance rates set forth in West Virginia Code § 33-6-30(c) may only be rebutted in a proceeding before the Commissioner.
Based on the foregoing discussion, we find the necessary grounds (See footnote 30) for issuing a writ of prohibition to prevent the enforcement of the May 6, 2008, order of the Circuit Court of Marshall County denying partial summary judgment to CitiFinancial with regard to the claims pending against it for alleged unreasonable and excessive credit insurance charges. Accordingly, the writ of prohibition sought by CitiFinancial is granted.