Corbin v. The Allstate Corporation , 2019 IL App (5th) 170296 ( 2019 )

2019 IL App (5th) 170296
NOTICE
Decision filed 01/29/19. The
text of this decision may be NO. 5-17-0296
changed or corrected prior to
the filing of a Petition for
Rehearing or the disposition of
IN THE
the same.
APPELLATE COURT OF ILLINOIS
FIFTH DISTRICT
______________________________________________________________________________
JEFFREY A. CORBIN, MARGARET A. ) Appeal from the
CORBIN, and ANNA TRYFONAS, ) Circuit Court of
) Madison County.
Plaintiffs-Appellees, )
)
v. ) No. 16-L-880
)
THE ALLSTATE CORPORATION, ALLSTATE )
INSURANCE COMPANY, ALLSTATE )
INDEMNITY COMPANY, ALLSTATE PROPERTY )
AND CASUALTY COMPANY, and ALLSTATE )
FIRE AND CASUALTY COMPANY, ) Honorable
) Barbara L. Crowder,
Defendants-Appellants. ) Judge, presiding.
_____________________________________________________________________________
JUSTICE CATES delivered the judgment of the court, with opinion.
Justice Chapman concurred in the judgment and opinion.
Justice Moore dissented, with opinion.
OPINION
¶1 Plaintiffs—Jeffrey A. Corbin, Margaret A. Corbin, and Anna Tryfonas—filed a class
action complaint against defendants—The Allstate Corporation, Allstate Insurance Company,
Allstate Indemnity Company, Allstate Property and Casualty Company, and Allstate Fire and
Casualty Company (collectively “Allstate”)—in the circuit court of Madison County. Plaintiffs
alleged that Allstate engaged in deceptive and unfair business practices in violation of the
Consumer Fraud and Deceptive Business Practices Act (Consumer Fraud Act) (815 ILCS 505/1
et seq. (West 2012)) and was unjustly enriched by charging its longtime, loyal customers higher
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auto insurance premiums than other customers based on undisclosed, non-risk-based factors.
Allstate filed a motion to dismiss and argued, in part, that plaintiffs’ claims were barred by the
filed rate doctrine and the primary jurisdiction doctrine. The circuit court denied Allstate’s
motion to dismiss but granted its subsequent motion to certify the following questions for
interlocutory review under Illinois Supreme Court Rule 308(a) (eff. Jan. 1, 2016): (1) “Whether
Plaintiffs’ claims regarding automobile insurance rates filed with the Illinois Department of
Insurance are barred by the filed rate doctrine” and (2) “Whether the Illinois Department of
Insurance and its Director have primary jurisdiction to determine if the complained of conduct by
a regulated automobile insurance company constitutes unfair or deceptive trade practice.”
Allstate filed an application for leave to appeal under Rule 308, and this court granted
interlocutory review. For reasons that follow, we answer the certified questions in the negative.
¶2 I. BACKGROUND
¶3 Allstate sells property and casualty insurance, including private passenger automobile
insurance (auto insurance), to consumers in Illinois. The named plaintiffs are Illinois residents
and consumers who have purchased auto insurance from Allstate for two decades or more.
According to the complaint, Allstate collected and analyzed data and determined that loyal,
longtime policyholders were willing to pay higher premiums than the risk they presented.
Plaintiffs claimed that since 2012, Allstate has considered its policyholders’ willingness to
tolerate premium increases as a factor in calculating auto insurance rates. Plaintiffs further
claimed that Allstate began charging its longtime policyholders higher premiums than it charged
new customers who presented the same risk but were less willing to tolerate a price increase.
This practice is referred to as “elasticity of demand” or “price optimization.” Plaintiffs alleged
that Allstate used this non-risk-based factor in calculating its premium rates for auto insurance,
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but did not disclose its use of this factor in its rate filings with the Illinois Department of
Insurance (Department) and in its communications with existing customers regarding renewal of
their auto policies. In count I, it is alleged that Allstate has engaged in unfair and deceptive
practices in developing rating methodologies and in advertising, marketing, and selling their auto
insurance products, and thereby violated the Consumer Fraud Act. Count II was also brought
under the Consumer Fraud Act and alleged that Allstate’s failure to disclose its use of price
optimization is unethical, oppressive, unscrupulous, and offends public policy. In count III, it is
alleged that Allstate has unjustly enriched itself by employing hidden price optimization
practices. Plaintiffs’ prayer for relief includes money damages, equitable and/or injunctive relief,
and restitution or disgorgement of ill-gotten gains from unjust enrichment.
¶4 Allstate filed a motion to dismiss plaintiffs’ complaint, arguing in part that the action was
barred by the filed rate doctrine and the primary jurisdiction doctrine. Allstate acknowledged that
Illinois is unique because it had decided to maintain a free market system for most property and
casualty insurance, including auto insurance, and that except for a broad and general prohibition
against discriminatory pricing based on race, color, religion, physical disability, and national
origin, Illinois allows auto insurers to select their own rates based on their business and market
objectives. Allstate noted that it is required to file its rates and underwriting manuals, as well as
any rate changes, with the Director of the Department of Insurance (Director) and that it is
required to calculate and charge premiums in accordance with the filed rates. Allstate
acknowledged that the Director has no authority to approve or disapprove the filed rates. Allstate
argued that the Director is vested with general oversight of the insurance industry, including
automobile insurance rates (215 ILCS 5/401 (West 2012)), and authorized to evaluate and
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declare that an insurer’s trade practices constitute unfair methods of competition or deceptive
practices (215 ILCS 5/429 (West 2012)).
¶5 Following a hearing, the circuit court denied Allstate’s motion to dismiss. In its order, the
court determined that Allstate failed to establish that plaintiffs’ complaint should be dismissed at
the pleading stage under either the filed rate doctrine or the primary jurisdiction doctrine. The
court noted that Illinois is unique in that insurers may select their own rates and merely inform
the Department of Insurance of their selection. The court found that none of the cases cited
indicated that the Department has the authority to review and disapprove of the filed rates.
Subsequently, the court granted Allstate’s motion to certify two questions pursuant to Rule 308.
This court granted interlocutory review of those questions.
¶6 II. ANALYSIS
¶7 Illinois Supreme Court Rule 308(a) (eff. Feb. 26, 2010) provides for an interlocutory
appeal from an order not otherwise appealable if the trial court finds that “the order involves a
question of law as to which there is substantial ground for difference of opinion and that an
immediate appeal from the order may materially advance the ultimate termination of the
litigation,” and the appellate court, in its discretion, permits an appeal from that order. Generally,
the scope of review in a Rule 308 appeal is limited to the questions of law identified by the trial
court. Rozsavolgyi v. City of Aurora, 2017 IL 121048, ¶ 21, 102 N.E.3d 162. A court of review
will decline to answer a certified question where the answer is dependent upon the underlying
facts of a case or where the question calls for an answer that is advisory or provisional.
Rozsavolgyi, 2017 IL 121048, ¶ 21; Dowd & Dowd, Ltd. v. Gleason, 181 Ill. 2d 460, 469, 693
N.E.2d 358, 364 (1998). A certified question presents a question of law subject to de novo
review. Rozsavolgyi, 2017 IL 121048, ¶ 21.
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¶8 The first question certified by the circuit court asks whether plaintiffs’ claims regarding
automobile insurance rates filed with the Illinois Department of Insurance are barred by the filed
rate doctrine. The filed rate doctrine protects public utilities and other regulated entities from
civil actions if the entity is required to file its rates with the governing regulatory agency and the
agency has the authority to set, approve, or disapprove the rates. Adams v. Northern Illinois Gas
Co., 211 Ill. 2d 32, 55, 809 N.E.2d 1248, 1263 (2004); Cohen v. American Security Insurance
Co., 735 F.3d 601, 607 (7th Cir. 2013). Under the doctrine, any filed rate that is approved by the
governing regulatory agency is per se reasonable and unassailable in judicial proceedings
brought by rate payers. Adams, 211 Ill. 2d at 55. The two companion principles at the core of the
filed rate doctrine are (a) the need to prevent carriers from engaging in price discrimination as
between ratepayers and (b) the preservation of the exclusive role of agencies in setting and
approving uniform rates, as there is a historical aversion to rate setting by courts. Arsberry v.
Illinois, 244 F.3d 558, 562 (7th Cir. 2001); Wegoland Ltd. v. NYNEX Corp., 27 F.3d 17, 19 (2d
Cir. 1994).
¶9 The Illinois Administrative Code requires companies who write specific types of
insurance, including private passenger automobile insurance, to file their rates, along with
underwriting manuals containing rules for applying rates, with the Illinois Department of
Insurance no later than 10 days after the stated effective date of the rate. 50 Ill. Adm. Code
754.10, 754.40 (2018). The Department of Insurance, however, has not been given explicit
authority to approve or disapprove the rates charged, either prior or subsequent to the filing of
the rates.
¶ 10 Prior to 1969, Illinois required “prior approval” of insurance rates by the Illinois
Department of Insurance. Ill. Rev. Stat. 1949, ch. 73, § 1065.1 et seq. In 1969, the Illinois
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General Assembly enacted an open competition rating law, which went into effect on January 1,
1970. See Pub. Act 76-943 (eff. Jan. 1, 1970) (adding Ill. Rev. Stat. 1969, ch. 73, § 1065.18-1
et seq.). The purpose of the legislation was to “promote the public welfare by regulating
insurance rates” as provided therein, in order that the rates “shall not be excessive, inadequate or
unfairly discriminatory.” Ill. Rev. Stat. 1969, ch. 73, § 1065.18-1. The express intent of the
legislation was to permit and encourage competition between companies to the fullest extent
possible, and “nothing in this Article is intended to give the Director power to fix and determine
a rate level by classification or otherwise.” Ill. Rev. Stat. 1969, ch. 73, § 1065.18-1. The
legislature included a sunset clause providing that the open competition law would be “effective
only until August 1, 1971, unless the General Assembly extends the term of or removes this
restriction on the period during which this Article is to be applicable.” Ill. Rev. Stat. 1969, ch.
73, § 1065.18-1.
¶ 11 The legislature did not renew the open competition rating law in August 1971. Nor did it
reinstate the “prior approval” law or enact a new rating law. Thus, Illinois was left without any
property, casualty, and motor vehicle insurance rating laws. See Ill. Rev. Stat. 1975, ch. 73,
§ 1065.18-1 et seq.; see also Jon S. Hanson, et al., National Association of Insurance
Commissioners, Monitoring Competition: A Means of Regulating the Property and Liability
Insurance Business, 420-422 (May 1974); Stephen P. D’Arcy, Insurance Price Deregulation:
The Illinois Experience, in Deregulating Property-Liability Insurance: Restoring Competition
and Increasing Market Efficiency 248, 256-60 (J. David Cummins ed., 2002). In June 1972, the
legislature enacted a law authorizing “qualified advisory organizations” to compile statistics,
formulate insurance policies, and develop underwriting rules, but the legislation contained no
provisions for rate-making standards or regulations. See Pub. Act 77-1882 (eff. Oct. 1, 1972)
6
(adding Ill. Rev. Stat. 1973, ch. 73, § 735A-1 et seq. (now codified at 215 ILCS 5/123A-1
et seq.)); 77th Ill. Gen. Assem., House Proceedings, May 15, 1972, at 57 (statements of
Representative Epton).
¶ 12 The history indicates that the Illinois legislature has determined that open competition in
auto insurance rates is workable and beneficial. Consequently, insurers, such as Allstate, are free
to establish rates in response to their independent assessments of economic and market
conditions, and the Department of Insurance has not been given the authority to set, approve, or
disapprove of those rates. Because Allstate’s private passenger automobile insurance rates were
not set, approved, or disapproved by the Department of Insurance, Allstate is afforded no
protection under the filed rate doctrine.
¶ 13 Allstate cites Horwitz v. Bankers Life & Casualty Co., 319 Ill. App. 3d 390, 745 N.E.2d
591 (2001), and Anzinger v. Illinois State Medical Inter-Insurance Exchange, 144 Ill. App. 3d
719, 494 N.E.2d 655 (1986), in support of its argument that the filed rate doctrine should be
applied here. We have reviewed those cases and find them distinguishable. Initially, we note that
neither Horwitz nor Anzinger analyzed the filed rate doctrine in light of Illinois’s unique open
competition environment in the area of auto insurance rates. In Horwitz, the court considered
whether the filed rate doctrine barred plaintiff’s challenge to the manner in which a health
insurance company calculated and applied premium rates on individual health insurance policies
written in Colorado. After determining that the laws of Colorado applied, the court found that
under Colorado’s statutory and regulatory scheme, the insurance commissioner was authorized to
approve or disapprove rate filings by health insurers, to investigate insurers to ensure compliance
with Colorado insurance law, to prohibit insurers from using excessive or illegal rates, and to
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order refunds of excess premiums to policyholders, and that plaintiff’s claims were barred by the
filed rate doctrine. Horwitz, 319 Ill. App. 3d at 405-06.
¶ 14 In Anzinger, plaintiffs appealed the dismissal of a class action complaint against the
insurer, seeking reparations for excessive premiums they had paid for medical malpractice
insurance. The challenged premiums had been collected in accordance with a rate schedule that
had been filed with the Director of Insurance. Initially, plaintiffs filed a petition with the
Department, challenging the rates as excessive and unfairly discriminatory. Following an
administrative hearing, the Director approved the rates, and plaintiffs sought judicial review. The
circuit court determined that the rates were excessive and unfairly discriminatory, and the
decision was affirmed on appeal. Upon remand, the Director vacated his findings and prohibited
use of those rates. Plaintiffs then filed a class action suit to recover the excess premiums that had
been found unfairly discriminatory and excessive. On appeal from the dismissal of plaintiffs’
action, the appellate court determined that the Director had been given the exclusive initial
determination of the reasonableness and discriminatory nature of the rates charged for medical
malpractice insurance under section 155.18 of the Illinois Insurance Code (Code) (Ill. Rev. Stat.
1983, ch. 73, ¶ 767.18) and that plaintiffs had no private right to recover where the rates were
approved by the Director and subsequently found to be excessive and discriminatory by the
reviewing court. Anzinger, 144 Ill. App. 3d at 723-24. Thus, Anzinger involved plaintiffs seeking
reparations for medical malpractice premiums initially approved by the Director, but
subsequently determined to be excessive under malpractice rate standards set forth in section
767.18 of the Code specifically addressing medical liability insurance.
¶ 15 The factual allegations and issues in the present case arise in a very different context.
Illinois has embraced open competition in regard to rate setting for auto insurance. In Illinois,
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insurers such as Allstate are free to establish auto insurance rates in response to their individual
assessments of economic and market conditions. The Director has not been given any
administrative authority to set, approve, or disapprove of those rates. Under the current scheme
in Illinois, the auto insurance rates filed by Allstate, or any other auto insurance company, are
not subject to regulatory approval by the Department of Insurance. Thus, the filed rate doctrine is
not applicable. Accordingly, we answer the first certified question in the negative.
¶ 16 The second certified question asks whether the Illinois Department of Insurance has
primary jurisdiction to determine if the complained-of conduct by a regulated automobile
insurance company constitutes an unfair or deceptive trade practice. The doctrine of primary
jurisdiction proposes that even though the circuit court has jurisdiction over a matter, the court
should, in some instances, stay the judicial proceedings and allow an administrative agency to
decide an issue when the agency has specialized or technical expertise that would help resolve an
issue or when there is a need for a uniform answer or an administrative standard from the
agency. Segers v. Industrial Comm’n, 191 Ill. 2d 421, 427, 732 N.E.2d 488, 492 (2000); People
v. NL Industries, 152 Ill. 2d 82, 95, 604 N.E.2d 349, 354-55 (1992). The doctrine applies only
when a court has either original or concurrent jurisdiction over an issue or issues within a case.
Segers, 191 Ill. 2d at 427-28. Where the doctrine is applied, the judicial process is suspended
pending referral of the issues to the administrative body for its views. NL Industries, 152 Ill. 2d
at 95-96. There is no fixed formula for applying the doctrine of primary jurisdiction; rather, in
every case, the court must ask whether the reasons for the existence of the doctrine are present
and whether its purposes will be aided by application in the particular litigation. United States v.
Western Pacific R.R. Co., 352 U.S. 59, 64 (1956); Village of Roselle v. Commonwealth Edison
Co., 368 Ill. App. 3d 1097, 1111, 859 N.E.2d 1, 14 (2006).
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¶ 17 In this case, plaintiffs have alleged violations of the Consumer Fraud Act based on
Allstate’s failure to disclose its use of “elasticity of demand” as a non-risk-related rating factor in
its filings with the Department and its communications with customers regarding the renewal of
auto policies. Plaintiffs allege that Allstate had engaged in certain business practices that are
deceptive and unfair. The Code prohibits unfair methods of competition and unfair or deceptive
practices. 215 ILCS 5/423 (West 2012). Specific unfair methods of competition and unfair or
deceptive practices are defined in section 424 of the Code. 215 ILCS 5/424 (West 2012). The
Director has authority to investigate and to determine whether an individual or a company has
been engaged in any of the practices defined in section 424, and to issue a cease and desist order.
215 ILCS 5/424, 425, 427 (West 2012). Under section 429 of the Code, the Director also has
authority to consider and make findings as to whether a company is engaging in an unfair or
deceptive practice that is not defined in section 424, but the Director has no enforcement
authority. 215 ILCS 5/429 (West 2012). If the Director issues a report charging a violation based
on an unfair or deceptive practice that is not defined, and the practice is continuing in nature, the
Director may, through the Attorney General, file a complaint in the circuit court. 215 ILCS
5/429(2) (West 2012). Section 432 of the unfair practice section of the Code provides: “The
powers vested in the Director by this Article shall be additional to any other powers to enforce
any penalties, fines or forfeitures authorized by law with respect to the methods, acts and
practices hereby declared to be unfair or deceptive.” 215 ILCS 5/432 (West 2012). Therefore,
under this provision, the Director does not have primary or exclusive enforcement authority with
respect to deceptive practices by insurance companies.
¶ 18 Based on the allegations in the complaint, the plaintiffs are challenging deceptive
business practices that are not defined or enumerated in section 424 of the Code. The alleged
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deceptive practices are not unique to the insurance industry. Allstate has not shown that the
Director or the Department of Insurance has any specialized knowledge or technical expertise
with regard to the deceptive practices alleged. The Director does not have primary or exclusive
authority in the area of regulating deceptive practices by insurance companies. Moreover, the
allegations of unfair and deceptive business practices and unjust enrichment come within the
experience and conventional competence of the Illinois courts. Accordingly, we answer the
second certified question in the negative.
¶ 19 In the dissenting opinion, our colleague agrees that the Director and the Department have
no power to set insurance rates or preapprove filed rates, but concludes that “there is a
comprehensive statutory scheme whereby the legislature has given the [Department] the power
to disapprove rates based on unfair or deceptive acts or practices by those engaged in the
business of insurance” (infra ¶ 28). Notably, the dissent finds persuasive the reasoning in Schilke
v. Wachovia Mortgage, FSB, 705 F. Supp. 2d 932 (N.D. Ill. 2010) (Schilke I), vacated, 758 F.
Supp. 2d 549 (N.D. Ill. 2010) (Schilke II), aff’d on other grounds sub nom. Cohen v. American
Security Insurance Co., 735 F.3d 601, 607-08 (7th Cir. 2013). In Schilke I, plaintiff’s lender and
mortgagor, Wachovia Mortgage, FSB, obtained and placed insurance on Schilke’s property when
her homeowner’s insurance lapsed. The cost of the replacement coverage, obtained from
American Security Insurance Company (ASI), was more than twice what plaintiff had paid for
her own coverage and included a commission to Wachovia’s insurance agent affiliate. Under the
terms of the mortgage agreement, plaintiff was required to maintain insurance for the mortgaged
property, and Wachovia was permitted to purchase replacement coverage to protect its property
interest. Schilke I, 705 F. Supp. 2d at 935. Plaintiff filed a proposed class action and alleged
Wachovia and ASI had engaged in deceptive conduct because the insurance premium plaintiff
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was charged for the ASI policy included undisclosed fees and “kickbacks” to Wachovia. Plaintiff
alleged violations of the Consumer Fraud Act, common law fraud, conversion, and unjust
enrichment. Schilke I, 705 F. Supp. 2d at 936. The district court granted ASI’s motion to dismiss.
The court determined that plaintiff’s damages claims against the insurer were barred by the filed
rate doctrine, and that the claim for injunctive relief failed because it did not plausibly allege
proximate cause. Schilke I, 705 F. Supp. 2d at 942-43. In concluding that the filed rate doctrine
applied, the district court noted that Illinois law requires insurers to charge rates in accordance
with the rates filed with the Department. The court further noted that Illinois courts have applied
the filed rate doctrine in the context of insurance, citing Anzinger and Horwitz. Schilke I, 705 F.
Supp. 2d at 942-43. Subsequently, the court vacated its judgment in Schilke I on procedural
grounds to allow plaintiff leave to submit a proposed, amended complaint to correct deficiencies.
See Schilke II, 758 F. Supp. 2d at 553.
¶ 20 In Schilke II, the district court concluded that the proposed amended claims against ASI
were barred by the filed rate doctrine for the reasons stated in its previous judgment. Schilke II,
758 F. Supp. 2d at 558-59. On review, the United States Court of Appeals for the Seventh Circuit
affirmed the judgment on the ground that plaintiff failed to plausibly state any viable claim for
relief. See Cohen, 735 F.3d at 608. In its opinion, the Seventh Circuit questioned whether the
filed rate doctrine applied to the facts of the case, and cast doubt on the district court’s reasoning,
noting that while the insurer was required to file its insurance rates with the Department, it was
“not at all clear that the Department has the authority to approve or disapprove property-
insurance rates.” Cohen, 735 F.3d at 607-08. Like the Seventh Circuit, we have questioned
whether the filed rate doctrine applies, given Illinois’s unique open competition laws with
respect to auto insurance regulation. Earlier in this decision, we considered the Act’s legislative
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history and scheme, and we concluded that the filed rate doctrine did not apply. Under Illinois’s
current legislative scheme, the Department is not vested with the authority to set, approve, or
disapprove of auto insurance rates filed by an insurer. The dissent has not offered any additional
analysis that would change our view, and the holding in Schilke II was certainly not dispositive,
as suggested by the dissent. Therefore, we simply do not believe that the filed rate doctrine
should be applied so expansively, and we respectfully disagree with the reasoning as proffered
by our dissenting colleague.
¶ 21 Further, the dissent would also find that the Department has primary jurisdiction to
determine whether the complained-of conduct constitutes an unfair trade practice, and would,
therefore, answer the second certified question in the affirmative. We simply disagree with the
dissent’s interpretation of the current regulatory scheme governing auto insurance rates. As
noted, Allstate failed to establish that the Director or the Department of Insurance have any
specialized knowledge or technical expertise in regard to the deceptive practices alleged in the
complaint. Additionally, the allegations of unfair and deceptive business practices and unjust
enrichment come within the experience and conventional competence of the Illinois courts.
Nothing within the statutory scheme suggests otherwise, and we do not believe it our function to
do what the legislature has chosen not to act upon. For these reasons, we have answered the
second question in the negative.
¶ 22 Finally, we pause briefly to address the scope of review in a Rule 308 appeal. As noted
by the dissent, there are cases in which the interests of judicial economy and the need to reach an
equitable result may lead a reviewing court to go beyond the certified question and consider the
propriety of the order that gave rise to the appeal. However, in an interlocutory appeal under
Rule 308, the scope of review is ordinarily limited to addressing the questions certified by the
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trial court. See Lewis v. NL Industries, Inc., 2013 IL App (1st) 122080, ¶ 5, 988 N.E.2d 197;
Hudkins v. Egan, 364 Ill. App. 3d 587, 590, 847 N.E.2d 145, 148 (2006). Except in those cases
where the interests of judicial economy and equity lie, this court simply answers the certified
questions without considering the propriety of the trial court’s ruling on the underlying order.
Hudkins, 364 Ill. App. 3d at 590. In this case, we have observed our limited scope of review by
answering the certified questions, and we do not believe it appropriate to reach further and
consider the propriety of the circuit court’s underlying order.
¶ 23 III. CONCLUSION
¶ 24 For the reasons stated, the certified questions have been answered in the negative.
¶ 25 Certified questions answered; cause remanded.
¶ 26 JUSTICE MOORE, dissenting:
¶ 27 I respectfully dissent from the opinion of my colleagues, which answers both certified
questions in the negative. For the reasons that follow, I find the plaintiffs’ claims are barred by
the filed rate doctrine. Further, I find that the primary jurisdiction doctrine requires that the
Department of Insurance (DOI) and its Director determine, in the first instance, whether the
complained-of conduct by the defendant insurance companies constitutes an unfair or deceptive
trade practice. Accordingly, I would answer both certified questions in the affirmative. In
addition, in accordance with this court’s power, in the interest of judicial economy, to reach the
underlying order giving rise to the certified questions (see Crawford County Oil, LLC v. Weger,
2014 IL App (5th) 130382, ¶ 11, 15 N.E.3d 978), I would reverse the circuit court’s order
denying the defendants’ motion to dismiss and remand with directions that the circuit court
dismiss the plaintiffs’ class action complaint as to the money damages claim and stay the
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complaint for injunctive relief pending referral to the DOI as to the issue of whether the
defendants’ conduct constitutes a deceptive act or practice as it relates to the insurance industry.
¶ 28 Beginning with the first certified question on appeal regarding the applicability of the
filed rate doctrine, I disagree with the conclusion reached by the majority that the DOI “has not
been given explicit authority to approve or disapprove the rates charged, either prior or
subsequent to the filing of the rates” (supra ¶ 9) and “[t]he Director has not been given any
administrative authority to set, approve, or disapprove of those rates” (supra ¶ 15). Rather, I find
the reasoning set forth by the U.S. District Court for the Northern District of Illinois regarding
this issue to be persuasive. See Schilke v. Wachovia Mortgage, FSB, 705 F. Supp. 2d 932, 942­
43 (N.D. Ill. 2010) (Schilke I), vacated, 758 F. Supp. 2d 549, 560-61 (N.D. Ill. 2010) (Schilke II).
As the court in Schilke I and Schilke II explained, “the ‘distinction between “the power to
establish and fix rates and *** the power to disapprove the rate” ’ is not relevant for purposes of
the filed rate doctrine.” Schilke I, 705 F. Supp. 2d at 943 (quoting Horwitz v. Bankers Life &
Casualty Co., 319 Ill. App. 3d 390, 407, 745 N.E.2d 591, 605 (2001), quoting Anzinger v.
Illinois State Medical Inter-Insurance Exchange, 144 Ill. App. 3d 719, 723, 494 N.E.2d 655, 658
(1986)); see also Schilke II, 758 F. Supp. 2d at 561. While, under Illinois law, the Director and
DOI do not have the power to set insurance rates or preapprove filed rates, there is a
comprehensive statutory scheme whereby the legislature has given the DOI the power to
disapprove rates based on unfair or deceptive acts or practices by those engaged in the business
of insurance. Schilke I, 705 F. Supp. 2d at 943 (citing 215 ILCS 5/423-427, 429, 431 (West
2008)). Because the DOI has the power to disapprove insurance rates on the grounds that an
insurance company utilizes an unfair or deceptive act or practice in setting such rates, I find that
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the filed rate doctrine is applicable to the plaintiff’s claims. Therefore, I would answer the first
certified question in the affirmative.
¶ 29 Similarly, I would find that the DOI has primary jurisdiction to determine if the
complained-of conduct constitutes an unfair or deceptive trade practice. In enacting article XXVI
of the Insurance Code, entitled “Unfair Methods of Competition and Unfair and Deceptive Acts
and Practices,” the legislature made the following statement of purpose:
“The purpose of this article is to regulate trade practices in the business of insurance in
accordance with the intent of Congress as expressed in the Act of Congress of March 9,
1945 (Public Law 15, 79th Congress),[1] by defining, or providing for the determination
of, all such practices in this State which constitute unfair methods of competition or
unfair or deceptive acts or practices and by prohibiting the trade practices so defined or
determined.” 215 ILCS 5/421 (West 2016).
¶ 30 Article XXVI not only defines specific unfair or deceptive acts or practices (id. § 424), it
contains a detailed procedure to determine whether undefined acts or practices are unfair or
deceptive (id. § 429). Article XXVI gives the Director power to examine and investigate such
practices, provides for an administrative hearing as to such practices, provides for intervention
by affected parties, and provides for judicial review as to any determination. Id. §§ 425, 426,
428, 430. In addition, the Director is authorized to issue cease and desist orders (id. § 427) and
impose penalties for a violation of such orders (id. § 431). In the case of undefined deceptive acts
or practices, the Director may employ the Attorney General to enjoin or restrain any such act or
practice. Id. § 429(2). Thus, article XXVI plainly gives the DOI concurrent jurisdiction to
determine what constitutes a deceptive act or practice in the context of the insurance industry.
1
15 U.S.C § 1011 et seq. (2012).
16
¶ 31 In support of its conclusion that the primary jurisdiction doctrine is inapplicable, the
majority repeatedly states that the DOI does not “have primary or exclusive authority in the area
of regulating deceptive practices by insurance companies.” See supra ¶¶ 17-18. While I assume,
for the sake of argument, that this statement is correct, I respectfully disagree that this is the
correct inquiry to be made when determining whether an exercise of the primary jurisdiction
doctrine is appropriate. The doctrine of primary jurisdiction presumes that a court has
jurisdiction over a matter, but provides that it should, in some instances, stay the judicial
proceedings, pending referral of a controversy, or some portion of it, to an administrative agency
having expertise in the area. Employers Mutual Cos. v. Skilling, 163 Ill. 2d 284, 288, 644 N.E.2d
1163, 1165 (1994). The doctrine is “ ‘ “concerned with promoting proper relationships between
the courts and administrative agencies charged with particular regulatory duties.” ’ ” Id. (quoting
Kellerman v. MCI Telecommunications Corp., 112 Ill. 2d 428, 444, 493 N.E.2d 1045, 1052
(1986), quoting United States v. Western Pacific R.R. Co., 352 U.S. 59, 63 (1956)). “Under this
doctrine, a matter should be referred to an administrative agency when it has a specialized or
technical expertise that would help resolve the controversy, or when there is a need for uniform
administrative standards.” (Emphasis added.) Id. at 288-89 (citing Kellerman, 112 Ill. 2d at
445). I find that the regulatory scheme our legislature adopted regarding the determination of
what constitutes a deceptive act or practice in the context of the insurance industry establishes
both of these elements.
¶ 32 Contrary to the assertion of the majority, I find that section 432 of the Insurance Code
supports, rather than defeats, a conclusion that the DOI should decide the issue of whether the
defendants’ conduct amounts to a deceptive act or practice under the doctrine of primary
jurisdiction. See supra ¶ 17. That provision states the Director’s powers under article XXVI of
17
the Insurance Code are additional to any other powers to enforce that are authorized by law “with
respect to the methods, acts[,] and practices hereby declared to be unfair or deceptive.”
(Emphasis added.) 215 ILCS 5/432 (West 2016). In my view, this is another declaration, made
by our legislature, that it is the DOI’s province to determine whether “methods, acts, or
practices” in the insurance industry are unfair or deceptive. For these reasons, I would answer the
second certified question in the affirmative.
¶ 33 Having answered both of the certified questions in the affirmative, I would, in the interest
of judicial economy, reach the order underlying the certified questions, which is the circuit
court’s order denying the defendants’ motion to dismiss. See Weger, 2014 IL App (5th) 130382,
¶ 11. After so doing, I would reverse the circuit court’s order and remand this cause with
directions that the circuit court dismiss the plaintiffs’ class action complaint, insofar as it alleges
a cause of action for money damages, and stay the action requesting injunctive relief pending
referral of the issue of whether the defendants’ conduct amounts to an unfair or deceptive
practice to the DOI.
¶ 34 For all of the foregoing reasons, I respectfully dissent.
18
2019 IL App (5th) 170296
NO. 5-17-0296
IN THE
APPELLATE COURT OF ILLINOIS
FIFTH DISTRICT
JEFFREY A. CORBIN, MARGARET A. ) Appeal from the
CORBIN, and ANNA TRYFONAS, ) Circuit Court of
) Madison County.
Plaintiffs-Appellees, )
)
v. ) No. 16-L-880
)
THE ALLSTATE CORPORATION, ALLSTATE )
INSURANCE COMPANY, ALLSTATE )
INDEMNITY COMPANY, ALLSTATE PROPERTY )
AND CASUALTY COMPANY, and ALLSTATE )
FIRE AND CASUALTY COMPANY, ) Honorable
) Barbara L. Crowder,
Defendants-Appellants. ) Judge, presiding.
____________________________________________________________________________________
Opinion Filed: January 29, 2019
____________________________________________________________________________________
Justices: Honorable Judy L. Cates, J.
Honorable Melissa A. Chapman, J., concurred
Honorable James R. Moore, J., dissented
____________________________________________________________________________________
Attorneys Troy A. Bozarth, Kathryn Modeer, HeplerBroom LLC, 130 North Main
for Street, Edwardsville, IL 62025-0510; Michael P. O’Day (pro hac vice),
Appellants Kathleen A. Birrane (pro hac vice), DLA Piper LLP (US), The Marbury
Building, 6225 Smith Avenue, Baltimore, MD 21209-3600
____________________________________________________________________________________
Attorneys Jay Angoff (pro hac vice), Cyrus Mehri (pro hac vice), Steven Skalet
for (pro hac vice), Christine Monahan (pro hac vice), Mehri & Skalet PLLC,
Appellees 1250 Connecticut Ave. NW, Suite 300, Washington, D.C. 20036; Thomas
E. Kennedy III, Sarah Jane Hunt, Law Offices of Thomas E. Kennedy, III, L.C.,
906 Olive Street, Suite 200, St. Louis, MO 63101; Andrea R. Gold, Tycko &
Zavareei LLP, 1828 L Street NW, Suite 1000, Washington, D.C. 20036; Peter
Kahana (pro hac vice), Jeff Osterwise (pro hac vice), Berger & Montague, P.C.,
1622 Locust Street, Philadelphia, PA 19103
____________________________________________________________________________________