State Ex Rel. Commissioner of Insurance v. North Carolina Rate Bureau

277 S.E.2d 844 (1981)

STATE of North Carolina, ex rel. COMMISSIONER OF INSURANCE
v.
NORTH CAROLINA RATE BUREAU.

No. 8010INS953.

Court of Appeals of North Carolina.

May 19, 1981.

Atty. Gen. Rufus L. Edmisten by Sp. Deputy Atty. Gen. Isham B. Hudson, Jr., Raleigh, for the Commission of Ins.

Young, Moore, Henderson & Alvis by William M. Trott and Dan J. McLamb, Raleigh, for the North Carolina Rate Bureau, appellants.

BECTON, Judge.

Article 12B of Chapter 58 of the North Carolina General Statutes is the enabling legislation for the North Carolina Rate Bureau which was designed to assume the rate-making functions formerly performed by the North Carolina Rating Bureau, the North Carolina Automobile Rate Administrative Office and the Compensation Rating and Inspection Bureau of North Carolina. G.S. § 58-124.17. Under G.S. § 58-124.20, the Rate Bureau must file with the Commissioner copies of the rates, classification plans, rating plans and systems used by member insurance companies. Each filing becomes effective as of the date specified in the filing, but no earlier than ninety days from the date the Commissioner receives the filing. G.S. § 58-124.21 gives the Commissioner discretionary authority to give the Rate Bureau written notice, within thirty days of a filing, that such filing does not comply with the requirements of Article 12B and that a date not less than thirty days from the mailing of such notice has been set for a public hearing on the filing.

Article 12B is silent on the questions of how and when a filing might be withdrawn by the Rate Bureau. In Comr. of Insurance v. Rating Bureau, 29 N.C.App. 237, 224 S.E.2d 223, affirmed, 291 N.C. 55, 229 S.E.2d 268 (1976), the North Carolina appellate courts agreed that a rating bureau (in that case, the North Carolina Fire Insurance Rating Bureau) could withdraw a filing if it did so before the Commissioner took any action on the filing and before the filing could go into effect pursuant to G.S. § 58-131.1.^[4] Both this court and the Supreme Court held open the question of whether a rating bureau could withdraw a filing after the Commissioner had set the filing for a public hearing. That issue now confronts us.

We hold that it was proper for the Rating Bureau to withdraw its voluntary filing in this case.^[5] In reaching this conclusion, we have been guided by the reasoning found in the following words of the Supreme Court decision in Comr. of Insurance v. Rating Bureau:

We have heretofore said that when the Bureau makes a filing in which it proposes an increase in the premium rates, "unquestionably, the Bureau may amend its filing so as to propose a smaller increase in premium rates than that proposed in the original filing." [Citation omitted.] We find no merit in the contention of the Commissioner that once a filing is made the Bureau cannot withdraw it, but it remains before the Commissioner for his approval, disapproval or modification.

If a filing, once made, could never be withdrawn, it would follow that if the Bureau made a filing proposing a substantial increase in the premium rates which the Commissioner, with or without justification, failed to disapprove within 60 days after its submission, such increase would go into effect, at least temporarily, pursuant to the "deemer" provision of G.S. 58-131.1, even though the Bureau were to find that its calculations were in error and no increase was justified and were to advise the Commissioner of such an error and of its desire to withdraw the proposal. It can hardly be supposed that the Legislature, by the enactment of Article 13 of Chapter 58 of the General Statutes, creating the Bureau, so intended. Nothing in the statute relating to filings by the Bureau supports the contention that a filing, once made, cannot be withdrawn for any reason satisfactory to the Bureau. In this respect, there is no basis for making a distinction between a filing which proposes an increase in the premium rate and a filing which proposes a decrease in such rate. We, therefore, hold that the Court of Appeals was correct in its determination that the Bureau was acting within its rights in withdrawing this filing ....

291 N.C. at 66, 229 S.E.2d at 274. This analysis applies with equal force to the situation before us. We find no compelling reason to conclude that a voluntary filing may not be withdrawn. The Commissioner's argument that allowing withdrawals will thwart the intent of Chapter 12B to avoid delays in the rate-making process is not persuasive. Withdrawals of filings for rate increases will delay the effective dates of such increases and will, it seems logical to assume, be avoided by the Rate Bureau. Furthermore, the references in the Commissioner's Order to expenditure of time and energy by Commission staff is also unpersuasive. The withdrawal of the filing reduced the amount of work necessitated by the filing. Much of the preparation for the 10 June hearing should prove beneficial if, and when, the Rate Bureau resubmits a filing. Moreover, the Commissioner performs his service ably and well and saves the State money when he prevails at a hearing or forces the Rate Bureau to withdraw or amend its filing prior to a hearing.

Since the Rate Bureau withdrew its filing, the matter was concluded. There was, therefore, no proposal before the Commissioner for a change in fire and extended coverage rates. The order appealed from was null and void and is vacated.

For two additional reasons, the order appealed from must be vacated. First, the Commissioner was, by virtue of his press release of 6 June 1980, estopped from claiming that the filing could not be withdrawn. We read the last paragraph of that press release, containing the phrases "the withdrawal will save the people ..." and "had the Hearing proceeded," as clear indications that the Commissioner acquiesced in the withdrawal of the filing and in cancellation of the hearing. We are not here implying that the Commissioner intentionally or fraudulently misled the Rate Bureau by his press release. It is not necessary to show bad faith, fraud, or intent to deceive before the doctrine of equitable estoppel can be applied. Watkins v. Central Motor Lines, Inc., 279 N.C. 132, 181 S.E.2d 588 (1971).

[A] party may be estopped to deny representations made when he had no knowledge of their falsity, or which he made without any intent to deceive the party now setting up the estoppel.... [T]he fraud consists in the inconsistent position subsequently taken, rather than in the original conduct. It is the subsequent inconsistent position, and not the original conduct that operates to the injury of the other party.

Hamilton v. Hamilton, 296 N.C. 574, 576-77, 251 S.E.2d 441, 443 (1979), quoting H. McClintock, Equity § 31 (2d ed. 1948).

At no point in the case before us did the Commissioner indicate to the Rate Bureau that the withdrawal of its filing was unacceptable. Indeed, the record shows that at the time and place set for the hearing, neither the Commissioner nor the Rate Bureau sent representatives. No evidence was presented. The 20 June 1980 filing of an order in this matter was entirely inconsistent with the Commissioner's earlier position. He was, therefore, estopped from issuing an order in this matter.

Finally, the Commissioner's Order is void because it was rendered in the absence of a hearing on the filing. G.S. § 58-124.21(a) states, in part, that at the hearing set by the Commissioner, evidence as to factors pertinent to the proposed rate shall be considered. "If the Commissioner after hearing finds that the filing does not comply with the provisions of this Article, he may issue his order ...." (Emphasis added.)

We find it unnecessary to address the obvious question of the due process rights of the member companies of the Rate Bureau. The statutes referred to above make adequate provisions for protecting their due process rights to notice and hearing. "It is only necessary that the Commissioner comply with the mandates of the statutes." Comr. of Insurance v. Rating Bureau, 29 N.C.App. at 248, 224 S.E.2d at 229. Here, the Commissioner entered an order even though there had been no hearing.

The order appealed from is, therefore,

Vacated.

ROBERT M. MARTIN and WHICHARD, JJ., concur.

NOTES

[4] G.S. § 58-131.1, the so-called "deemer" provision, has been replaced by G.S. § 58-124.21(b) by which a filing is "deemed to be approved" if no notice of hearing is issued within thirty days from the date of the filing.

[5] There is no suggestion in the Record before us that the Commissioner has been bombarded with a series of filings and last-minute withdrawals which might naturally tie the Commissioner's hands. We save for another day our judgment on the propriety of a well-calculated withdrawal by the Rate Bureau to gain a tactical advantage over the Commissioner.