201 A.3d 899
Pa. Commw. Ct.2019Background
- Woodford and Options Insurance Agency (Producer) are licensed insurance producers; the Pennsylvania Insurance Department (Department) alleged violations related to referral fees and consumer fees and filed an order to show cause in Nov. 2016.
- Department charged Producer with: unlawful referral fees (Section 672-A(b)(2)); charging fees in addition to commissions for personal/consumer insurance (Section 674-A(a)); charging fees for completing insurance applications (Section 674-A(b)); and conduct bearing on worthiness for licensure (Sections 611-A(7) and (20)).
- Producer moved for summary judgment and submitted an affidavit from Woodford denying unlawful conduct; the Department’s untimely answer and affidavits were struck, but the Commissioner denied summary judgment citing unresolved credibility issues.
- After an evidentiary hearing, the Commissioner found (1) no proved violation as to referral-fee limits but nonetheless included that section in a cease-and-desist order, (2) that fees in addition to commissions for consumer/personal insurance are prohibited (deferred to Department’s reasonable interpretation) but declined penalties retroactively, and (3) one violation of prohibiting fees for completing an insurance application (Section 674-A(b)); imposed a $5,000 fine and five years of Department supervision.
- Producer appealed. The Commonwealth Court affirmed most of the Commissioner’s rulings but reversed the cease-and-desist order insofar as it related to Section 672-A(b)(2) because the Commissioner found no violation of that provision.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether striking the Department's untimely response required granting Producer summary judgment | Woodford: Untimely response eliminated factual disputes; summary judgment should be entered | Department: Nanty-Glo rule bars granting summary judgment on the moving party’s affidavit alone; credibility issues remain for factfinder | Denied summary judgment was proper; administrative adjudicator serves as factfinder and credibility issues precluded summary judgment |
| Whether Section 674-A(a) allows charging fees in addition to commissions for personal/consumer insurance | Producer: Fees charged were lawful; Commissioner initially found ambiguity that could permit fees | Department: Specific authorization for commercial fees implies consumer fees are prohibited; Commissioner should defer to Department | Commissioner reasonably found statutory ambiguity but deferred to Department and proscribed future consumer fees; Court upheld prospective prohibition but declined retrospective penalties |
| Whether Producer violated Section 674-A(b) (fees for completing applications) | Producer: Fee was for representation/broker services, not application preparation; stipulations showed insurers prepared applications | Department: Agreement and internal letter tied the $70 fee to application assistance | Commissioner’s finding of one violation was supported by substantial evidence (consumer agreement and employee letter); Court affirmed |
| Whether penalties/cease-and-desist were proper, including for referral-fee provision | Producer: No violation, so no penalties or cease-and-desist should issue | Department: Violations justify penalties and supervision; aggravating conduct supports sanctions | Court reversed cease-and-desist as to referral-fee provision (no violation found) but affirmed penalties and orders related to Sections 674-A(a) and (b); consideration of conduct bearing on licensure was proper |
Key Cases Cited
- Borough of Nanty-Glo v. American Surety Co., 163 A. 523 (Pa. 1932) (rule limiting summary judgment based on party's own affidavit in jury trial context)
- Snyder v. Dep’t of Envtl. Res., 588 A.2d 1001 (Pa. Cmwlth. 1991) (administrative adjudicator, not Nanty-Glo, resolves credibility)
- Peoples Nat. Gas Co. v. Pa. Pub. Util. Comm’n, 554 A.2d 585 (Pa. Cmwlth. 1989) (similar administrative factfinder principle)
- Termini v. Dep’t of Ins., 612 A.2d 1094 (Pa. Cmwlth. 1992) (Commissioner is ultimate finder of fact; may consider misconduct bearing on licensure)
- Prudential Prop. & Cas. Ins. Co. v. Dep’t of Ins., 595 A.2d 649 (Pa. Cmwlth. 1991) (deference to Commissioner on factual findings)
- Skotnicki v. Ins. Dep’t, 146 A.3d 271 (Pa. Cmwlth. 2016) (credibility determinations by Commissioner are binding on review)