Skotnicki, G., Aplt. v. Insurance Department, 175 A.3d 239

Background

Appellant Gregory Skotnicki's homeowners policy with Phoenix involved a July 2013 dog-bite claim; Phoenix paid $42,500 and later issued notices first of non-renewal (Apr. 22, 2014) and then cancellation (Jun. 18, 2014).
Skotnicki appealed both insurer actions to the PA Insurance Commissioner under the Act 205 regulations (31 Pa.Code § 59.7); Consumer Services conducted investigations and issued investigative reports in each appeal.
The May 28, 2014 Consumer Services report on the non-renewal concluded Phoenix violated Act 205 and directed continuation of coverage, but stated it was not an adjudication; Phoenix requested a hearing and then withdrew that appeal before a Commissioner order was entered.
The July 14, 2014 Consumer Services report on the cancellation concluded Phoenix met Act 205 requirements; a de novo hearing occurred (Sept. 30, 2014) before the Commissioner who later issued a final Adjudication and Order (Jan. 15, 2015) finding the bite unprovoked and upholding cancellation.
Skotnicki argued collateral estoppel barred relitigation because the earlier investigative report (and the withdrawal of Phoenix’s appeal) produced a final adjudication on provocation; the Commissioner and Commonwealth Court rejected that claim.
The Supreme Court reviewed whether Consumer Services’ investigative reports (absent a Commissioner order) constitute final adjudications for collateral estoppel purposes and affirmed the Commonwealth Court.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a Consumer Services investigative report (without a Commissioner order) is a final adjudication for collateral estoppel	Skotnicki: the investigative report was part of the formal record and, after Phoenix withdrew its appeal, became a final adjudication binding on Phoenix	Department/Phoenix: investigative reports are tentative, non-adjudicative; only the Commissioner’s final order adjudicates the merits	Held: investigative reports are not final adjudications; collateral estoppel does not apply absent a Commissioner order
Whether withdrawal of an insurer’s request for a formal hearing converts the investigative report into a final judgment	Skotnicki: Phoenix’s withdrawal meant it accepted the investigative report and was bound by it	Department: withdrawal did not create a final merits judgment; Commissioner did not enter an order	Held: withdrawal did not create a final adjudication; no binding judgment resulted
Whether the issues in the two appeals were identical for collateral estoppel	Skotnicki: same parties and same factual issue (provocation) were addressed in both reviews	Department: the notices and procedural posture differed; the second proceeding was a de novo hearing with additional evidence	Held: even if issues overlapped, the lack of a final adjudication in the first proceeding defeats estoppel; de novo hearing may produce different result
Whether parties had a full and fair opportunity to litigate the issue in the initial Consumer Services review	Skotnicki: Phoenix had due process and the opportunity to seek a hearing, so estoppel should apply	Department: Consumer Services’ initial review did not develop a formal record or permit full de novo litigation; hearing provides full opportunity	Held: the de novo hearing is the forum for full adjudication; Consumer Services’ report did not provide a final, full-litigation adjudication

Key Cases Cited

Safeguard Mut. Ins. Co. v. Williams, 345 A.2d 664 (Pa. 1975) (sets out collateral estoppel elements)
Office of Disciplinary Counsel v. Kiesewetter, 889 A.2d 47 (Pa. 2005) (discusses collateral estoppel and its purposes)
Toy v. Metropolitan Life Ins. Co., 928 A.2d 186 (Pa. 2007) (describes Act 205 and Commissioner enforcement authority)
Freedom Med. Supply, Inc. v. State Farm Fire & Cas. Co., 131 A.3d 977 (Pa. 2016) (plain-language interpretation of regulations)
In re Vencil, 152 A.3d 235 (Pa. 2017) (standard of review for legal questions)