United Insurance Co. of America v. Maryland Insurance Administration
144 A.3d 1230
| Md. | 2016Background
- United Insurance Co. of America and Reliable Life (Petitioners) challenge Maryland Ins. § 16-118, which requires insurers to routinely compare in-force life policies against a death master file and take steps if matches are found; statute became effective Oct. 1, 2013 and did not state whether it applied retroactively.
- Petitioners’ small-face-value, low-premium in-force policies required beneficiaries to provide proof of death; Petitioners priced policies on that basis and argued retroactive enforcement would impose unforeseen costs and contractual burdens.
- Commissioner Goldsmith told Petitioners in Feb. 2013 the MIA would enforce § 16-118 against in-force policies (i.e., retroactively), and Petitioners sued in Anne Arundel Circuit Court seeking a declaratory judgment that the statute does not apply retroactively (or is unconstitutional as applied).
- MIA moved to dismiss for failure to exhaust administrative remedies under Ins. § 2-210; circuit court granted dismissal; Court of Special Appeals affirmed; Maryland Court of Appeals granted certiorari.
- The Court of Appeals examined whether the Insurance Article’s administrative remedy is primary (requiring exhaustion) and whether the constitutional exception to exhaustion applies to Petitioners’ challenge.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Petitioners must exhaust administrative remedies under Ins. § 2-210 before seeking declaratory relief | Petitioners: § 2-210 allows concurrent relief; they may go directly to court (and their claim is a constitutional, common-law challenge not dependent on the agency) | MIA: § 2-210 provides a primary remedy covering threatened enforcement; Petitioners’ claims depend on the statute and agency expertise | Held: Administrative remedy is primary; Petitioners must invoke and exhaust the MIA process before court review |
| Whether Commissioner Goldsmith’s pre-effective-date statement was a "threatened act" triggering § 2-210 | Petitioners: The informal, nonpublic statement is not a statutory "threatened act" and thus § 2-210 does not apply | MIA: The Commissioner’s declaration that MIA would enforce the statute retroactively constitutes a threatened act under § 2-210 | Held: Commissioner’s statement qualified as a threatened act; § 2-210 covers Petitioners’ grievance |
| Whether Petitioners’ constitutional challenge (retroactive application / impairment of contracts) falls within the constitutional exception to exhaustion | Petitioners: The challenge attacks the legislature’s power to impose retroactive obligations on pre-existing contracts and thus is a direct constitutional attack exempting them from exhaustion | MIA: The claim challenges application of the statute to a particular situation and MIA’s interpretation, so exception does not apply | Held: Constitutional exception inapplicable — Petitioners challenge application to their in-force policies, not the statute’s validity as a whole |
| Whether the MIA’s expertise is relevant to Petitioners’ dispute over retroactivity and economic impact | Petitioners: Retroactivity and constitutional questions are purely legal and not within MIA expertise; courts need not defer | MIA: Determinations about policy administration, premium effects, enforcement consequences and statutory construction are within MIA expertise | Held: MIA expertise is relevant; factual and statutory-construction aspects should be addressed first administratively |
Key Cases Cited
- Zappone v. Liberty Life Ins. Co., 349 Md. 45, 706 A.2d 1060 (Md. 1998) (test and presumption that administrative remedy is primary; factors to weigh)
- Carter v. Huntington Title & Escrow, LLC, 420 Md. 605, 24 A.3d 722 (Md. 2011) (Insurance Article is a comprehensive remedial scheme; agency expertise and special remedy factors)
- Prince George’s County v. Ray’s Used Cars, 398 Md. 632, 922 A.2d 495 (Md. 2007) (discussion of constitutional exception narrowness and reasons for exhaustion)
- John Deere Const. & Forestry Co. v. Reliable Tractor, Inc., 406 Md. 139, 957 A.2d 595 (Md. 2008) (adopted Landgraf retroactivity analysis for Maryland law)
- Landgraf v. USI Film Prods., 511 U.S. 244 (U.S. 1994) (framework for assessing whether a statute operates retroactively)
- Goldstein v. Time-Out Family Amusement, 301 Md. 583, 483 A.2d 1276 (Md. 1984) (constitutional exception applies only to facial attacks on a statute as a whole)