*1 Allstate Life Insur Company, Aetna Life Insurance Company, Company ance Men’s Business Assurance America, Life Insurance Connecticut General Company, Company, Life IDA Hartford Insurance Montgomery Company, Life Insurance Ward Life Company, Insurance Occidental Life Insurance Com pany California, Philadelphia Life Insurance Company, Provident Life Accident Insurance Company, Company, The Rockford Life Insurance Company, Paul Life Revere Insurance The Travel Company, Washington ers Insurance National In Company, Andersen, surance John B. Stuart U. Crawford, Lund, Joseph Mannix, William R. Pat O’Donahue, Rath, Tripp, rick J. James Keith J. National Association of Life Underwriters and Wis Underwriters, consin Association of Life Plaintiffs- Respondents,
v. Susan M. Commissioner of Insurance Mitchell, Insurance,
Office of Commissioner of Defendants- Appellants.†
Supreme Court Argued No. January 7, 80-518. 31, 1981. Decided March 1981. (Also reported 639.) in 303 N.W.2d denied, Motion for † costs, reconsideration May without 1981. *2 appellants argued by For the the cause D. was James Jeffries, attorney general, assistant with whom on the briefs Follette, attorney general, were Bronson C. La Repasky Robert D. Gilíes, and David J. assistant attor- neys general. by P. Axel- respondents
For there Jon was brief Huggett rod, Sundby, DeWitt, Erie Farnsworth A. argument by Madison, Schumacher, oral S.C., & Jon P. Axelrod. Representa-
Amicus for Public Curiae brief Center tion, League, Con- Consumers and Wisconsin National League by Thwin, Center was filed Gerald J. sumers Swankin, Representation, Public David Con- National League, Brown, and James L. Consum- sumers Wisconsin League, ers all of Madison. In- of Life of American Council
Amicus Curiae brief Ross Hildebrand and & was filed Daniel surance W. Stevens, S.C., of Madison.
Amicus brief of The National Association Curiae Hanson, Jon Insurance Commissioners was filed S. secretary executive of Brookfield.
COFFEY, appeal judgment a J. This an from county, Jackman, circuit for court Dane the Hon. W. J. presiding. Judge, Reserve The circuit court declared 2.14(3) (a) (f)1 (3) Wis. Code Ins. § Adm. and when joined 2.14(4) (a) (effective with Adm. Wis. Code Ins. § February 1980) applicable invalid insofar as to whole policies enjoined Mitchell, life M. Susan Commis- Insurance, appellant, enforcing sioner of any pen- from alty for a violation of the said rules. This action is before this court on certification from appeals. the court of May 10, 1979,
On this case was before this court for involving the first time provisions these of the code but with an earlier January 1, effective date of 1979. These § 2.14(3) (a) Adm. Code (3) Wis. Ins. (f) ap creates pendixes § 1 and 3 to Wis. Adm. Code Ins. 2.14 which set forth the mandatory life insurance cost disclosure information that is the subject suit, namely, this “Preliminary of Policy Summary, Life,” Buyer’s Whole and “The Wisconsin Guide to Life Insur through at ance.” Id. 39 and 41 pp. 42-3. See also: 6-8 infra. Wilde, then Commis- R. rules, promulgated Harold to companies Insurance, insurance life directed sioner of with information policy purchasers provide prospective life, (term, whole describing types life insurance pamphlet respective in a costs endowment) and their Buyer’s to Life Insurance” entitled “The Wisconsin “Pre- together ,2 form labelled (Buyer’s Guide) with a Summary” Summary). (Policy liminary Policy required Policy Summary Buyer’s Guide and necessity of emphasized the prior to sale delivered to be Index Cost policies the Surrender comparing the shopping aid in comparative means of (SCI)3 aas Cost policy. The determining Surrender lowest cost being considered were policies for the Index numbers January 1, 1979, § 2.14(4) (a), effective Code Adm. Ins. Wis. provided: provide, (a) requirements, The insurer shall “(4) Disclosure rule, any policy subject purchasers this prospective to all Buyer’s Life copy Guide to edition the Wisconsin the current Summary Preliminary Policy properly filled Insurance and a out premium premium prior applicant’s de- accepting or initial through except posit, not market insurers which do Policy Summary Preliminary intermediary may provide an point Buyer’s Insurance at Guide to Life Wisconsin’s long they: delivery, so pol- 30-day right policyholder to return the “Guarantee to icy premium, a full refund of prospective policyholder, direct “Alert the advertisements solicitations, right copy her to obtain a of the Wis- mail of his or Preliminary Policy and a consin Guide to Life Insurance Summary prior to sale.” *4 Bro Insurance Fund The is described in the State Life SCI chure as follows: using dividends, premiums, “This index is calculated [SCI] for the of the index and an after-tax interest cash value duration assumption are on the the in- These cost values based that rate. years] live for the duration the index 20 and sured will of [10 paid according dividends will then surrender the and that of to the current dividend scale. The value is based on $1000 insurance.”
94 required to to the consumer with the one- be disclosed page Policy Summary form. January 1978, shortly 1,
On December before rule, date of Aetna effective Commissioner Wilde’s others,4 Company (Aetna) the re Life Insurance spondents, pursuant an commenced action 227.05 sec. seeking temporary (1), Stats., permanent a both enforcing injunction enjoining the from Commissioner judgment declaring these same rules and a them invalid beyond unconstitutional, as power the Commissioner’s rule-making statutory compliance establish not in proc al., complaint, Aetna, In et its edures.5 alleged part that the Commissioner’s rules exceeded authority, his the life insurance disclosure ma cost given prospective purchasers terials ordered to be incomplete misleading were 628.34 in violation sec. — (1), Stats., in that these suf did not contain materials information to an ficient enable consumer to make they purchase falsely repre informed decision and costly policy sented that the least could be determined solely by comparison the SCI numbers under Aetna consideration. based this claim on the fact Policy Summary Guide and ordered repeatedly emphasized import Commissioner Wilde ance the Surrender Cost Index as follows: Policy Summary policy, “To find a policy’s low-cost look to the Sur- Index, premium.
render Cost not its “The lower Index, the Surrender Cost lower the policy’s jmu.” cost to parties appeal to this are Aetna and 13 other insur life companies ance agents well 7as life insurance associa tions life insurance underwriters. statutory We neither address the constitutional nor rule- making procedure challenges as we resolve this case on the basis allegations support beyond of the claim that rules power the Commissioner’s to establish. *5 Buyer’s Guide called index is
“The basic life insurance cost Cost Index’. ‘Surrender thing may important know sum- “But the most quite simply: POLICIES WITH marized LOOK FOR THEY NUMBERS. LOW SURRENDER INDEX COST THE COST LEAST. “THE REMEMBER IMPORTANT THING TO MOST IS INDEX WHEN USING THE COST SURRENDER A BET- A THAT A NUMBER IS GENERALLY SMALL TER A POLICY BUY THAN COMPARABLE WITH (Emphasis capital letters LARGER original.) NUMBER.” request (Judge Sachtjen)6
The trial court denied the temporary injunction appealed. Aetna, al., for et appeal, appellate court re- At the time the first trial court versed circuit court directed the but enjoin pending on the of the a trial enforcement rule appellate decision, concludedthat merits. In its court “unqualified” representations low with that in the numbers “cost the least” contained SCI Policy Summary the court were always policies with that “it true determined On cost the least.” low Index numbers Surrender Cost having original appeal, court, considered Wilde’s this appeals, petition decision of the court to review the ruling propositions law that “the vacated the decision opinion appeals in its should the court addressed hearing authoritatively until after a determined not be agree However, court did on the merits.” this injunction, temporary appeals and continued the court of remanding directing court to the circuit the case pending enjoin rule, a hear- enforcement court to ing on the merits. Sachtjen. assigned Judge originally The rec was The case why transferred to Reserve the case was
ord does not disclose Judge Jackman after remand.
During period first the interim of time between *6 subsequent court, appeal circuit and the remand to the replaced M. Mitchell as Commissioner Susan Wilde hearing possible to review a Insurance and conducted a challenged Following hear- modification of the ing, rules. this change Mitchell directed a in the effective date January 1, 1979 to these administrative code rules from February 1, further, on or made minor after 19807 and changes Policy Summary. Buyer’s An in the Guide and example change restating a is Mitchell’s of minor Wade’s representations concerning policies earlier the cost of qualifying repre- by merely with low numbers SCI “likely” sentation with the insertion word follows: “A A POLICY SURRENDER IN- WITH LOW COST (Emphasis DEX IS LIKELY TO BE A BETTER BUY.”
supplied.) 20, 1979, shortly On November after Commissioner language change Buyer’s Mitchell ordered the in the Preliminary Policy Guide and the Summary,8 Aetna filed an complaint again amended and claimed that they amended rules were invalid for mandate the distribu- tion of incomplete misleading material, contrary sec. — (1), 628.34 Specifically, language Stats. Aetna termed the change by merely Commissioner “change Mitchell as without substance” and reiterated that the amended rules require continued to incomplete— the distribution of misleading cost disclosure information. 7 § See: Wis. 2.14(6) (Jan., 1980). Adm. Code Ins. 1, supra As noted in § n. at 2.14(8) Wis. Adm. (a) Code Ins. (f) (Jan., 1980) provide and the current “editions” Buyer’s Preliminary Policy Guide Summary required § be distributed under 2.14(4) (a) Wis. Code Ins. Adm. are set appendices forth in appendices to the These rule. contain challenged representations. allegation the amended was that for this
The basis Summary required dis Policy to be did rules code tributed, pursuant to the administrative an purchasers life with accurate provide of whole particular because picture the relative cost of practical exclusion they еmphasized the SCI to al., Aetna, claimed et life cost indices. other insurance namely, indexes, insurance cost two other life Equivalent Payment (NPCI)9 Net Index and the Cost (ELAD)10 also disclosed Level Annual Dividend must provide with sufficient informa in order to the consumer purchase make an tion to informed decision. dealing the evidence tried to the court and
The case was ELAD, SCI, NPCI the actuarial bases of the *7 relating in nature of whole life as well as that to the policies, dispute. Aetna, support of is surance not Buyer’s Policy their claim that the Guide and the Sum mary delivery unless disclosure of required sale, is the NPCI also that before established policy dependent upon the true cost of a whole life is Payment The Net Cost Index also in the is described State Life Insurance Fund Brochure as follows: payments “The index is manner calculated in the same [NPCI] comparable except as the Life Insurance Index Surrender Cost any that the cash surrender value and terminal are not dividend used. This index is useful if the main concern is which the benefits paid are to be at death and if the level of is of sec- cash values ondary importance. helps compare time, It costs at some future years, policyholder paying pre- such as 10 or 20 if the continues policy miums on the and does not take the cash surrender value.” Equivalent Level Annual Dividend is defined in the prescribed by Commissioner Mitchell as . . an “. average dividend, taking annual money the time value of ac into § p. count.” appendix. Wis. Adm. Code Ins. 2.14 at 42—2 of is It impact used to determine of illustrated dividends or non- guaranteed values on the SCI or NPCI. Ibid. ELAD reveals which greater policy non-guaranteed has the dividend. terminated,11 by how it surrender for cash death or value. The the NPCI measures of the SCI and are both policies relative costs of life assum whole SCI ing policy by value12 termination for cash surrender assumption premised upon while the NPCI policy by termination death.13 trial, Aetna,
At num- with the introduction of exhibits consequence bered 61 and that of the established as a assumption policy than surrender rather termination by accurately death, cannot of the alone use SCI predict comparative life when costs whole death, by assumption terminated cash purchaser policy value of the will be returned to the does Further, by not policy occur if death. is terminated policy is these in the event a exhibits demonstrate surrendered, the NPCI is accurate measure the more considering policy’s when of the com- all elements parative since, contrary SCI, cost14 to the the NPCI policy by assumes the will death be terminated and the cash value will not be available to reduce the cost of the policy. dealing
These exhibits reflected the results of studies accuracy with the predicting costly SCI in the less of two policies, assuming whole life that each will terminated death rather than surrender ten and twenty years after issue. Each exhibit established that when termination assumed, death is and one of two policies under consideration has a lower SCI and the other *8 has a lower NPCI, then policy with the lower NPCI 11 § See: Wis. Adm. (Jan., 1980) Code p. Ins. 2.14 at 42-1 of Appendix. 12 supra, See: p. n. 3 at 93. 13 § See: Wis. Adm. Code (Jan., 1980) p. Ins. 2.14 at 42-1 of Appendix. 14 The protection elements of the cost of policy when the is ter by premiums minated death are and dividends.
99 costly policy (or with the lower SCI is the less ac- for, noted, is the more expensive) more NPCI as it is policy’s when of a relative cost curate indicator Further, by termination will occur death. assumed that result of their that as a these demonstrated exhibits regarding (death or assumptions termination different disagree as to the surrender) and the NPCI often SCI demonstrating thus, costly policies; less two the more in fact be the lower would SCI where of cases expensive policy in number a substantial by occurs. termination death of non- the relative costs number examined
Exhibit poli- non-participating participating policies other as to competitive pair This “500 situations”.15 cies over study lower SCI with the determined that pair buy” competitive not the “better over were was as- death (44%) when termination situations years in over ten after to occur issue sumed pair the calculations competitive (25%) situations when twenty years after on a termination date of were based purchase. study ex- results of a
Exhibit number reflects in- amining 40,000 “competitive pair situations” over policies. volving non-participating participating both alone is study This likewise concluded that the SCI life complete of the better indicator an accurate premium per dol- purchase return in terms of insurance “wrong” designated the lar, it that the SCI determined costly in expensive) policy over (more as the less 20% pair 8,000) competitive situations (more of the than at a to occur was assumed termination death when year twenty after issue. interval ten or allegation regard to the With purchaser Summary unless the Policy 1 5 comparison “competitive pair refers to A situation” competitive separate policies in situation.
costs of
100 ELAD, also informed of the the record demonstrates (1) offering that: participating policies the dividend is an company’s illustration based the current dividend only guaranteed scale and thus the dividends are not continue in illustrated;16 at (2) future ELAD rate prospective purchasers tells the extent illus- which non-guaranteed trated dividends or into the values enter poli- calculation and participating SCI for NPCI cies; (3) since the current illustrated are used dividends calculating SCI, usually par- favors this index ticipating policies non-participating policies, par- over ticularly ELAD; in the (4) participating absence non-participating policies competing in the same marketplace only accurately compared can with the be disclosure ELAD of the as well as the and NPCI. SCI noted, Aetna, al., require As et claims that failure to participating disclosure of the ELAD with SCI for policies misleading ELAD, for, in the absence Buyer’s Policy Summary in- will fail to Guide prospective purchaser form the of the extent that non- guaranteed par- values17 are into for factored the SCI ticipating policies. relating foregoing relationship
Given the facts to the SCI, question ELAD, between the con- the NPCI and fronting Buyer’s the circuit court was whether the Guide Policy Summary prescribed by Mitch- Commissioner prospective purchasers ell would whole life insurance due to their failure to include the NPCI and ELAD for the under SCI Buyer’s consideration. The salient features prescribed by Mitchell are:18 Commissioner § p. (Jan., 1980) 42-1 of Wis. Adm. Code Ins. 2.14 at Appendix. nonguaranteed values referred to here are “illustrated dividends.” § 2.14(8) (a) 1980) provides (Jan., Adm. Code Ins. Wis. Guide as follows: *10 LIFE INSUR- TO BUYER’S GUIDE
“WISCONSIN ANCE Insurance of the Commissioner of “Office Washington Avenue 123 West
Madison, Wisconsin “1980 by Com- guide prepared the Wisconsin “This has been missioner of Insurance. guide policy. It any company “This does not endorse
designed ever, seek How- help buy to life insurance. most consumers should with unusual financial situations individuals professional advice. LIFE “BUYING INSURANCE you you buy insurance, for “When life look needs. should expensive your This policy
least guide which meets help you: will buy. you “Decide how much life should insurance you. type policy “Choose the for best “Compare policies differ- the cost of issued similar companies. ent “FINDING A LOW COST POLICY you your “After decide which kind of insurance fits life needs, good buy. way compare look for a best policies similar is to use the cost indexes. A POLICY AWITH LIKELY LOW COST SURRENDER INDEX IS BE TO A BETTER BUY. “What are Cost Indexes ? always “Premiums alonе do not reveal cost. Cost the true get is the you you difference pay between what and what dividends,
back. Three Premiums, factors affect the cost: and cash values. “(a) Buyer’s Wisconsin Guide to Life Insurance. The Wisconsin Buyer’s Guide to Life contains, Insurance is a document which language to, is limited within the current edition of the ‘The Buyer’s put Wisconsin Guide to Life Insurance’ out the insur- ance pamphlet commissioner of the state of Wisconsin. This shall periodically accuracy appropriateness. be reviewed Ap- pendix 3 to this rule contains the current edition of ‘The Wisconsin ” Life Insurance.’ “Premiums policy’s are most factor in obvious a cost. buy You you policy should a unless can afford premiums. “If company’s return, experience investment loss expenses favorable, portion your premium Only returned pay as a participating policies dividend. you dividends. buying When participating consider policy, you will receive a dividend illustration based on company’s current dividend scale. These future divi- guaranteed. dends are not “Computing the cost of whole life insurance is difficult. policyholder This is because a will receive one amount of money if the is surrendered for its cash value and another Usually people amount if he or she dies. who buy in fact whole life insurance keep intend them but *11 many people early. policies surrender the For this you reason, determining should consider cash values in policy. the cost of a “The Surrender Cost Index “This index takes into account all three factors discussed above, as well as interest. The cost index com- surrender pares you costs as if policy surrendered the in the future
and took its cash value. anyone “Before you sells policy, a life insurance he or give you she must figures surrender cost index at 10 and years. ranks, To policy you see how that com- should pare figures those with ones for similar from companies. other get “To the most reliable comparisons, keep following rules in mind: comparisons “Cost only among should be made similar policies. example, you For using should avoid the sur- render cost compare index to term and whole life insur- ance. “Small differences in index may numbers be offset policy other features or quality differences in service. Indexes “Other Useful index Payment Index. This Cost Net Insurance “Life your if is useful It into account. values does not take cash your paid death. at to be the benefits concern is
main a lower index, with cost the surrender As with index buy. figure likely a better to be Equivalent Dividend. This index “The Level Annual taking value of average dividend, time an annual money into account. “SHOPPING HINTS
U vary substantially in Policies cost.
“SHOP AROUND. Before you buy policy, index. check cost the surrender The com- “COMPARE pany AND COMPANIES. POLICIES policy will not neces- with the lowest indexes for one (Bold sarily face the lowest for others.” have indexes original.) emphasis type and Summary Policy established Commissioner requires supply prospective Mitchell19 insurer issuing purchaser com- name address pany, type policy, and name of its face amount issue, premium SCI, at annual and SCI. As to the it provides: § 2.14(3) (f) provides 19 Wis. Adm. Code Ins. the Pre liminary Policy Summary required to be distributed consumers appendix
is set forth in rule: *12 “(f) Preliminary Policy Summary. purposes For the of this rule, Preliminary Policy Summary provided means a document buyer policy prior of a life insurance to sale which contains necessary information, substantially consumer cost disclosure the same companies, specified format for all as the commis- Appendix sioner. 1 to Preliminary this rule Policy contains a Summary form for Whole Life and Endowment Policies. . . In- . may, upon request, incorporate surers Preliminary Policy Summary (if they forms are to be filled out intermediaries) copies into Buyer’s of the Wisconsin Guide to they Life Insurаnce which reprint.” years years “10
“SURRENDER INDEX*-— COST policy, compare figures, “To a low cost index find cost just premiums. not premiums, The Index takes and interest Surrender Cost values, (if any) cash dividends policy into consideration. A with a Cost lower Surrender likely buy. Index is to be a better you compare “Be sure use the Surrender Cost Index to only probably substantial policies. similar Small index are differences Large significant. may mean not differences savings. Buyer’s Guide See the Wisconsin examples. to Life Insurance for “* The Surrender Cost Index assumes that years for surrendered its cash value 10 in the prior future. Death may to these surrender dates alter comparisons. Figures the cost participating policies are guar- based on illustrated dividends which anteed. “The Wisconsin requires Commissioner of Insurance an agent application.” complete this form he an when or she takes (Emphasis original.)
The record experts demonstrates that various actuarial disagreed concerning the issue of whether the above- quoted prospective purchasers documents would mislead policies whole life comparative to their costs. experts Commissioner’s testified that Policy Summary misleading despite were not they only fact required the disclosure of the SCI represented with low SCI numbers are likely buy. to be They the better further stated that the inclusion of the ELAD only and NPCI would serve to only confuse the consumer and therefore disclosure of the SCI was reasonable. Three of the commissioner’s experts representation Policy stated that the “A with a low likely buy,” surrender cost index is to be a better was not “likely” as the word sufficient was a qualifier reading in the phrase sense that consumers this *13 solely making purchase rely would not on in the SCI their meaning “likely” decisions. One of them defined as “not always.” testifying Mitchell, support of
Commissioner in when experts rule, testimоny and her reiterated of her only required stated that the the Surrender disclosure comparison Cost Index for life cost whole insurance purposes index was for believed that this reasonable she provided comparison simple a and effective means of cost likely not to further recited that confuse consumers. She Buyer’s Summary Policy not were Guide and the misleading they represented a low as that a with only likely buy. However, ad- to a she SCI be better always perfect mitted that the SCI would policies, in and cost of whole life measure relative particular policies until The Com- retained death. those although majority of missioner also testified that purchase life do so the consumers who whole re- death, to to the decision the intent hold them until quire only Index was Cost disclosure of Surrender showing life whole part on most based statistics actually intentions, sur- purchasers, despite initial their years. policies within 20 render their experts, a her and In contrast to the Commissioner experts cost index insurance of actuarial life number Buyer’s al., Guide testifying Aetna, recited that et Policy Summary prescribed Commissioner misleading. experts These stated Mitchell were repeated emphasis on SCI average pur- prospective
Policy Summary lead would pur- arriving at their rely solely to SCI chasers failure Thus, they that the concluded chase decisions. ELAD is require of the NPCI disclosure provide reading alone fails of the SCI the mere because relative cost as to the information and accurate sufficient extent as the death as well policies terminated *14 non-guaranteed (il- which the is SCI calculated on costs dividends) They that lustrated .20 cited admitted fact the purchase purchasers at the time intend most whole life policies to hold their their until death as the basis for opinion that for the the must also be disclosed NPCI gives NPCI the of the relative more accurate measure policies by costs terminated death. declaring judgment
The circuit court entered Wis. 2.14(3) (f) ap- (a) (3) Adm. Code Ins. and the § pendices (Jan., 1980) applicable thereto invalid insofar policies. judgment, support to whole In life the this agreed Buyer’s court with the Aetna that the Guide and Policy Summary prescribed by Mitchell Commissioner incomplete they require were in dis- that failed to also closure of the follow- the NPCI and ELAD and made ing findings of fact and conclusions of law: FACT “FINDINGS OF “A policies substantial is number of low cost whose judged by the Index not lowest Cost Surrender are in cost if not surrendered but to death. continued “Comparison participating non- policies cost of participating policies on Cost the basis of the Surrender having Index participating alone policies results in substantially lower those Surrender Cost than Indexes for non-participating policies. expects “The participating Commissioner and non- participating policies compared will be cost basis of the differ Surrender alone, although policies Surrender Index Cost such presence or absence of and the dividends non-participating policies Cost Index of guaranteed participating policies that of not. is “It is prospective purchaser to the com- pare participating using non-participating policies only the Surrender Index. Cost “The Preliminary Policy assertion in Survey [sic] and the Guide that a low surrender cost index 20 “Illustrated dividends” are an estimation of the divi annual purchaser dends receive, guaranteed will and are not present continue in the future at the “illustrated” rate. any buy accompanied not likely is the better to be where cases compared show those can be index which expen- may less not Index the Low Surrender Cost mis- thereforе It is policy if it not surrendered. sive leading. ÍÍ partici- Index in the case Cost “Since Surrender use of illustrated pating is made low calculation, the the to disclose the failure dividends permit Equivalent purchaser Level Annual Dividend does part Cost of the Surrender to determine what [sic], amount premiums Index is based on illustrated *15 misleading. guaranteed of which is not and is majority kind policies “The of of a can be similar judged by Index, as to but a cost Cost Surrender not, especially intent substantial can number when keep is to In cases the Net until death. such Payment persons. It is also Index is value to such Cost comparison a the Low tool to confirm valuable either point if not in the same Surrender Cost Index or it does direction, reason for provoke inquiry purchaser into the it to of the to the difference. The failure include misleading. Preliminary Policy Summary is Payment “The Surrender and Cost Index the Net Cost non-participating policies guaranteed Index of are figures, since no dividends are included the calcula- Payment tions. But the Surrender Cost Index Net . and participating policies guaranteed. Cost Index of not are so Preliminary Policy Summary Buyer’s Neither the or the may misled, make Guide this clear so that a customer though guaranteed. even it is stated that dividends are not Preliminary Policy Summary Buyer’s “Because the and Guide have the mark of them the Commissioner on information contained has the endorsement of the State complete correct, although as they incomplete are misleading because of the absence of vital information persons needed a substantial number of an make intelligent choice.” “CONCLUSIONS OF LAW: rule, “1. The 2.14(3) (a) INS. as amended [sic] promugated amendment to take effect [sic] Feb- ruary 1, 1980, insofar it as directs the use the ‘Pre-
liminary Policy Summary, Life’ and Whole ‘Wisconsin to Life therein forth as Insurance’ as set ‘Appendix ‘Appendix 1’ and 3’ invalid and void applied being policies to whole life in excess the the powers of the Commissioner Insurance because misleading information, including same contain tion informa- contrary incompleteness, to to because Stats, 628.34, agents compels Sec. Wis. insurance disseminate such information.” appealed judgment
Commissioner Mitchell from the circuit court and the this court case is before appeals. certification from the court of Issue
Did declaring the trial court err in the Com- rule-making missioner of power Insurance exceeded her requiring companies insurance to disseminate mislead- ing cost disclosure information toas whole life because contrary 628.34(1), of incompleteness, to sec. ? Stats
At outset, it must be noted that this case does challenge involve authority the Commissioner’s promulgate requiring companies rule insurance to dis- seminate life insurance cost disclosure information. Aetna authority. admits that the Commissioner has such *16 fact, In the record demonstrates that Aetna and the in- industry support complete surance as a whole requirement. However, accurate cost disclosure Aetna objects accuracy completeness to the of the informa- required tion disclosed in the be Commissioner’s Policy Summary 1, February Guide and effective 1980. ruling
The Commissioner attacks the trial on court’s (1) apply two bases: court the trial did not the correct proceeding challenging in a standard of review adminis 227.05(4), Stats; trative rules (2) under sec. the circuit findings supported by court’s and conclusions are not . the record I. Review Standard of
According review Commissioner, court’s the trial to the whether of of the rule must be limited to a determination effecting purposes rule is a reasonable means 601.01(3), Stats. the Insurance Code found sec. argument premise that ad- (1977). her bases She rulе-making quasi-legis- nature ministrative is of its Thus, adjudicatory. the absence lative rather than authority promulgate cost dis- no claims that she has rules, established rules were not closure and that the contends that compliance ch. with the Commissioner judicial as that review is the same the standard of legislative namely, Ac- acts, of reasonableness. the test cordingly, that the trial court’s claims the Commissioner concerning Stats., unfair and mis- 628.34(1), use of sec. leading marketing practices insurance in the business inappropriate it re- as as the standard of review was beyond of the quired reasonableness the court to look disagree, underpinnings. rules and into their factual We legislature 628.34(1) (a), Stats., pro- has in sec. agents companies and em- and their hibited insurance misleading ployees making representations from false or regard contracts, including dis- to insurance misleading of information that because semination incompleteness: “Misrepresentation, per- No (a) Conduct forbidden. code, no em- this son who is or should licensed under agent pri- ploye any person person, no of a whose such
mary competitor person licensed as a interest any code, person under this and no on behalf of foregoing any persons may made or cause to be make relating contract, the in- communication to an insurance any any intermediary business, which insurer or surance misleading information, including in- contains false or incompleteness.” (Em- because of formation phasis supplied.) *17 Thus, requiring life commissioner’s rules whole agents companies insurance and their to distribute Buyer’s Policy current “editions” of the and the Summary clearly they require are unreasonable if such parties question of violate the law. The whether Policy Summary Guide and the are question Thus, is a of fact. must look to record to we findings supported if trial determine court’s therein. Findings
II. Trial Court’s
applicable
As to the rules
of a circuit
to the review
finding
fact,
court’s
of
to Klein-Dickert Osh-
we refer
kosh,
Mortgage
660,
Inc. v.
Corp.,
Frontier
93 Wis.2d
(1980),
Ill by minated death rather than surrender. Aetna’s exhibits numbers and 62 established that a number substantial rely solely making of consumers who on their the SCI purchase likely relatively buy decision are a more expensive policy they premium payments if continue Thus, Buyer’s until death. the assertion in the Guide Policy Summary policy and the that a with a lower SCI likely buy, explana- to be a better in the absence of an accurate, tion as to representation may when this not be adequately purchaser fails to inform the and is therefore misleading.
The trial participating court also found that аnd non- participating policies compared when on the basis of the Buyer’s Policy SCI alone set forth in the Guide and Summary participating will favor non- over participating policies for as the Surrender Cost Index participating policies is reduced with the inclusion of (SCI) illustrated dividends its calculation. The court Buyer’s further found that Commissioner Mitchell’s Policy Summary Guide and purchaser fail to inform the participating policy’s the extent a to which SCI is based findings disputed. illustrated dividends. are not These Thus, Policy Summary the Commissioner’s repeatedly emphasize use of for the SCI cost comparison purposes, fail to extent but disclose the participating policies by which the is reduced SCI receiving. dividends that the consumer is not assured of The record demonstrates that the disclosure of the extent participating policies to which the SCI for is determined nonguaranteed precisely dividends is what ELAD accomplishes. Therefore, comparison a true and accurate participating nonparticipating policies as to illus- only trated dividends can be made the disclosure of ELAD; hence, presentation of the SCI without contemporaneous misleading. revelation of the ELAD is The circuit court further found that does SCI accurately life measure relative cost of whole ultimately when it therefore death and terminated particular who, at the NPCI is of value to consumers purchase, policies in keep the time of intend to their force until death. Commissioner Mitchell admitted buy type of purchasers most whole life this insurance they keep until insurance with the intent it force always die. She would not also conceded that the SCI *19 perfect poli- life measure of the relative cost of whole cies, they by particularly if terminated death. were knowledge Commissioner, Despite facts, of these the reasoning primar- must based on the distorted that she be ily actually people with their concerned with what do they policies do, to rather than what intend to decided only index, SCI, of the because most order disclosure one policies consumers twentieth surrender their before the year anniversary date. testimony why
This the Commissioner demonstrates Buyer’s the failure her and to include the NPCI in Guide Policy Summary incomplete them and mislead- renders ing. majority people that who has admitted the She purchase with intent to whole life insurance do so the policies death, yet, spite their until in of her ad- hold always perfect mission that “would not be SCI policies death, repeatedly measure” for held until she encouraged singular in her cost disclosure materials point use of the to be is that it is SCI. considered purchase the consumer’s intent at the time of and not by whether the is surrendered or death terminated that should determine what information must be dis- intelligent in closed order to them to an enable make and purchase informed decision. Since most consumers are buying purchase protec- at in interested the time death tion, dealing policies with the NPCI costs of relative required together disclosed, terminated death is to be SCI, accurately completely in- in order to policy's hold form them of their cost and thus we relative dis- only that the the failure to disclosure SCI misleading. close the NPCI is given accurately summary,
In that the SCI does circumstances, predict costly policy under all least that the SCI the ELAD a material fact discloses present, namely, alone to illus- fails the extent which SCI, and that trated dividends are reflected in the is the more accurate of the relative cost NPCI measure policies life whole terminated death and is therefore guide purchasers a valuable intend to hold their who death, supports com- until record and indeed pels finding the trial court’s failing Policy Summary to inform likely consumer when the to be inaccurate SCI is failing ELAD. include the NPCI and the argued throughout
Commissioner these Mitchell has judgment proceedings that the court defer should to the determining agency mate- cost disclosure what required rials should to consumers to be disseminated *20 argument prior claim that to This amounts to the sale. by required statements materials to be distributed Commissioner, misleading, even can never the if false legisla- challenged negate accepted, and, if the would reject 628.34(1) (a), intent of tive sec. this Stats. We legislature assertion for the reason that the made a stating 628.34(1) (a), Stats., determination in sec. must
life insurance contract information not be mislead- ing incompleteness due to In when disseminated. the Stats., case, 628.34(1) (a), requires context of this sec. necessary provide materials that are disclosure the complete costs, picture with consumers a as to the relative namely, (cost surrender), (cost at the at SCI NPCI death) dividends). (illustrated Further, ELAD and the time complete at the requires disclosure
this a statute making purchase Com- decision. The consumer is judgment liberty her missioner is never at to substitute unambiguous legislature terms spoken in has when including informa- respect (“. . full disclosure . Ibid.), incompleteness.” misleading tion because judgment as to what thus, not defer to her the court need by required therefore material and information is 628.34(1) Stats., she legislature (a), unless under sec. judgment. grounds demonstrates reasonable supports the record that the In view of our determination findings Mitchell’s trial that Commissioner court’s misleading Policy Summary due Buyer’s Guide incompleteness, has we hold that the Commissioner judgment. ground for her a reasonable demonstrated requiring any dissemina- Thus, rule we further hold that information that is disclosure tion cost beyond scope commis- incompleteness of a due to rule-making power in that it mandates violation sioner’s (a), 628.34(1) of sec. Stats.
By judgment circuit court Court. —The affirmed. (dissenting). ABRAHAMSON,
SHIRLEY S. J. declaratory judgment This action commenced case is a judicial pursuant 227.05(1), Stats., re- to sec. to obtain promulgated In- view of a rule the Commissioner of majority if surance. The treats this case as it were con- ducting of a trial the circuit court of the review charge disseminating misleading Commissioner on a majority’s information. I I write because believe approach does not conform to or case law the statutes wrong produces and because I it result. believe majority major question states which the circuit court confronted and decided as—“Whether Policy Summary prescribed by Com-
115 misleading prospective would to missioner Mitchell be to their failure purchasers insurance due to of whole life Payment ELAD Cost include Index] the NPCI [Net SCI [Equivalent [Sur- Level Annual Dividend] policies under consideration.” for the render Cost Index] majority the circuit p. 100) concludes that (Sujyra, The misleading, rea- properly court held the documents rule-making power soning as follows: Commissioner’s requires insurance is exceeded if the Commissioner agents companies that information to disseminate misleading incomplete; whether the because it is misleading question Summary Policy is a Guide and are sitting trier as the fact for the circuit court to decide court; presented this to that of facts on evidence based findings that court will not the circuit court’s reverse findings Summary these unless Guide and weight against great clearly of fact are erroneous if there is preponderance of even and clear the evidence contrary findings support the Guide evidence summary steps Summary misleading. of the are not This reasoning highlights majority’s flaw of the basic sight majority namely opinion, has lost case. the nature of thе judi
Briefly I the case as follows: This case is a view promulgated by cial review an administrative rule agency.1 promulgated pursuant The rule was gen areWe now in what the “third some commentators call eration” of controls administrative external and internal law. The agencies increasing subject on administrative have been judicial scholarly significant and other attention. There have been approaches judicial new in the 1970’s in review of administrative rulemaking. opinion dissenting The ideas I have set forth in this part are in derived from numerous state and federal cases generally, e.g., Davis, law review See Administra commentaries. 6, 7, (2d 1978), (1958); tive Law Davis, Treatise chs. ed. ch. Estreicher, Lawmaking, (1980); Facts in 80 Colum. L. Rev. Pragmatic Judge Justice: Contributions Harold Leventhal
116 requiring statutory power adopt to rules Commissioner’s companies insurance to information about disseminate policies.2 of cost life insurance The Commissioner Law, to Administrative (1980); Gifford, 80 894 Colum. L. Rev. Rulemaking Rulemaking Struggling Review: Toward a New Paradigm, (1980); Auerbach, 32 L. Rev. Admin. 577 Informal Making: Proposed Relationship Rule A Between Administrative Review, Procedures and Judicial (1977) ; Linde, L. Rev. 15 72 Nw Lawmaking, Due Process Gardner, (1976) ; 55 Neb. L. Rev. 197 of Books, Agencies: Partnership Federal Courts and An Audit of Probing Mind 75 (1975); Nathanson, Colum. L. 800 Rev. of Hearing Variations, Judicial Administrator: and Standards of Review Under the Administrative Act and Other Fed- Procedure Statutes, eral The (1975); Stewart, 75 Colum. L. Rev. 721 Refor- mation Law, American Administrative 1666 88 L. Rev. Harv. Rulemaking (1975); Wright, The Courts and the Process: The Review, Limits Q. Boyer, Judicial (1974); 59 Cornell 375 L. Type Hearings Resolving Alternatives to Administrative Trial Complex Scientific, Economic, Issues, Social L. 71 Mich. Rev. Oregon (1972); Ill Prohnmayer, The Administrative Procedure Essay Rulemaking Act: An on State Administrative Procedure Reform, (1980) ; Auerbach, Adminis- 58 L. Ore. Rev. 456-63 Rulemaking Minnesota, trative (1979); 63 Minn. L. 151 Rev. Gallagher, Legislative Bunn & Committee Review Administra- Wisconsin, tive Rules in 935; Linde, 1977 L. Brodie Wis. Rev. & Prescribing State Court Review Administrative Aсtion: Scope Review, 537; Bonfield, The Iowa Ad- 1977 Ariz. J. St. L. Background, ministrative Procedure Construction, Applicabil- Act: ity, Agency Law, Rulemaking Public Access Process, The 60 (1975); Currie, Rulemaking Iowa L. 731 Under the Illinois Rev. Law, Pollution (1975); 42 U. Levinson, Chi. L. Rev. 457 The Florida Administrative Procedure Act: Revision and 1975 197'4 Amendments, (1975); Gifford, U. Miami L. Rev. 617 Declara- tory Judgments Under Model State Administrative Procedure Acts, Sewell, 13 Houston (1976); L. Rev. 825 Judicial Review and Act, Memphis Administrative Procedures Uniform St. U. L. (1976). Rev. 253 1979-80, 601.41(2), Sec. Stats. states the Commissioner powers specifically granted “shall have all reasonably ... or im plied in order perform to enable the Commissioner the duties enforce 601.41(3), chs. [to grants 600-646].” Sec. Stats. 1979-80, adopted lengthy hearings the rule after which Aetna participated. hearings participants at the discussed types helpful of information mis which would leading consumers, par company insurance and the ticipants presented arguments to the Commis same they presented sioner as later to the circuit court taking this court. After into consideration the concerns *23 industry consumer, and the the selected Commissioner helpful the information which she believed would be most to the consumer and decided how this information could presented best be to the consumer an man informative misleading. formulating ner which would In not be the necessarily rule the Commissioner had to decide the same question according majority which to the the confronted circuit court and which court— now confronts this Buyer’s Policy Summary “whether the Guide and would misleading prospective be purchasers to of whole life insurance due to their failure to include NPCI and the ELAD policies with the SCI for the under consideration.” (Supra, p. 100) By promulgating the rule Commis the nega implicitly question sioner has answered this in the question tive. This phrased same can be in different Summary provide terms as follows: Do the Guide and adequate, helpful information and furthеr the Commis “rule-making authority 227.014(2),” the to Commissioner under s. 227.014(2) (a), provides: 1979-80, sec. in turn Stats. agency adopt interpreting “Each is authorized to such rules the provisions of statutes enforced or administered it as it con- necessary purpose siders to to statutes, effectuate the they but such rules are not valid if exceed the bounds of correct interpretation.” Aetna power adopt concedes that the Commissioner has the regulating rules companies disclosure of information insurance policies. on the challenge cost life insurance Aetna’s is directed particular the promulgated. rules Commissioner the. interpretive For legislative a discussion of rules and rules and scope judicial thereof, see, review Minnesota-Dakota Retail Sibley Co., Hardware v. (Minn. Ass’n 1979). N.W.2d 360 disseminating con goal to assist information
sioner’s comparing cost of life insurance sumers By rule Com purchase? promulgating prior to question in the implicitly answered the missioner has formulating rule Commissioner In affirmative. making quasi-law role quasi-legislative, performed a has legislature delegated her. In this de has which the rule, court in claratory judgment review the action to in decision the Commissioner’s effect reviews requires formation she disseminated purpose. and fulfills its majority itself has not restricted
I dissent because rule; ma- instead the to a review of the Commissioner’s judgment for improperly jority a court’s has substituted quasi-legislative of the Commissioner. decision I. CHAPTER REVIEW judicial applicable I first statutes consider review to this case. Policy agree parties
The Summary part promulgated rule the Com- a agency case action in the instant missioner and the 227, a ch. 1979-80. is classified as rule under Stats. brought declaratory judgment Dane action in Aetna this county seeking judicial rule circuit court review 227.05(1) pursuant 227.05, 1979-80.3 to sec. Stats. Sec. here, except applicable provides that, in instances not judicial validity of “the exclusive means of review of the declaratory judgment as to a shall be an action for rule validity brought court for such rule in the circuit county.” Dane 1979-80, 227.05(4), de-
Under sec. a court shall Stats. if clare rule invalid the rule: violates constitutional agency; provisions; statutory authority of the exceeds provides Chapter procedures, rules, two one for sec. review 227.15, 227.05, decisions, other and the for administrative secs. 227.20, 227.16(1), Stats. rule-making compliance adopted with without was procedures. 227.05(4) any pursuant to this proceeding “Sec. In judicial de- rule, shall section for clare the rule the court review of constitu- if violates invalid it finds that it authority provisions statutory
tional of the or exceeds the agency statutory adopted compliance or was without rule-making procedures.” statutory Aetna asserts au the rule exceeds thority challenge of the on Commissioner. This rests two grounds: (1) Stats., prohibits 628.34(1) (a), sec. which misleading company making an insurance state from similarly prohibits requir ments the Commissioner from ing company an insurance state make ments; (2) purposes of the insurance laws4 601.01(3) (c), (b), (g) (j), See. forth the Stats. set purposes of the insurance code as follows: “(b) policyholders, To ensure that and insurers are claimants fairly equitably; treated “ (c) healthy adequate To ensure an that the state has insur- by competitive market, ance characterized the exer- conditions and initiative; cise “(g) To maintain freedom of of enter- contract and freedom prise purposes law; so far as consistent with the other of the “(j) keep public matters;” To informed insurance 2.14(1), Sec. Ins (1980), “purpose” Wis. Adm. Code subsec- challenged rule, tion of the states: Puepose. “Ins. (1) 2.14 Life purpose insurance solicitation. require this purchasers rule is to insurers deliver to of life improve insurance buyer’s ability information which will appropriate plan select the most of life insurance for his or her needs, improve buyer’s understanding of the basic features of purchased which has been or which is under considera- improve ability buyer tion and to evaluate the relative *25 plans costs of prohibit similar of life insurance. This rule does not the use of additional material which is violation of this rule any or other interprets Wisconsin statute or This rule. rule and implements, including but not following limited to the Wisconsin 601.01(3) (b), (g) (c), Statutes: (j) ss. and 628.34.” by administered the Commissioner are the frustrated requires company
rule which an insurance to make ments.5 state question challenge
The first
a rule
raises is what
judicial
the record on which
review is to be based. Sec.
227.05,
point.
Stats. 1979-80 is silent on this
There
advantages
alternatives,
several
presents
each of which
disadvantages.
The
will
nature
record which
dependent
be needed is
on the issues
on the review.
raised
may
scope
And the nature of the record
affect
might
solely
review. Judicial review
be limited
record
to a
consisting
language
rule and of the statutes
description
procedure
adopting
and a
followed in
solely
the rule.6 Or another alternative is review based
during
on the record made
the administrative
rule-
making
might
proceedings. Review
also
based on a
court,
record
on
made before the circuit
a record made
during
rule-making proceedings supplemented
as the
appropriate,7
circuit court deems
or on a record made
agency
administrative
remand to the administra-
finding.8
agency
tive
fact
further
majority
only
argument
concerns itself with
the first
my opinion.
espouse
I shall so limit
The rationale and result
I
apply similarly
argument.
second
to this
6 See, e.g.,
Board,
587,
Peterson v. National Resources
94 Wis.2d
(1980).
121 proceedings The in record this before case includes agency both the and circuit In case court. the instant rule-making transcripts were of made the Commissioner’s hearings, and ma- the Commissioner received written hearings. 227.02, terial in connection with the Stats. Sec. presented 1979-80.9 These records were administrative objected to the circuit introduction court. Aetna to the 227.05(2) rule, agency. aof the matter was be referred to the Sec. repealed 1963, by 191, 227.05(2), ch. of Laws 1965. Stats. Sec. provided: appli- “(2) concerning the an of issue fact is raised Whenever cability affecting proper party validity or of rule to a the interpretation deciding perti- rule, shall, of a the court the before legal question, agency nent the for refer case to determination ruling procedure provided declaratory of the fact issue under the agency by in s. 227.06. The fact issue determination of such by promptly shall be transmitted to the court thereafter agency, together papers agency with all to the transmitted upon agency court a record or referral of case to the copy proceedings certified of the entire record before said agency respect subject determination, in same re- such to the quirements provisions as are set forth in The deter- s. 227.18. proceeding mination shall be in the reviewable court scope which it arose as an issue and the shall such review provided in s. 227.20.” Mfg. For a 227.05(2), 1963, discussion of sec. see Stats. Josam Health, 587, Co. v. State Board 301 Wis.2d N.W.2d (1965), agency any procedural in which the court held the waived right may it have had to have issues fact to the referred back agency and further held that the circuit court was authorized to testimony findings explana- take and make I could no fact. find repeal tion 227.05(2), or discussion of the of sec. I Stats. 1963. repeal note that the 227.19, followed Josam ease. sec. Stats. Cf. 1979-80. 227.02, requires, 1979-80, Sec. exceptions, Stats. with some agencies precede making public hearing. that rule with notice and 227.021, 227.022, addition, See secs. Stats. 1979-80. In the statutes require agency “keep hearing minutes or a record of the in such manner as it determines to be desirable and feasible.” Sec. 227.022(2), Helstad, Stats. 1979-80. New Law on Administrative Making, Buie 1956 Wis. L. Rev. 422. court. the circuit of the administrative record Apparently grounds there objection not clear. for the record court was no claim made the circuit inade- proceedings an the Commissioner were before Nevertheless, in the quate judicial review. basis *27 expert opinion instant case the trial court heard extensive testimony ruling in that record made on the and based its court. testimony taking of authorizes the
Sec. 227.05 neither declaratory taking testimony prohibits in a of nor the party ex- judgment Neither action review of a rule. presented circuit court. plains why in the evidence was testimony taking in circuit justifies of Aetna’s brief the 1979-80, citing 227.05(1), which refers sec. court Stats. court evidence,”10 of this “supporting and the order to for a circuit court matter to the remanded the which “hearing But this reference sec. on the merits.” “sup- (1) “supporting appears to 227.05 evidence” to be determining porting purpose for the whether evidence” of legal rights plaintiff impaired the of been as the have so 227.05(1), provides: 1979-80, Sec. Stats. Declaratory judgment proceedings. (1) Except pro- “227.05 as (2), judicial vided in sub. the exclusive means of review of the validity declaratory judgment of a rule shall be an action for validity brought to the county. of such rule in the circuit court for Dane officer, agency board, The commission or other whose rule party is involved shall defendant. The summons in such provided action 801.11(3) by delivering shall be served as in s. copy secretary agency to such officer or to the or clerk of the composed where person any of more than one or to member of agency. declaratory such judgment The court shall render a only appears such complaint action when it sup- from the and the porting application evidence that the rule or its threatened inter- impairs, feres with or or threatens impair, to interfere with or legal rights privileges plaintiff. declaratory judg- A may ment plaintiff be rendered whether or has first requested agency pass upon validity of the rule in question.” justify declaratory judgment action. of The order hearing this court type did not elaborate to be by prescribe conducted the circuit court or the nature of to be record reviewed or to be made. The nature of upon judicial the record which review of a rule should be important Unfortunately conducted is an issue. the ma- jority guidance provide does not consider it and does not declaratory judgment for future actions. upon
Whatever based, the record which review is question, broader 227.05, also unanswered sec. Stats. 1979-80, scope review, principles is the is judicial review apply which the court should to determine whether statutory the rule exceeds the Commissionеr’s authority.11 parties disagree scope as to review. Aetna
argues that the issue of whether the rule a fact issue for ab initio circuit determination question court or a for ab law initio determination *28 the courts. The Commissioner asserts that the review quasi-legislative agency of a determination; that the court judgment cannot substitute its for that of the Commis- ; scope sioner the of review is the basis rational test.
Principles judicial review are the means of allocat- ing decision-making agencies function between allowing agencies courts and the courts and to work as partners in the public furtherance of the interest. Gard- ner, Agencies: Federal Courts and An Audit Part- nership Books, (1975). 75 Colum. L. Rev. 800 legislature delegated policy-making has function to agency empowered administrative and has the court agency to review they rules to ensure that are lawful. A stamp agency rule; court should not rubber an such 11 The Revised Model State Administrative Procedure Act (1961) similarly on which the Wisconsin statute is based is silent. 357, (Master 14 1980). See Uniform Laws Annot. 400 ed.
124 time-consuming, expensive review be a ritual. would meaningful supervision Judicial review should be a agencies. exercising work of the administrative But supervisory powers, judicial such the court must exercise rule; agency restraint. The court is to review the court is not to what decide the rule should be.
Recently suggested courts and commentators have reviewing might separately a rule the court deal agency component rulemaking, issues of such as the rulemaking procedure, agency’s interpretations law, agency’s agency’s determinations, factual agency’s decisions within the exercise of dele- gated “component” or “functional” discretion. Under the approach judicial review, judicial scope of review depends 1975, on the issue In with the enact- involved. legis- 227.20, 1979-80, ment of sec. Stats. the Wisconsin adopted approach, lature has this functional albeit context, namely judicial different of administra- review Explanatory *29 applicability Stats., 227.20, The of sec. is not limited to decisions adjudicatory governs which are in nature. review Sec. 227.20 of legislative decisions which are reached in the “exercise the Westring James, 475, 462, function.” v. 71 Wis.2d 238 N.W.2d (1976). 695
125 Stats., useful 227.20, judicial in sec. embodied review judicial review determining approach taken be rule us. before 1979-80, the court’s provides that 227.20, Sec. Stats. before made to the record review shall confined be review of agency13 and describes administrative law, and determina- agency interpretations of procedure, agency’s exercise policy within tions of fact delegated follows: discretion as be (1) review shall Scope The of review. “227.20. con- jury shall be court a conducted without irregu- alleged record, except in cases of
fined to the larities in testimony agency, thereon procedure before granted to take and, may if leave is be taken the court interrogatories testimony, depositions written such hearing provided may prior as taken to the date set proper therefor. in ch. 804 if cause is shown disputed separately issues “(3) treat The shall court law, interpretations agency procedure, determina- of tions of fact or agency’s exercise within delegated discretion. reviewed, is not assured of a full record. permit a waubenon wish this noted circuit court cannot determine in what Thus see. issue of and for supra “fair-play Although [13] received, (1963). (1962); See previously, the court to and text. what presenting secs. 227.20, however, v. State opinion the circuit sec. 227.20 review is Ashwaubenon adjudicative” purpose 227.18, Stats, Highway troublesome to be is not ignore evidence before the circuit court way take evidencе in a sec. 227.05 227.19, evidence will be taken. See notes court, review the administrative interpreted always v. the administrative hearing, Comm., P.S.C., with the aid of 227.20, applies one. At minimum before evidence The on the 17 Wis.2d this absence as Stats. record of a even if the Wis.2d court has my agency record, 1979-80. record of a full 120, concluding agency 126, reviewing 47, contested case. parties, said, is, review. record. 125 N.W.2d 115 N.W.2d The record and inadequate I does 6, 7 and do I record should court Ash have not *30 “ agency (4) for The court shall the to the remand case of the
further action if it finds either the fairness that proceedings im- or of action been the correctness has the paired by follow procedure a material or a failure error prescribed procedure. agency “(5) modify The court shall aside or the set erroneously if agency action it inter- finds that the has preted provision interpretation a of law and a correct compels to particular action, a case or it remand the shall agency inter- the action a correct for further under pretation provision of the law. of “(6) agency’s depends any If the action on fact found agency proceeding, a the the court contested case agency judgment shall not substitute its for that of the weight finding any disputed as the of the evidence on agency shall, however, of fact. The court set aside action or agency’s agency remand the case to if that it finds depends any finding action not fact that is supported by substantial evidence in the record. agency’s “(7) If depends action on facts deter- hearing, aside, modify mined without a the court shall set agency or action compel particular order action if the facts as a law, may matter of it case to or remand the agency the the for further examination and action within agency’s responsibility. “ (8) The court shall reverse or remand the case to agency agency’s if it finds exercise discretion range agency delegated outside the of discretion to the by law; stated agency rule, officially is inconsistent with an an agency policy prior agency or a practice, if devi- explained ation therefrom not court to the satisfaction agency; or is otherwise violation of a con- statutory provision; stitutional or but court shall judgment substitute its agency for of the on an issue of discretion. “(10) Upon weight such review due shall be accorded experience, competence, technical specialized knowledge agency involved, well as discretion- ary authority upon right conferred it. appel- challenge lant the constitutionality any or act of its application appellant to the shall not be foreclosed or impaired by appellant the fact that applied has permit license, or privilege holds under such act.” 1979-80, large 227.20, codifies To a extent sec. Stats. traditionally em- the rules of review the courts have ployed. *31 among findings (the
Distinguishing task of factual (ordinarily agency subject review), law issues of to agency’s court), of discretion and the exercise task of the agency subject choices, to (policy prerogative of the converge. review) easy. Neverthe- is not Often the three using component approach judicial review of less clarify helps ensures that rule before us the issues and performs judicial properly the court its review function. using In this I look” doc- case tend to favor the “hard Judge it, espoused by trine As I Leventhal. understand agency while the focus of the doctrine is on whether the requisite look,” took the “hard the court immerses itself in agency’s supported record to see if the action is Estreicher, factual record and reasoned articulation. Pragmatic Judge Justice: The Harold Contributions of Leventhal to Law, 894, Administrative L. Colum. Rev. agency’s 906 (1980). If supported, action so it will upheld. II. REVIEW OF FACTUAL UNDERPINNINGS majority that in concludes order to determine statutory whether the rule exceeds the Commissioner’s authority the court must “look . . . into their factual un- derpinnings.” p. 109) (Supra, agree majority although making
I with the that rule policy legislative involves determination and is an act in character, Peterson v. National Board, Resources 595, (1980), Wis.2d N.W.2d 845 there are fre- quently components rule-making factual there are —as adjudicative process. Misunderstanding of the dangerous developing facts is as an administrative determining adjudicatory- as in rule outcome of an proceeding. majority
Unfortunately the does not set forth the sug- examining. underpinnings” “factual I which it is gest underpinnings” that rule the basic “factual policies are that lapsed or substantial number of by death; in a surrendered rather than terminated majority of instances whether the terminates lapse, death, surrender the SCI and the NCPI Indexes result; comparison as cost tools lead the same comparison complex;14 of costs of insurance information; that there is a need for disclosure of cost single, agreed-upon technique and that there is no comparing policies prior purchase. I costs believe predicates undisputed these factual of the rule are unchallenged by court, majority Aetna, the circuit or the *32 opinion. majority
The concludes there is another factual issue underlying the rule and it sets forth as “The follows: question Policy of whether the Guide and the Summary misleading question (Supra, of is fact.” 110) p. majority’s question of characterization the as by supported any authority one of fact is not citation to by any reasoning or of the court. moment,
Assume for
majority does,
the
the
that the
quеstion
of whether the rule is
is
fact.
one of
The issue which then must be decided is who decides this
fact —the
Considering
Commissioner
the
circuit court.
legislature
that the
empowered
has
the Commissioner to
determine what
information should be disclosed
the
legislature
consumer and that
has authorized the
14 See,
e.g.,
Belth,
Insurance,
Price Disclosure in
1972 Wis.
Life
1054; Bernacehi,
Implementation
Rev.
L.
Full Disclosure
Policy
Contract,
Value in the
Insurance
24 Drake L.
809
Life
Rev.
(1975); Note,
Insurance and The Consumer: At
Price
What
Life
Disclosure,
(1977).
26 Drake L. Rev. 857
rule as to disclosure
to review the Commissioner’s
court
Commissioner’s
whether it is
excess
to determine
predi
statutory
if the rule is
authority,
I conclude that
informa
disputed factual
whether the
on the
issue
cated
misleading,
factual
issue should
or is
tion is
(on
of the
initially by
the basis
Commissioner
decided
then be
presented
her), and
decision should
record
her
court —to deter
court —and this
reviewed
the circuit
supported
evidence
mine if it is
substantial
what should
back then to
record. The issue comes
I
question further.
I
this
record be.
not discuss
shall
merely
applied the substantial
court
note that
this
has
“legislative-type deci
evidence test
to records made in
deciding
saying
sions,”
there
court in
whether
decision,
support
legislative-type
evidence to
substantial
at
minds could arrive
determines whether reasonable
State
agency. Ashwaubenon
v.
same conclusion as
Highway
131,
Comm.,
N.W.2d
17 Wis.2d
Westring
(1962), quoted
approval
James, 71
v.
462, 476,
(1976).15
Wis.2d
dence quality with that reason evidence which a *33 accept adequate able man support could аs a . . conclusion. . may There conflicting may be eases where two views be sus each by case, agency tained substantial evidence. In such a it is for the ” accept. to determine which view the of evidence it . .’ wishes . Board, Reinke v. 123, 135, 138, 139, Personnel 53 191 Wis.2d quoted (1971), approval Daly N.W.2d 833 Re National v. Board, 208, sources 220, (1973). 60 Wis.2d 208 839 N.W.2d 180
III.
OF
REVIEW OF ISSUE
LAW
majority’s
I
of
as
find the
characterization
the issue
surprising.
one
Ordinarily
of fact
of
the determination
a
whether
rule
a com
contravenes
statute involves
parison
language
of
and of the rule and
of
statute
interpretation
ques
an
and the statute. These
rule
generally
questions
pur
tions are
as
law for
of
viewed
poses
judicial
of
Peterson v. National Resources
review.
Board,
(1980).
94
288
Inasmuch
Wis.2d
N.W.2d 845
majority
as the
issue
this case is viewed
being
misleading”
whether
rule
under
is “false or
628.34,
1979-80,
sec.
can
also charac
Stats.
the issue
application
statutory (legal) concept
terized as the
aof
(“false
misleading”)
undisputed
to an
fact situation
language
(the
rule).
issue,
This
kind of
sometimes
question
law,
characterized as a
of fact and
has
mixed
generally,
invariably,
but not
this court
been viewed
question
judicial
as a
purposes
law for
review.
DILHR,
106, 115-117,
Nottleson v.
287 N.W.2d
Wis.2d
(1980).16
analysis
Department
The court’s
v.
Wawszkiewicz
Treasury,
Supp.
(D.
1979),
480 F.
D.C.
to deter
mine whether the
contents of a rule were
Department
instructive. Consumers attacked a
of Trea
sury regulation allowing
carry
wine
the name
labels
“Chardonnay”
disclosing
grape
without
that other
va
may compose up
percent
rieties
to 25
of the volume. Con-
though
application
Even
the determination of the
aof
statu
tory concept
may
question
law,
to the fact situation
be labeled a
reviewing
disregard
agency’s
court should not
determina
judgment
tion. The determination
calls for
value
and the court
must in
weight
given
each case decide the extent
to which
should be
agenсy’s
judgment.
to the
value
DILHR,
Nottleson v.
94 Wis.2d
106, 116-117,
(1980). Although
131 arguing regulation, label the that sumers the attacked arguing misleading incomplete and was it was because identify precise regulation that the further percentage the should Treasury grape em- was of all varieties. The carry require powered to labels to wines statute deception conformity regulations “prohibit of with which “irrespective prohibit fal- of consumer” which the and sity” “likely consumer.” matters mislead the which are to began analysis by saying issue that the court its The regulation permitted mis- was whether the the label leading statutory was construction and therefore one of giving question the court, of The words on law.17 meaning ordinary consumer would which the label give implication” them, determined the “clear bearing only of the word “Chardon- consumer the label variety grape nay” was that wine was from that made and no other. court therefore concluded The therefore, were, as a rule were label beyond statutory authority De- matter of law authority statutory Treasury partment.18 no has of mis- false and discretion sanction the transmittal leading information.
Using
approach,
to the
this
this court need
defer
court,
decision
the Commissioner or of
circuit
Summary
Policy
I conclude that
ordinary
con-
do not
and of themselves mislead the
17
agency’s interpretation
statutory provi
examining
“In
an
sions,
questions
required
law which
Court
it is
confronts
decide.
. .
are the final authorities on matters of statu
. [C]ourts
tory
part
independent
judicial
review,
As
construction.
of its
...
agency
this Court must
de novo
therefore determine
whether
authority.”
statutory
has acted
consistent
Wawszkiewicz v.
Dept.
Treasury,
Supp. 739,
(D.
1979).
480 F.
D.C.
approach
For a similar
see Federation
Homemakers v.
(D.C.
(“All
Butz,
1972)
Frankfurters);
466 F.2d
Cir.
meat”
Freeman, 304,
(D.C.
(“Imita
1962)
Armour &
v.Co.
F.2d 404
Cir.
Ham”),
injunc
cert
(1962)
(preliminary
tion
denied
sumer.
at the
words
the
and
Guide
ordinary meaning
they
ordinarily
for their
and as
would
by purchaser
average
be
a
understood
of life insurance of
intelligence,
implication
I conclude
of the
the clear
Summary
Guide and
is that cost determination of life
complex
involving
insurance is
process
many
a
factors
which the cautious consumer must evaluate. For ex-
ample,
Summary
policy,
the
states that “to find a low cost
compare
figures,
just premiums.”
cost index
not
This
language
Summary
not
the
is
limited to
surrender
Summary
cost index. The
does set forth the surrender
policy
cost index
policy
for the
a
because “a
with
lower
likely
buy.”
Surrender Cost Index
is
a better
This
say
policy
statement
a
does not
or
that a
lower
mean
with
always
buy.
utility
Surrender Cost Index
a
is
better
The
qualified
of the Cost
man-
Surrender Index is stated
Summary
ner in
Repeatedly
both
the
the Guide.
applies
the consumer
told that
is
the cost surrender
index
only if the
policy, not
if
consumer surrenders
consumer dies. The
is
are
consumer
told that dividends
guaranteed.
Summary
not
expressly
The
states
“the
policy
Surrender Cost Index assumes that the
is surren-
for
years
dered
its cash value 10 or 20
in the future.
prior
may
Death
to these surrender dates
alter the cost
comparisons. Figures
participating policies
are based
guaranteed.”
on illustrated dividends which are not
right:
policy
Aetna is
The
with a lower cost surrender
may
always
index
buy.
be a better
record
But the
majority
shows that
policy
the vast
of cases
a lower Cost
buy—
Surrender
Index will be the better
whether the
surrendered or terminated
death.
agency labeling
This is not a case of an
percent
an 85
Meat,”19
meat frankfurter
“All
agency labeling
or an
part
variety
wine made in
grapes
as “Chardon-
19 Federation
Butz,
(D.C.
Homemakers v.
The food labels straight- honest, buying. consumer is are not labels get- ordinary purchaser is not truthful; or forward labels, read ting goods These food the label describes. register, final and are the cash between the shelf only required made available to be information person licensed the State Wis- consumer. No sales explain the label present and authorized to consin *36 pro- package or to of the the intricacies of contents further information. vide Summary do not case, and
In the instant the Guide policy pre- purport whether the the consumer advise consumer. cheapest policy for that available sented is par- Summary predict cost a The and do not Guide cost The true policy particular consumer. ticular for a pur- at the date of policy can not be determined maturity death, fact,” only that is at “after the chase but policy. The Guide policy, of the or at surrender go can about esti- Summary explain how consumers and Summary give mating policy. and of a The Guide the cost com- and disclosure course cost the consumer short supplemented parison shopping. course can This short salesperson. licensed Summary labels, do and the food the Guide Unlike they not ren- any and factual misstatements contain they misleading by fail to include. what and dered false 20 Supp. Dept. Treasury, 739 480 F. v. Wawszkiewicz 1979). (D. D.C. Freeman, 1962), (D.C. v. Armour & Co. 304 F.2d Cir. (1962). cert. denied 370 U.S. hedged
These documents their face are with sufficient qualifications an and them from such disclaimers to savе policy purchaser attack. No of a insurance of ordi- life nary intelligence reading education the documents supplies think could that the SCI all the information purchaser know “final” needs to or that the SCI is the “only” comparison shopping. I answer to therefore Summary conclude that the are not as a mat- Guide misleading. ter law
IV. OF REVIEW AGENCY DISCRETION
OR POLICY position, The essence of Aetna’s essence of the majority’s Policy opinion, is that the Guide and Summary they emphasize are deficient because the SCI22 may and do not contain two other which use indices be of prospective purchaser. life insurance circuit court reasoned that the rules were be- cause Commissioner failed to useful include informa- tion. majority Aetna and the seek to force the Commis- require sioner companies insurance to make more detailed they disclosure because conclude that additional information Summary would make the more helpful for the consumer.
Although everyone agrees desirability pre- on the senting meaningful the consumer with effective, cost dis- closure, it is record, briefs, clear from the the circuit *37 opinion majority court opinion the that reasonable disagree people achieving fair, as to the best means meaningful, accurate cost which disclosure the consumer dispute goes can really understand. The in this case the issue of whether Commissioner’s her exercise of authority as to what information must be is disclosed reasonable, sound and that is whether the Commissioner 22 required Since 1972 the rules have disclosure of the Sur policy render purchased. Cost Index consumer to the after the is
135 discretion, of discre- has her whether the exercise abused delegated range tion is outside discretion substantially fur- law, the rule Commissioner whether rational objectives sought, rule is a thers whether meаns to an end. legislature delegated to the Commissioner has objective.
power to select Select- the means to reach existing ing assessing projected the means involves predicting a course of facts and effectiveness of might each previously, I review action. As said this court making process. component rule of the Commissioner’s assessment The court would review Commissioner’s they supported sub- if are of the facts to determine together. In stantial evidence. Facts and blend making, deals some instances of Commissioner rule “ ‘evidentiary’ disputes with normative less with than experiments conflicts, projectories imperfect data, from differing simulations, predictions, assess- educated risks, v. possible Amoco Oil ments of like.” Co. 722, Agency, 501 F.2d 735 Environmental Protection (D.C. 1974). Law Trea- Davis, 1 Administrative Cir. See 1979). 6.13, p. (2d tise sec. ed. in
In this to what case the Commissioner’s decision as helpful formation in the nature will be to the consumer is conflicting. prediction supporting of a for which data than two Whether one index is better for the consumer one, readily or whether than three better really capable objective “fact,” determination. This unknowable, can best be characterized as an educated prediction, skeptically hunch, or more as a based on avail empirical able data. The Commissioner’s decision rests essentially legislative policy judgment, on an rather than on a v. factual determination. FCC Nat’l Citizens Cf. Broadcasting, 775, (1978). Comm’n 813-14 U.S. see, disclosure, e.g., Por of mandated a discussion March (The Bulletin 1981 Wisconsin Securities Office of Comm’r of pp. Securities), 3, 1-6; Bowers, Kripke, Vol. No. Book Review
136
Where rule turns on facts which are interrelated policy assessment, choices, predictions risk and future, the court’s review should be to the directed explanations reasons and Commissioner advanced support policy choices, assessments, risk predictions, only should dwell assurances support correctness of the for factual the rule. When they are, fact and court’s mixed, often objective agency, given is “to an see whether the essen- tially legislative perform, task to it out in has carried negate dangers manner to calculated of arbitrariness irrationality general the formulation rules application in Automotive and Ac- the future.” Parts Boyd, 330, (D.C. Ass’n cessories v. 407 F.2d 338 Cir. 1968). See also Environmental v. Wisconsin Decade Pub. Comm., 425, 409, Service Wis.2d N.W.2d (1977); Dept. Industrial Union v. F.2d Hodgson, 499 (D.C. 1974). 474-475 Cir. dealing
In Summary with Aetna’s contention that the inadequate and Guide are and should two more include again indices, analysis I turn to the court’s instructive Chardonnay in the Wawszkiewicz wine case. second seeking issue in that case involved the consumers’ to force Treasury require to disclosures more detailed than necessary being were prevent to from label mislead- ing. compared Treasury’s The court its review of the statutory power prohibit misleading “false and state- Treasury’s ments” statutory and its review of power require “provide labels which the consumer with ade- quate identity quality information as to the products.” statutory The court said that unlike the obli- gation Treasury prohibit on the false or statements, separate there is statutory and different Corporate Regulation The SEC and Disclosure: in Search aof Purpose, 1081; Whitford, The Function 1980 Wis. Rev. L. Dis- Transactions, closure Consumer 1973 Wis. L. 408. Rev. *39 obligation Treasury the the disclosure ensure that adequate. The of information to inelude is decision what review, subject purposes adequacy or of is exclude for agency discretion court, the the of said but issue is one “highly a defer- and the of review is standard agency reviewing must affirm the ential one. The court for the if it itself that a rational basis exists assures agency agency all determination, considered the that arriving relevant factors at its choice.” Wawszkiewicz Department 739, (D. Treasury, Supp. v. F. 746 480 of 1979).24 D.C. agency of
This of review statement standard policy making substantially discretion and similar to adopted, statement, the which this court has traditional quasi-legislative scope of of of a rule or of a review re it will administrative court has said decision. This quasi-legislative to determine view acton administrative arbitrary irrational; if it capricious, if it is or willful or objective; if it is any reasonable relation to its bears legisla reasonably calculated fulfill intended and 24 label, question not mis . The of whether a otherwise . provides leading, adequate a not matter information is therefore statutory of construction. support of “The Court instead must review the evidence in only upon agency’s policy may judgments, the decisions but strike finding discretion, or ‘arbitrary, capricious, them an abuse of (A). 706(2) otherwise 5 sec. not in accordance law.’ U.S.C. highly This ing The review standard of review is deferential one. agency a rational court affirm the assures must if it itself agency agency determination, basis exists for the and that arriving . all relevant factors in at choice. . considered its . pro simply forma, it Court’s role here is course not must be of agency satisfied that has articulated reasons identified reviewing important support judgment. facts in of its . But . . agree judge optimal need not the administrator’s choice is preferable; long sup or port so even as the decision is rational and has may judgment record, court not substitute its own agency. (Citations omitted.) for that . . .” Wawszkiewicz Dept. Treasury, Supp. 739, (D. 1979). v. 480 F. 746 D.C.
138 tively jus purposes; authorized if it shocks the sense tice, consideration, indicates lack of fair and careful sifting” “winnowing process. result Daly 208, 216, Board, v. National Resources 60 Wis.2d (1973) ; Optometry 208 839 Kachian Examin N.W.2d v. ing Board, 1, 8, 170 (1969); 44 Josam 743 N.W.2d Wis.2d 587, Mfg. 603, Health, Co. v. Board Statе 26 Wis.2d (1965); Rothwell, 28 Olson N.W.2d v. Wis. 233, 239, (1965); Cooper, 2d Ad State 137 N.W.2d (1965).25 ministrative Law 761
V. OF THE APPLICATION TEST OF
RATIONALITY I that court conclude whether the issue before the is viewed as a of an of or of review issue fact review agency policy, scope discretion or of is review sub- stantially similar, of the because essence standards applicable requirement to each is the of or reasonableness rationality. Davis, 1 Law Treatise sec. Administrative 6.6, p. 1978) (2d 468 ed. .26 This court has that “the said light substantial evidence of in almost the record test” converges any case concept with the of reasonableness expression and rationality, judi- scope usual of quasi-legislative Westring James, cial review of acts. v. 462, 477, (1975). 71 Wis.2d 238 also N.W.2d 695 See 25 clearly regulation, “In order to set aside a it must be un may ques reasonable. If reasonable minds well be divided on the tion, upheld. the administrator must be It must be that no shown regulation reasonable administrator would have made such a lacking essentially arbitrary.” it is that in reason that it is Optometry Examining Board, 8, Kachian v. 44 Wis.2d (1969). N.W.2d 743 of This issue reasonableness and rational put is Mfg., basis sometimes constitutional terms. See Josam supra. apply In this case I would the reasonableness test and defer agency, question to the if I even viewed the as one of law. See supra. note 16 Labor, 487 Dept. Inc. U.S. NYS, Industries v. Assoc. (D.C. 1973). 342, F.2d Cir. passes rule whether the
I turn now to determine rationality. test of regulations on the emphasis in her
The Commissioner’s predicate— index based the factual cost surrender is unchal- previously undisputed and which as noted is we prior death lenged terminated most are —that point in the the NCPI that in most the SCI and cases same direction.
Considering facts, concluded these the Commissioner Index, regulation emphasizing Surrender the Cost that a discussing single Summary, and requiring a in the index grounds Guide, on the in the has merit all the indices con- rule and court reviewed the simplicity. The circuit respects in sеveral erred the Commissioner cluded good simplification.” It of “over the direction things court, says is mis- simple, the circuit it but make they leading things simpler than are. It to make question Summary and close whether “simpler.” “simple” minds could reach Reasonable majority different conclusions. The admits experts dis- record demonstrates that “various actuarial agreed concerning . . docu- issue whether the . purchasers prospective ments would mislead whole life *41 policies 104). comparative p. as their {Supra, to costs.” majority, however, deeper
The burrows review its ap- of the rule concludes that the Commissioner’s proach determining fur- what information should inherently nished to the consumer is flawed because the guided by actually happens Commissioner has been what by to most rather than what in- most consumers tend policy buying to do with the majority when it. The requires the Commissioner to draft the Guide and Sum- mary to majority pur- reflect the intention of policy
chasers to hold the majority death.27 until To the point of this court then “the . . . that it is the con- [is] sumer’s intent at the purchase time of . . . that should determine what information must be disclosed in order intelligent enable them pur- to make an and informed (Supra, chase p. 112) decision.” point Even if the has merit I majority’s think it obvious that the conclusion agency determination for the not for the court. nothing more, If necessity this statement illustrates the agency making. review, judicial de novo decision challenge For the is foreseeable that were the Commis- grounds sioner sug- her majority base rule on the gests, she would predicating mislead the consumer rule on fantasy a consumer rather than on the facts life insurance.
The court is to review the Commissioner’s rule to de- quasi-legislative termine if the task was carried out in a negate manner dangers calculated irrationality if, on the presented, basis of the evidence her rule makes Upon sense and is defensible. a review rec- ord I conclude that the Commissioner’s rule is the result study long hearings. considered and careful after process Commissioner’s decisional cannot be characterized being gaps, slipshod reasoning. filled with mistakes or It is Commissioner, for the court, not this to choose which gives specific The court direction to the Commissioner all three agreed indices must be included. Even I if the rule invalid, disagree was approach I majority. with this taken There are other considered, indices which the court has not it is far from clear helpful. from the record that ELAD would be The court should not dictate the decision of what indices should be used. given The Commissioner opportunity should be to re may examine the issue which lead to a better articulation of the position previously change position. taken or a company’s For one advertising approach insurance to cost dis- closure, Life, see The Bankers How Can I Make a Reliable Cost Comparison Competitive Policies, Between Changing Times (June 1980). only It refers to two indices. *42 experts predict needs. to believe and to consumer policy administrator’s court need not conclude that rea- preferable or one. Where best even the measures may as to which of several sonable minds differ appropriate chosen, should courts should defer to the be Service, Family Mourning v. agency. Publications (1973). U.S. patently unreasonable.
The Commissioner’s rule is not of an It is not not the result void rational It is basis. unconsidered, The Commis- willful irrational choice. or given decision; explanation for her sioner has a rational supported by expert opinion. her decision is a difficult The area disclosure is of life insurance cost agencies country regulatory and in- one, and across the might I companies groping answers.28 surance as the Commis- have the rule in the manner drafted same might differently. am But I or I sioner have drafted it record Insurance. The the Commissioner of adequate support exercise to the Commissioner’s discretion. promulgated are de-
The rules the Commissioner signed operate transac- in multitude of the future magical that will tions. At time is no formula this there that the cost assure the consumer understands experiment policy. The Commissioner should be free regulatory approaches should rational various abandoning regulatory approaches, reexamine be able to retaining changing prove those defective published in the well. The rules are those that function Code, The rules can be not in concrete. Administrative changed they Commissioner and the if do not work. The industry agree something im- done to needs give prove I would disclosure of cost to the consumer. marketplace. a chance the rules adopted states have disclosure The record shows that several principally use the cost surrender index. rules which *43 forth, I dissent. set
For reasons I Nathan S. am authorized state that Justice Hbf- joins FERNAN in this dissent. Wisconsin, Plaintiff-Appellant,
State of
v. Freight Defendant-Respondent- System, Inc., Yellow
Petitioner. Supreme Court Argued 31, No. 79-800-CR. March 1981. Decided 1981. March
(Also reported
834.)
in 303 N.W.2d
tive decisions. See Judicial Council
Notes
accompanying
163,
414,
1975 AB
Ch.
Laws of 1975.
expressly applicable
judicial
rules,
review of
While
apply
227.20,
1979-80,
spectrum
to a
sec.
Stats.
does
wide
including quasi-legislative
of administrative decisions
de-
maybe
agency
cisions which
have some similarities with
legislative approach
scope
rules.12 I find the
to the
227.20, Stats.,
applicable
Sec.
to administrative
decisions
play” pro
whether
reached in a contested case to which the “fair
227.07-227.13,
1979-80, apply
visions of secs.
Stats.
or whether
hearing
provisions
apply.
reached after a
in which these
do not
Comm.,
Environmental Decade
Wisconsin
v. Public Service
650, 659a-659b,
(1980);
Wis.2d