54 Pa. Commw. 93 | Pa. Commw. Ct. | 1980
Opinion by
The Pennsylvania Assigned Claims Plan (Plan) seeks review of the Insurance Commissioner’s (Commissioner) order requiring it to pay the basic loss benefit claims that Safeguard Mutual Insurance Company would be legally obligated to provide claimants under the Pennsylvania No-Fault Motor Vehicle Insurance Act.
On May 29, 1979, the Commissioner suspended Safeguard’s operation -of business based on an insolvent financial condition which could prove harmful to both policyholders and the general public.
On November 30, 1979, the Commissioner ordered the Plan to promptly provide those legally obligated basic loss benefits covered by the No-Fault law. The adjudication found authority in Section 108(a) (1) (D) and (E), 40 P.S. §1009.108(a)(l)(D) and (E), which provide in pertinent part:
*96 (a) General.—
(1) ... [A] victim or the survivor or survivors of a deceased victim may obtain basic benefits through the assigned claims plan ... if basic loss insurance:
(D) applicable to the injury is inadequate to provide the contracted-for benefits because of financial inability of an obligor to fulfill its obligations; or
(E) benefits are refused by an obligor for a reason other than "that the individual is not entitled in accordance with this act to receive the basic loss benefits claimed.
The Commissioner determined that the May 29, 1979 suspension order, not a final judicial determination of insolvency in a liquidation proceeding before this Court, was adequate and proper to invoke Section 108(a) (1) (D)’s “financial inability” clause. In addition, the Commissioner found that Safeguard’s refusal to pay legally entitled claimants because of the Suspension Order was based on financial condition, not on the lack of merit of such claims as provided by Section 108(a)(1)(E). This appeal followed the decision ordering payment by the Plan under the No-Fault Act.
Procedurally, the Plan argues that Safeguard is both an indispensable and necessary party to the present proceeding. We disagree. An indispensable party is one whose rights are so connected with the claims of the litigants that no decree or order can be made without impairing those rights. Action Coalition of Elders v. Allegheny County Institution District, 44 Pa. Commonwealth Ct. 356, 360, 403 A.2d 1357, 1360 (1979). On the other hand, a necessary party is one “ ‘whose presence, while not indispensable, is essential if the court is to completely resolve the controversy before it and render complete relief.’ ” Action Coali
Initially, we must point out that the Commissioner’s authority is broad and comprehensive. The power to suspend Safeguard operations based upon a finding of either insolvency or a hazardous financial condition is clearly written in Article V of the Insurance Department Act of 1921.
(b) Assigned claims plan.—
(1) Obligors other than self insurers and governments providing basic loss insurance in this Commonwealth shall organize and maintain, subject to approval and regulation by the commissioner, an assigned claims bureau and an assigned claims plan and adopt rules for their operation and for assessment of costs on a fair*98 and equitable basis consistent with this act. If such bureau and. plan are not organized and maintained in a manner considered by the commissioner to be consistent with this act, he shall organize and maintain an assigned claims bureau and an assigned claims plan. (Emphasis added.)
To hold, as the Plan requests, that the Act does not authorize the Commissioner to compel payment of an insurer’s claims
The Plan contends that the Commissioner’s error was two-fold in its application of Section 108(a)(1) (D): First, the section contemplates a financial inability to meet only basic loss benefit claims, not all obligations, and the evidence indicates that Safeguard has sufficient liquid assets to meet these obligations; and second, the use of the term “financial inability” under the statute requires, at the least, a final judicial determination of insolvency as a prerequisite to activating the Plan’s coverage. We find merit in neither argument.
The No-Fault Act’s declared policy has always been the establishment of a statewide system of
On the first issue, logic dictates that the test must be whether Safeguard can meet all of its claims and obligations, present or future, in the normal course of business. We find nothing to indicate that the No-Fault Act authorizes its claims to take preference over equally serious losses from its sister insurance sectors. The Act does not exist in a vacuum, cannot act in disharmony with other claims, and will not be made to operate against the public’s best interest. As for the “financial inability” question, there is no reference in the statute to the term “insolvency” and certainly no indication that a final judicial determination of insolvency is necessary to the section’s application. The insurer need only be financially unable to fulfill its
The Plan’s responsibility for policy coverage is even clearer upon a reading of The Pennsylvania Insurance Guaranty Association Act.
The Plan also challenges the Commissioner’s decision under Section 108(a) (1) (E) providing for payment when “benefits are refused by an obligor for a
Order
The Insurance Commissioner’s decision and order, dated November 30, 1979, to be affirmed in its consideration of Section 108(a) (1) (D), 40 P.S. §1009.108(a) (1)(D), and affirmed with modification concerning Section 108(a) (1) (E), 40 P.S. §1009.1Q8(a) (1) (E), of the Pennsylvania No-Fault Motor Vehicle Insurance
Date: September 26,1980
Act of July 19, 1974, PX. 489, as amended, 40 P.S. §§1009.101 et seq., effective July 19, 1975. Basie loss benefits are provided by the No-Fault Act for net loss sustained by a victim, exclusive of property damage, and synonomous with personal injury protection (PIP) claims for the purposes of this matter. See 40 P.S. §1009.103.
Suspension was made in accordance with Article V of the Insurance Department Act of 1921, Act of May 17, 1921, PX. 789, added by Act of December 14, 1977, PX. 280, as amended, 40 P.S. §§221.1 et seq., and based upon the finding that Safeguard’s liabilities exceeded assets by $5,629,519 as of December 31,1977.
However, our decision today makes no attempt to reflect upon or influence that which is the subject of the Commissioner’s May 29, 1979 application to this Court for Safeguard’s dissolution and liquidation upon a judicial declaration of insolvency.
See note 2, infra, and the Commissioner’s summary authority at 40 P.S. §221.10.
To our reading, Section 108(b), 40 P.S. §1009.108(b), is clear, and Section 106, 40 P.S. §1009.106, does not relegate victims or claimants to an exclusive procedure against the Plan, as the Plan argues, but only states that the Plan may be responsible, Section 106(a) (5), 40 P.S. §1009.106(a) (5), and that timely application must be made, Section 106(c) (4), 40 P.S. §1009.10S(c) (4).
See Section 102(b), 40 P.S. §1009.102(b).
See Section 704 of the Administrative Agency Law, 2 Pa. C. S. §704, and Nagle v. Insurance Department ex rel. Sheppard, 48 Pa. Commonwealth Ct. 295, 299, 409 A.2d 525, 527 (1980).
By the same token, the Plan incurs no injury or financial disability, since the Assigned Claims Bureau or any insurer to whom the claim is assigned is subrogated to all rights of the claim against the insurer legally obligated to provide the coverage. See 40 P.S. §1009.108(a) (2).
Act of November 25, 1970, P.I/. 716, as amended, 40 P.S. §§1701.101 et seq.
In fact, we note with interest one specific hardship case in which the Commissioner petitioned this Court ex parte for a special injunction to force the payment of certain present and future medically related expenses to one Gary Zoellner for seyere personal injuries suffered as a result of an April 16, 1978 automobile accident. On July 20, 1979, the late President Judge Bowman ordered Safeguard to pay these bills upon the Commissioner’s approval as of and until such time as the suspension order would be vacated.