Opinion
In October 2005, following an extensive investigation, the Commissioner of California’s Department of Insurance (the Commissioner) entered into a settlement agreement with a number of related insurance companies (the insurers) resolving allegations that the insurers’ claims-handling procedures violated the Insurance Code.
Factual and Procedural History
The settlement agreement between the Commissioner and insurers established a claims reassessment process under which previously denied claims for disability income benefits could be resubmitted for reevaluation. The agreement also imposed an $8 million penalty and required changes to the insurers’ claims-handling procedures and to the language of their insurance policies. As a result of the reassessment process, approximately $230.2 million in additional benefits will be paid to policyholders that made claims. The settlement agreement does not include any express benefits for policyholders who, like plaintiff, had not submitted a claim for benefits under the relevant policies.
Plaintiff’s second amended complaint alleges that the insurers’ “systematic scheme to deny and terminate claims eliminated coverage under the disability income policies for all policyholders and, therefore, effectuated a reduction in coverage across the entire policy holder class. As a result, plaintiff and the classes paid premium dollars for units of coverage that were never afforded under the disability income policies, and [the insurers] breached the policies by not providing the units of coverage that plaintiff and the classes purchased with their premium payments. . . . [G]iven that the disability income policies were non-cancelable and guaranteed renewable, [the insurers were] prohibited from raising premiums for any reason. Reducing coverage functioned as a de facto increase in premiums because coverage was eliminated but premiums remained the same. By increasing the premiums, [the insurers] breached the contracts of insurance with its policyholders and collected excessive premiums during the conspiracy period.” The amended complaint also alleges that
In April 2009, the Commissioner moved to dismiss the mandamus cause of action against him. The court granted the motion on the ground that the Commissioner does not have a mandatory, ministerial duty to afford plaintiff the requested relief and that to the extent the Commissioner is vested with the authority to do what plaintiff demands, the Commissioner’s refusal to do so constitutes a proper exercise of his discretion, in a manner that was not arbitrary or capricious. Plaintiff filed a timely notice of appeal.
Discussion
“An ordinary mandamus action under Code of Civil Procedure section 1085 permits judicial review of ministerial duties as well as quasi-legislative acts of public agencies. [Citation.] Mandamus lies to compel the performance of a clear, present, and ministerial duty where the petitioner has a beneficial right to performance of that duty. [Citation.] Mandamus may issue to correct the exercise of discretionary legislative power, but only if the action taken is so palpably unreasonable and arbitrary as to show an abuse of discretion as a matter of law.” (Carrancho v. California Air Resources Board (2003)
Initially, plaintiff contends that the Commissioner had a ministerial duty under sections 12926 and 12921 to enforce plaintiff’s alleged rights under the Insurance Code. “ ‘A ministerial act is an act that a public officer is required to perform in a prescribed manner in obedience to the mandate of legal authority and without regard to his own judgment or opinion concerning such act’s propriety or impropriety, when a given state of facts exists. . . .’
Contrary to plaintiff’s argument, the Commissioner does not have a ministerial duty “to enforce the right to rescission under the Insurance Code belonging to [plaintiff] and the proposed class” and “to require that the corporate insurers return the premium that they collected from [plaintiff] and the proposed class under false pretenses — likewise required under the Insurance Code.” Assuming (without deciding), as argued by plaintiff, that sections 330, 331, 481.5 and 483 entitle him and others to rescind their policies and obtain a refund of premiums,
Plaintiff argues, in the alternative, that the court erred in dismissing the petition for a writ of mandate because he alleged facts sufficient to show an abuse of discretion by the Commissioner. While “traditional mandate will lie to correct abuses of discretion, a party seeking review under traditional mandamus must show the public official or agency invested with discretion acted arbitrarily, capriciously, fraudulently, or without due regard for his rights, and that the action prejudiced him.” (Gordon v. Horsley (2001)
In reviewing such decisions, “ ‘the trial court does not inquire whether, if it had power to act in the first instance, it would have taken the action taken by the administrative agency. The authority of the court is limited to determining whether the decision of the agency was arbitrary, capricious, entirely lacking in evidentiary support, or unlawfully or procedurally unfair.’ [Citation.] ... In applying this deferential test, a court ‘ “must ensure that an agency has adequately considered all relevant factors, and has demonstrated a rational connection between those factors, the choice made, and the purposes of the enabling statute.” ’ [Citations.] Courts exercise limited review ‘out of deference to the separation of powers between the Legislature and the judiciary, to the legislative delegation of administrative authority to the agency, and to the presumed expertise of the agency within its scope of authority.’ [Citations.] The court does not ‘weigh the evidence adduced before the administrative agency or substitute its judgment for that of the agency, for to do so would frustrate legislative mandate.’ ” (Carrancho v. California Air Resources Board, supra,
Plaintiff also contends that “it was error for the superior court to dismiss [his] claim against the Commissioner until adequate discovery was conducted and the facts relating to the Commissioner’s exercise of his discretion were presented.” But plaintiff suggests no specific uncertainties that might affect his right to a writ of mandate and justify discovery prolonging the proceedings against the Commissioner. Plaintiff’s conclusory allegation that the Commissioner’s decision “was arbitrary and capricious and an abuse of discretion” is insufficient to warrant further proceedings. (Galbiso v. Orosi Public Utility Dist. (2010)
In summary, even on the questionable assumption that plaintiff and purported class members suffered economic harm as a result of the insurers’ claim practices that have now been corrected, the Commissioner was not required to pursue any remedy on their behalf. Nothing in the record suggests that the decision not to pursue additional remedies was so unreasonable as to constitute an abuse of discretion. Hence, the trial court properly granted the Commissioner’s motion to dismiss the cause of action seeking a writ of mandate.
Disposition
The order dismissing the action against the Commissioner is affirmed.
McGuiness, P. J., and Jenkins, J., concurred.
Notes
All statutory references are to the Insurance Code unless otherwise noted.
The defendant insurers are not parties to this appeal.
Under section 331, “[c]oncealment, whether intentional or unintentional, entitles the injured party to rescind insurance." Section 330 defines concealment as the “[njeglect to communicate that which a party knows, and ought to communicate.” Section 481.5, subdivision (a), provides in relevant part that when “there is a reduction in coverage, the insurer shall tender ... the amount of the unearned premium generated by the reduction in coverage, to the insured . . . .” Section 483, subdivision (a) provides that “[a] person insured is entitled to a return of the premium . . . [¶] . . . [w]hen the contract is voidable, on account of the fraud or misrepresentation of the insurer.”
The trial court took judicial notice of the settlement agreement. We grant the Commissioner’s unopposed request that this court also take judicial notice of the settlement agreement. (Evid. Code, § 459.) Plaintiffs request that we take judicial notice of an order by the Commissioner in proceedings entitled “In the matter of Withdrawal of Policy Form Approval for UNUM Life Insurance Company et al.” is denied on the ground of relevance.