Excellus Health Plan, Inc. v. Serio, 2004 N.Y. Int. 0043 (Apr. 6, 2004).
INSURANCE — INSURANCE LAW § 4308 — INSURANCE RATES — C.P.L.R. Art. 78
ISSUE & DISPOSITION
Issue(s)
Whether the Superintendent of Insurance may exercise discretion under his authority to review and approve premium rates to disapprove or modify rate changes that are considered approved under "file and use provisions."Disposition
No. The "file and use provisions" mandate the Superintendent’s approval of all rate increases and decreases that fall within the statutorily prescribed range.SUMMARY
Plaintiff is an insurance provider. Under Insurance Law § 4308, the Superintendent of Insurance ("the Superintendent") must approve all insurance premium rate modifications before they become effective. Subsections (g) through (j) of Section 4308, called the "file and use provisions," state that once an insurer submits a rate filing to the Superintendent, the filing "shall be deemed approved provided … that the anticipated incurred loss ratio [falls within a statutorily prescribed range]." In November 2001, Plaintiff submitted a rate filing to revise its premium rates. The loss ratio under Plaintiff’s rate filing fell within the acceptable range. In January 2002, the Superintendent notified Plaintiff that he would modify some of Plaintiff’s rates and reject others.
Plaintiff commenced a proceeding under C.P.L.R. Art. 78, contending that the Superintendent did not have the authority to condition approval of the rates on his review. The Supreme Court held that Plaintiff’s rates were approved as a matter of law under the file and use provisions, and the Appellate Division affirmed. Holding that the file and use provisions precluded the Superintendent’s discretionary review, and that under those provisions Plaintiff’s rates must be approved, the Court of Appeals affirmed.
The Superintendent claimed that, under Section 4308(b), he has the authority to disapprove any premium that is "excessive, inadequate, or unfairly discriminatory." However, the Court found the statutory text to be clear and unambiguous on the issue of rate approval. The Court held that, under Section 4308(g)(1), rates are approved as a matter of law if the loss ratio falls within the statutorily prescribed range. The Court found that this reading comports with the statute’s legislative history and overall purpose to ensure that premium rates are reasonable and equitable. The Superintendent may use his discretion in reviewing initial contract terms, but he may not use his discretion to disapprove rate modifications that have an acceptable loss ratio. Accordingly, the Court affirmed the holding of the Appellate Division.
Prepared by the liibulletin-ny editorial board.