The opinion
STATE OF MAINE SUPERIOR COURT
PENOBSCOT, ss. CIVIL ACTION
Docket No. AP-04-029
,&\&fi / p/./ ;)/ 11-2 J * rI.
PENQUIS COMMUNITY
ACTION PROGRAM, INC.,
Petitioner
DECISION AND ORDER ON RULE
v. 80C
APPEAL
MAINE SUPERINTENDENT OF
INSURANCE,
and
MAINE EMPLOYERS MUTUTAL
INSURANCE COMPANY
Xespondents
This matter is before the Court on appeal pursuant to 5 M.R.S.A. $911001-11008
(2004) and Rule 80C of the Maine Rules of Civil Procedure from a decision of the Maine
Superintendent of Insurance (herein "Superintendent").' The Court affirms the
Superintendent's determination.
BACKGROUND
On May 28, 2004, the Penquis Community Action Program (herein "PCAP")
fiiea a petition with the Superintendent pursuant to 24-A M.R.S.A. 55 229 and 2320(3j
requesting that the Superintendent order PCAP's former workers' compensation insurer,
Maine Employers Mutual Insurance Company (herein "MEMIC"), to rescind its
1
Pursuant to 24-A M.R.S.A. § 210 (2004), the Superintendent appointed Bureau of Insurance Attorney
Robert Alan Wake to serve as the hearing officer. Attorney Wake had full decision-making authority, and
his acts were considered official acts of the Superintendent pursuant to 9 210.
reclassification and refund a portion of PCAP7spremiums. MEMIC initially charged
PCAP according to a seven code basis, but changed it to a more expensive two code basis
in 2000. Shortly after the change, MEMIC realized that the CAPs were entitled to the
more advantageous two code basis and adjusted some of the CAPs, but mistakenly
neglected to adjust the PCAP account.
In 2004, PCAP discovered that the other CAPs were receiving the more
advantageous two code rate and requested a hearing before the Superintendent. It sought
a retroactive readjustment based upon the erroneous assessment; it also made a claim
based upon discrimination.
The Superintendent allowed a readjustment for the years immediately preceding
the hearing-he agreed that the proper assessment was under the two code basis.
However, he denied the readjustment for the years 2001-2002 and 2002-2003. The
Superintendent cited two reasons: (I) The request for adjustment was too late for the
earlier years; and (2) The discrimination claim was invalid since the disparity was based
upon incompetence and inadvertence. PCAP appealed the Superintendent's
determination to this Court pursuant to M.R. Civ. P. 80C as a review of final agency
action.
DISCUSSION
A. Standard of Review
The Court's review of the Respondent's determination is limited. Agency rulings
may be reversed or modified on appeal only if the Court determines that they are: (1) in
violation of constitutional or statutory provisions, (2) in excess of the statutory authority
of the agency, (3) made upon unlawful procedure, (4) affected by bias or error of law, (5)
unsupported by substantial evidence on the whole record or (6) arbitrary or capricious or
characterized by abuse of discretion. 5 M.R.S.A $ 11007(4)(C) (2004).
The scope of judicial review of an administrative agency's fact-finding is strictly
limited; such a finding may be overturned only upon a showing by the challenger that it
was "unsupported by substantial evidence on the whole record." Clarke v. Maine
Unemployment Insurance Commission, 491 A.2d 549, 552 (Me. 1985) (citation omitted).
"The standard of review for an administrative finding of fact is identical to the 'clear
error' standard used by the Law Court." Id. (quoting Gulick v. Board of Environmental
Protection, 452 A.2d 1202, 1207-08 (Me. 1982)). The reviewing court must examine the
entire record to determine whether on the basis of all the testimony and exhibits before
the agency it could fairly and reasonably find the facts as it did. Clarke, 49 1 A.2d at 55 1
(citing In re Maine Clean Fuels, Inc., 310 A.2d 736, 741 (Me. 1973)). The Court will not
substitute its judgment for an agency's where there may be a reasonable difference of
opinion. Clarke, 491 A.2d at 552 (citing Seven Islands Land Co. v. Maine Land Use
Regulation Commission, 450 A.2d 475, 479 (Me. 1982)).
In an 80(C) appeal, the Court must determine whether the Maine Superintendent
abused his discretion, committed error of law, or made findings not supported by
substantial evidence in the record. See e.g., McGhie v. Town of Cutler, 2002 ME 62,75,
IYJ A.2d 504. Substantiai evidence is evidence that a reasonabie mind wouid accept as
sufficient to support a conclusion. See e.g., Bath Iron Works v. Maine Unemployment
Insurance Commission, AP-01-066 (Me. Super. Ct., Cum. Cty., June 17, 2002) (Crowley,
J.). A reviewing court should "afford due consideration to the Superintendent's
interpretation and application of technical statutes and regulations and will overturn the
Superintendent's action only if the statute or regulation plainly compels a contrary
result." Consumers for Affordable Health Care v. Superintendent of Ins., 2002 ME 158,
g 30, 809 A.2d 1233, 1242 (quoting Maine AFL-CIO v. Superintendent of Ins., 595 A.2d
424,429 (Me. 1991)); York Ins. of Maine v. Superintendent, 2004 ME 45, 845 A.2d
1145.
B. Applicable Law.
The National Council on Compensation Insurance (herein "NCCI") Basic
Manual, Rule 1(F)(2) provides:
Corrections in classification that result in a decrease in premium, whether
determined during the policy period or audit, must be applied retroactively
to the inception of the policy. NCCI Basic Manual Rule l(F)(2).
The Superintendent has consistently interpreted this provision, and did so in this case, to
mean "corrections [in rating classifications] made at the request of the policy holder are
not made 'at audit,' and therefore apply prospectively rather than retroactively, unless the
policyholder 'contested the erroneous classifications within a reasonable time after the
audit."' Perry Transport, Inc., v. MEMIC, No. INS-03-412 (Me. Bur. Ins. Aug. 25,2003,
clarified on reconsideration, Sept. 25, 2003), afSlrmed sub nom. Perry Transport, Inc., v.
Maine Bureau of Insurance, ANDSC-AP-03-14 (Me. Super. Ct., And. Cty., June 1,2005)
(Delahanty, J.), citing Palmer Development Corp. v. NCCI, No. INS-94-11 (Me. Bur. Ins.
Dec. 22, i993j. Retroactive corrections of ciassifications are required only when
determined during the policy period or audit. Based on the evidence in the Perry record,
the Superintendent found that "although [Perry] had concerns about its classification at
the time the policy was in force, . . . ; [Perry] did not contest the audit findings to the
Superintendent pursuant to 24-A M.R.S.A. 9 2320(3) or to NCCI [or MEMICl pursuant
to 24-A M.R.S.A. 5 2320(2)" and, therefore, denied retroactive reclassification under
NCCI Basic Manual, Rule 1(F)(2). Perry Transport Decision and Order (Me. Bur. Ins.
Aug. 25,2003).
1. Timeliness
Rule lF(2) is a well-established administrative rule that operates to bar any
generic claims for reclassification. The Appellant accepts this, but offers two theories to
get around the Rule lF(2) application. First, Appellant argues that 24-A M.R.S.A. 9
229(3) applies, and second, that discrimination claims are not governed by l(F)(2).
According to the Appellant, 24-A M.R.S.A. 9 229(3) creates a discovery rule that allows
review within 30 days after the party discovers the act that aggrieves them. This would
open the door since the Appellant discovered that the other CAPS were getting the better
treatment and promptly filed the request for hearing. Appellant's argument fails for two
reasons. First, this rule is available only for review of ucts by the S~perintendent,and
this is not such a request. This is a request for the review of MEMIC's rate classification;
it does not apply or override Rule l(F)(2). Second, the discrimination claim is not viable
for the reasons set out in the following section.
2. Discrimination Claim
Appellant argues that discrimination claims do not fall under the ambit of Rule
1tr)tL). There is no case iaw on point, but the Superintendent's iriierpreiaiioa iliat Riile
4 ,"\ ,A\
l(F)(2) applies is correct. The Superintendent concluded that no discrimination, as
prohibited by 24-A M.R.S.A. 9 2301, occurred. He found, as a matter of fact binding
upon the court, that the misclassification of PCAP was an unintended mistake. In other
words, he found that there was no intent to treat Penquis differently. Appellant argues
that the Superintendent should not have grafted an intent element onto the anti-
discrimination statute. The Superintendent's interpretation is correct. Something more
than patent inadvertence is necessary to make the case. Most discrimination cases in
other areas of the law utilize a burden shifting procedure: the victim of alleged
discrimination makes his prima facie case by showing disparate treatment. The
respondent then has the burden of proving an alternative non-discriminatory reason for
the treatment. If the respondent does so, the claim fails. In this instance the
Superintendent found that the failure by MENIIC to readjust the rate assessment was
simply an administrative error. Accordingly, all discrimination claims fail, whether
timely or not.
Additionally, if the Appellant's argument-the fact that other insureds in similar
situations received more favorable treatment mandates an irrefutable conclusion that
illegal discrimination has taken place-is accepted, every instance of mistaken
computation constitutes discrimination. This is a result the law does not seem to intend.
In Irnagineering Inc. v. Superintendent of Insurance, 593 A.2d 1050, 1053 (Me.
1991), the Law Court articulated the relevant standard: considerable deference will be
given to the Superintendent on questions involving the interpretation and application of
technical insurance statutes and regulations unless those laws plainly compel a contrary
resuit. Vv'iih ibis deference in mind, tile Superintendent's inierpretzttioii of tiie NCCi
Basic Manual is appropriate and does not compel a contrary result nor does it constitute
abuse of discretion.
CONCLUSION
For the foregoing reasons, the Court affirms the Superintendent's Decision.
Accordingly, the entry shall be:
The Superintendent's Decision is AFFIRMED. The Clerk may incorporate this
Decision and Order into the docket by reference.
Dated: 3's VI zD , ,006
4
I
A drew Mead
J stice, Maine Superior Court
Date Filed 1118/04 Penobscot Docket No. AP-2004-29
County
Action Rule 80C Appeal
ASSIGNED TO JUSTICE ANDREW bi. MEAD
*Independent claim against Maine Employers
Mutual Insurance Company dismissed
3/8/05.
MAINE SUPERINTENDENT OF INSURANCE
* MAINE EMPLOYERS MUTUAL INSURANCE COMPANY,
PENQUIS COMMUNITY ACTION PROGRAM, INC. ",, NATIONAL COUNCIL ON COMPENSATION INSURANCE
I Plaintiff's Attorney ,
1 Defendant's Attorney
EATON PEABODY PIERCE ATWOOD BY: Allan M. Muir, Esq.
One Monument Square, Portland ME 04101
P 0 Box 1210
Bangor ME 04402-1210 I
For: Maine Employers' Mutual Insurance Co
BY: T ~ ~ S - G ; - - ~ R w/drew
S ~ R - ~ S ~ OFFICE
3/14/05 ~ OF THE ATTORNEY GENERAL
Thad B. Zmistowski Esq. 6 State House Station, Augusta ME 04333-0006
Jennifer L. Eastinan Esq.
Date of
Entry
Petition for Judicial Review of Final Agency Action Pursuant to
M.R.Civ.P. 80C filed.
Notice of Assigned Justice filed. Pursuant to Administrative Order,
Single Justice Assignment of Civil Cases, Docket No. SJC-323, the above
referenced case is specially assigned to Justice Andrew M. Mead. Copy
forwarded to attorneys for the Plaintiff.
Entry of Appearance and Statement of Position filed by Allan M. Muir Esq.
on behalf of Maine Employers' Mutual Insurance Company.
Copy of Notice of Assigned Justice forwarded to attorney for
Maine Employers' Mutual Insurance Company.
Motion to Specify Course of Future Proceedings Under Rule 80C(i) filed
by Petitioner.
Motion to Withdraw by Thomas C. Johnston, Esq. on behalf of Petitioner,
Penquis Community Action Program, Inc. filed.
RespondentlDefendant Superintendent of Insurance's Entry of Appearance,
Statement of Position, and Answer filed.
Copy of Notice of Assigned Justice forwarded to attorney for Maine
Superintendent of Insurance.
Respondent/Defendant Superintendent of Insurance's Motion to Dismiss
Independent Claim and Memorandum in Opposition to Motion to Specify
Future Course of Proceedings with Exhibit A filed.
Memorandum in Opposition to Superintendent's Motion to Dismiss Independent
Claim and in Reply to superintendent's Opposition to Motion to Specify
Future Course of Proceedings filed by Petitioner.