Opinion
HHDCV166034746S
09-09-2016
Connecticare Benefits, Inc. v. Katherine L. Wade, Commissioner of the Connecticut Insurance Department
UNPUBLISHED OPINION
MEMORANDUM OF DECISION RE MOTION TO DISMISS (#103), AND MOTION FOR TEMPORARY INJUNCTION (#100.35)
The plaintiff, ConnectiCare Benefits, Inc (CBI) filed this administrative appeal from the decision of Katherine L. Wade, Commissioner of the Connecticut Insurance Department, approving a rate increase of an average of 17.4 percent for individual health insurance plans offered by CBI through Access Health CT, the Connecticut health insurance exchange created under the Patient Protection and Affordable Care Act (ACA). Although the commissioner approved the rate increase sought by CBI in its application of June 1, 2016, CBI contends that the commissioner failed to fulfil her statutory duty to ensure that the rate approved is adequate when she declined to consider a supplemental submission filed by CBI on August 23, 2016, requesting an average rate increase of 27.1 percent, rather than the 17.4 percent increase it had sought in its June 1 application. CBI seeks a temporary injunction vacating the commissioner's decision and remanding the matter to her with direction to consider CBI's supplemental submission.
The commissioner moved to dismiss the appeal, alleging that this is not a " contested case" and therefore not appealable under the Uniform Administrative Procedures Act (UAPA), General Statutes § 4-183. She further asserts that CBI failed to exhaust its administrative remedies because it did not move for reconsideration of the decision pursuant to General Statutes § 38a-19(a). The commissioner also opposes the application for a temporary injunction, asserting that the court lacks authority to remand the action to the commissioner without a full hearing on the merits.
Motion to Dismiss
The court must first address the motion to dismiss, which challenges its subject matter jurisdiction. There is no absolute right to appeal an administrative decision. Fairfield v. Connecticut Siting Council, 238 Conn. 361, 368-69, 679 A.2d 354 (1996). Appeals to superior court from administrative agencies exist only under statutory authority and require strict compliance with the governing statutes. Office of Consumer Counsel v. Department of Public Utilities Control, 234 Conn. 624, 640, 662 A.2d 1251 (1995). Ordinarily, administrative appeals under the UAPA, General Statutes § 4-183, are permitted only from final decisions in contested cases after exhaustion of all administrative remedies. General Statutes § 4-183(a); Fairfield v. Connecticut Siting Council, supra, 238 Conn. 369. In this case, however, General Statutes § 38a-19(d) provides that " [a]ny order or decision of the commissioner [of the Department of Insurance] shall be subject to appeal therefrom in accordance with the provisions of sections 4-183." The Supreme Court has construed a similarly worded provision in General Statutes § 14-311 to permit an administrative appeal " notwithstanding the usual requirement of a statutorily required hearing." Nizzardo v. State Traffic Commission, 259 Conn. 131, 140 n.10, 788 A.2d 1158. Based on the plain language of § 38a-19(d) and the Supreme Court's interpretation, in Nizzardo, of similar language in § 14-311, the court concludes that this administrative appeal is authorized without the requirement of a hearing.
The court further concludes that CBI was not required to seek a hearing pursuant to General Statutes § 38a-19(a), which permits any person aggrieved by any decision of the commissioner rendered without a hearing to request a hearing within thirty days after the decision, before filing this appeal. Nothing in § 38a-19(d) requires an aggrieved party to seek a hearing under § 38a-19(a) before exercising its statutory right to appeal. Section 38a-19 provides alternative courses that may be chosen by an aggrieved party. See Loper v. Gilligan, Docket No. 532354, Superior Court, judicial district of New London (January 3, 1995, Hurley, J.) [13 Conn.L.Rptr. 240, ].
The court concludes that § 38a-19(d) authorizes this appeal to be brought, without a hearing, directly from the commissioner's decision of September 2, 2016. The court has jurisdiction over the appeal, and the motion to dismiss is denied.
Application for Temporary Injunction
The court now turns to CBI's application for a temporary injunction. CBI alleges that it filed its supplemental rate increase application on August 23, 2016, to update the morbidity factor it had used in its original application. It claims that the update was necessitated by (1) the announcement by certain other insurers that they would no longer offer products under Access Health CT, (2) the likely deterioration of the risk pool as healthy individuals leave the market to avoid significant rate increases, and (3) analysis of experience of claims paid through July 31, 2016, which established higher than expected claims paid in the first six months of 2016. It asserts that the commissioner arbitrarily refused to consider this supplemental submission on the basis of her prior directive, issued on March 7, 2016, that all 2017 rate applications must be submitted by June 1, 2016, with any amendments thereto submitted by June 15, 2016. CBI alleges that the commissioner implemented this directive without following the procedures for promulgating regulations under the UAPA. CBI further alleges that the commissioner's final decision on its rate application prevents CBI from offering its individual insurance product through Access Health CT at a premium rate that will provide for payment of claims, administrative expenses, taxes, and regulatory fees and have a reasonable contingency and profit margin.
CBI asserts that it will be irreparably harmed without a temporary injunction vacating the commissioner's decision because its contract with Access Health CT requires it to decide, within five business days of a rate decision, whether it will terminate its agreement and cease to provide its insurance product through the exchange. It argues that it must decide, by September 9, 2016, whether to exit the exchange, thereby losing goodwill and compelling the some fifty thousand individuals it insures to seek health insurance through another insurer, or to remain in the exchange and sustain financial losses that threaten its solvency.
Because the contractual deadline for CBI's decision was imminent, the court held a hearing on September 8, 2016. Michael Wise, the president and chief executive officer, testified for CBI, and Paul Lombardo, an actuary with the Department of Insurance, testified on behalf of the commissioner. The court also received exhibits and briefs by both parties.
In very brief summary (in light of the need to issue a decision less than twenty-four hours after the hearing), CBI's president testified that CBI is a wholly owned subsidiary of ConnectiCare, Inc. It was formed solely for the purpose of participating in the health exchange under the ACA. Its initial rate application for 2017 was based on its claims experience through March 2016, but its claims experience since March has deteriorated. It has lost about $10 million in the first six months of 2016 and now anticipates that it will lose $20 million by the end of the year. Under governing law, it is not permitted to make up that loss in future years. Indeed, if its rates generate more than sufficient revenue, it is required to rebate excess revenue.
The decision of other providers to exit the exchange occurred after the commissioner's deadline for submission of rate applications. CBI expects that if it stays in the market, its number of insureds will increase by ten percent or more. It also expects that adverse selection will occur, as healthier individuals will choose not to buy insurance as rates increase.
There is real time pressure for resolution of CBI's administrative appeal. Even if there was not the five-day deadline imposed by its contract with Health Access CT, the final rates must be known at some point in September 2016, because renewal notices, with the final rates, must be sent to current members of the plan on or about October 1, and open enrollment for the plan begins on November 1.
The department's actuary testified that the deadline established for the rate applications was necessary to allow the department's staff sufficient time to evaluate all the rate applications that must be considered at the same time as CBI's. He testified that governing regulations require the department to announce all the relevant rate decisions--in this case, a total of eighteen--at the same time. The department believes that it would be required to allow other insurers to supplement their rate applications if it allowed CBI to do so. The actuary testified that rate applications, by their nature, are always based on incomplete information because they are predictions made at a given point in time.
The court has substantial equitable authority under § 4-183(f) to stay the decision of the commissioner " on appropriate terms." In Griffin Hospital v. Commission on Hospitals and Health Care, 196 Conn. 451, 493 A.2d 229 (1985), the Supreme Court held that the UAPA's " provision for 'a stay upon appropriate terms' gives the court broad authority to fashion appropriate relief to protect the interests of all those involved during the pendency of an administrative appeal." In Griffin Hospital, the Supreme Court affirmed a trial court's order that permitted a hospital to operate under a budget employing rates that had been expressly rejected by its regulatory commission, on the condition that the hospital escrow a certain percentage of the revenues it received so that it could refund the overcharges if its appeal was ultimately unsuccessful. It concluded that the conditions imposed by the court adequately protected the commission's regulatory authority and the interests of patients. Griffin Hospital and numerous other cases hold that a court's equitable authority to issue a stay under § 4-183 is analogous to its authority to issue a temporary injunction to maintain the status quo.
But no case cited by the parties, or found by the court in its research overnight, involved a temporary injunction " vacating" an administrative agency's decision and mandating that the agency consider additional evidence. General Statutes § 4-183 has two subsections relating to remands to an agency, neither of which apply here. Section 4-183(h) allows the court to order an agency to consider additional evidence if " there. were good reasons for failure to present it in the proceeding before the agency." (Emphasis added.) In this case, however, the evidence was presented by CBI but rejected by the commissioner. CBI has not applied to present additional evidence under § 4-183(h), and the court does not believe that § 4-183(h) can be stretched to require the commissioner to consider the excluded evidence in this case. General Statutes § 4-183(k) also authorizes a remand to the agency for further proceedings, but it applies only when a plaintiff prevails on the merits of its administrative appeal and further administrative consideration is needed.
At the hearing held on September 8, when questioned by the court about its authority to vacate a decision rather than stay it pending appeal, CBI's counsel argued that a temporary injunction and a stay are essentially the same under Griffin Hospital . The court agrees that Griffin Hospital directs trial courts to apply essentially the same standard in considering a stay under § 4-183 as would be considered in deciding an application for a temporary injunction to maintain the status quo. The status quo, however, would not be maintained if the court were to vacate the commissioner's decision and order her to consider evidence that she has previously rejected as untimely.
The court's authority in an administrative appeal is limited by statute. There is no provision in § 4-183 authorizing a court to vacate a decision on a temporary basis. The analogy between a stay and a temporary injunction applies only where the temporary injunction preserves rather than disrupts the status quo. CBI's application for a temporary injunction is therefore denied.