Berkshire Life Insurance v. Maryland Insurance Administration

KENNEY, Judge. This appeal arises out of two separate decisions by the Circuit Court for Baltimore City in favor of appellee, Maryland Insurance Administration (“MIA”), and against appellant, Berkshire Life Insurance Company (“Berkshire”). The first decision was the denial of Berkshire’s request to stay the Insurance Commissioner’s (the “Commissioner”) Final Order requiring it to pay a monetary award to an individual insured, and it is the subject of Appeal No. 1248, September Term, 2000. The second decision affirmed the Commissioner’s Order and is the subject of Appeal No. 1935, September Term, 2000.

These appeals were consolidated on the parties’ motion on December 29, 2000. Appellant raises the following two issues on appeal: I. Appeal No. 1248: Under the separation of powers doctrine and constitutional and statutory tenets of due process, was Berkshire Life entitled to a stay of the Commissioner’s Substituted Conclusions of Law and Final Order ⁶³³ (“Final Order”) pending judicial review in the circuit court where the administrative order required only the payment of a monetary award to an individual insured and Berkshire Life agreed to post an adequate cash bond?

II

Appeal No. 1935 Did the circuit court commit reversible error in affirming the Final Order of the Commissioner where the Commissioner ignored the standard of review for a Recommended Decision of an ALJ mandated by the insurance regulations and substituted his determinations for those of the ALJ? FACTUAL AND PROCEDURAL BACKGROUND This case involves three different disability policies purchased by Howard F. Rosenstein: Policy No. NC216442 dated February 11, 1976 (the “1976 Policy”), Policy No. NC240959 dated September 12, 1980 (the “1980 Policy”), and Policy No. NC247381 dated November 23, 1981 (the “1981 Policy”). The 1976 policy provided coverage for total disability, which is defined in the policy as the complete inability of the Insured to engage in his occupation, except that if indemnity has been paid for 120 months in any period of continuous disability, and this policy provides indemnity in excess of 120 months, then for the remaining duration of that period of continuous disability, the term “total disability” shall mean the complete inability of the Insured to engage in any gainful occupation in which he might reasonably be expected to engage, having due regard to his education, training, experience and prior economic status])] The 1980 policy insured against total disability as well, which is defined as your inability to engage in your occupation, except: the terms of this policy may provide that the indemnity payments are to be made beyond the policy anniversary that falls on or most nearly follows your sixty-fifth birthday. In such a case, for benefits that are to be paid for disability after such anniversary, or after disability benefits have been ⁶³⁴ paid for a period of two years (if this is longer), the term “total disability” will have this meaning: your inability to engage in any gainful occupation in which you might reasonably be expected to engage, with due regard to your education, training, experience, and prior economic status.

The 1980 policy also contained a supplementary agreement covering residual disability benefits. Residual disability is defined by the policy as “(1) your inability to do one or more of your important daily business or professional duties; or (2) your inability to do these duties for the length of time that they usually require.” The policy further provides that residual disability payments would be made, inter alia, if “you enter a period of such disability right after the end of a period of total disability.” The 1981 policy covered only total disability as previously defined in the 1980 policy. Mr. Rosenstein bought the first policy when he was working as a Special Agent in the Criminal Investigation Division of the Internal Revenue Service. Mr. Rosenstein went into business for himself in September 1980, and continued to operate his business until the time of his disability claim.

Although Mr. Rosenstein is licensed to practice law in Maryland, he has always worked as an investigator specializing in financial and fraud investigations. When he opened his business, Mr. Rosenstein began consulting with private firms in addition to state and local governments in both criminal and private matters. Mr. Rosenstein described some of his work as follows: My expertise in financial and fraud investigations has encompassed the reconstruction of complicated factual and financial transactions to determine whether fraud has occurred; locating funds wrongfully taken from financial institutions and businesses; assisting defense counsel in white collar crime prosecutions and investigations; assisting insurance companies in reconstructing financial documents, books and records in order to evaluate their coverage and defense of claims; and assisting attorneys and their clients in the resolution of tax disputes, criminal and civil. ⁶³⁵ He testified that he often helped obtain successful outcomes for his clients and that he worked on a number of high profile cases, including representing the Maryland Deposit Insurance Fund in cases involving Old Court Savings & Loan, Ridgeway Savings & Loan, Community Savings & Loan, and Merritt Commercial Savings & Loan. With Mr. Rosenstein’s success came his involvement in increasingly complex and high profile cases.

Between 1991 and 1994, he was working on two demanding cases, one in Rhode Island and one in New Jersey. These cases required frequent travel, adherence to strict deadlines, review of voluminous amounts of material, and supervision of a number of other people. Mr. Rosenstein was under “tremendous pressure.” Nevertheless, he found the work to be “a lot of fun. I was having a great time but it was hard and it took its toll on me so during that period I first started to note small lapses of short term memory, loss of concentration.” After some soul searching, Mr. Rosenstein decided that the job was “just taking too heavy a toll on me, physically and mentally.” In late 1994, therefore, he decided to cut back on the sprawling complex cases requiring travel in favor of local cases that, although complicated, were not as large in terms of document review.

Although Mr. Rosenstein reduced his workload, he continued to notice “little slippages” in concentration and short term memory during 1995 and 1996. In addition to these problems, in November of 1996, he began suffering from substantial pain in his knees, headaches that were sometimes incapacitating, fatigue, and “constant indigestion.” Mr. Rosenstein sought the help of Dr. Steven Diener, an internist who diagnosed and began treating him for hypertension, reflux, and a hiatal hernia. Although he was now being treated, Mr. Rosenstein’s problems grew worse. The pain in his knees did not subside, and he continued to have problems with concentration and memory.

He was later diagnosed with sleep apnea, and Dr. Diener suggested that Mr. Rosenstein might also be suffering from ⁶³⁶ depression. Mr. Rosenstein continued to work until January 1997, when he finished his duties in a white collar defense case. He took no new cases despite being approached to do so. Notwithstanding his various problems, Mr. Rosenstein believed at that time that he would be returning to work.

His health continued to deteriorate, however, and he began seeing a rheumatologist, Dr. Matthew P. Bunyard, and a psychiatrist, Dr. Lawrence R. Hyman, in addition to Dr. Diener. In March of 1997, after his “third, or fourth or fifth visit with Dr. Diener,” Mr. Rosenstein filed a disability claim with Berkshire under all three policies. If he was found to be totally disabled, he would receive payments of $1,000 a month for each policy for a total of $3,000 per month. These benefits would be paid until he reached age 65. • On his claim form, he listed “Mid 1996 to present” as the period of disability.

His duties were listed as “expert in the analysis of complex factual and financial transactions, reconstruction of documentation related to those matters including expert testimony,” and his symptoms were listed as “dementia, headaches, sleep depreviation [sic], stress, hypertension, depression, reading sight deterioration, arthritis.” He stated that he was unable to perform the following job duties: “review numerous documents, large analyses, memory loss, testimony at hearings and trials, meetings involving stress.” Mr. Rosenstein also enclosed a “description of occupation” form with the claim form. Dr. Diener submitted an “Attending Physician’s Statement,” which included statements in pre-printed blanks that Mr. Rosenstein was totally disabled from December 1996 and that he was also partially disabled from December 1996. 1 In April 1997, Berkshire asked Mr. Rosenstein for copies of his personal and business income tax forms for the period ⁶³⁷ 1992 through 1996, as well as for other financial information. Mr. Rosenstein provided this information to Berkshire. On May 14, 1997, Bruce Hodsoll, Berkshire’s Vice President of Claims Management, met with Mr. Rosenstein at Mr. Rosenstein’s home.

During that meeting, Mr. Hodsoll offered to settle the claims under all three policies for $36,000, but Mr. Rosenstein declined the offer. Mr. Hodsoll then indicated that, if Mr. Rosenstein did not accept the offer, Berkshire was likely to pay only under the residual disability benefit clause of the 1980 Policy for a total of $3,000. Mr. Hodsoll indicated also that he would review the matter again to determine if it would be possible for Berkshire to increase its offer. On July 2, 1997, after receiving no answer or further contact from Mr. Hodsoll, Mr. Rosenstein wrote to James Zelinski, President of Berkshire.

Mr. Rosenstein copied his letter to MIA, which responded by opening an investigation. Berkshire responded to the letter by sending Mr. Rosenstein the first of two $1,500 checks as a residual disability benefit under the 1980 policy. It denied the claim for total disability benefits, despite the language in the policy requiring a period of total disability prior to payment of residual disability benefits. In early October 1997, Dr. Diener submitted a Progress Report to Berkshire again stating that Mr. Rosenstein was totally disabled and had been from January 13, 1997.

Berkshire again advised Mr. Rosenstein that it believed he was only entitled to a residual disability benefit. Mr. Rosenstein then wrote a letter to Thomas W. Loftus, the Berkshire Claims Consultant assigned to his claim, with a series of questions concerning Berkshire’s denials of his claims as well as Berkshire’s failure to seek additional medical information from Dr. Bunyard. Berkshire responded that “based on its ‘evaluation of the medical records’ and Mr. Rosenstein’s failure to prove the required loss of income,” it did not believe that he was entitled to anything more than minimal benefits under the residual disability coverage. On November 13,1997, Mr. Rosenstein filed a Supplemental Disability Claim, again seeking total disability benefits.

Berkshire denied this claim. Dr. Hyman wrote to Berkshire on ⁶³⁸ December 30, 1997, with information on Mr. Rosensteiris condition and advising that, in his opinion, Mr. Rosenstein was totally disabled. Berkshire referred Mr. Rosensteiris claim file to Laurie Cohen, a Ph.D. psychologist under contract with it. Dr. Cohen reached no conclusion from her review but requested further information.

Subsequently, she had contact with Dr. Hyman concerning her questions. Apart from the foregoing, Berkshire took no additional steps, including an independent medical evaluation, to investigate the claim. During this same period of time, MIA was conducting an investigation. It issued a form determination letter in September 1997 indicating that Berkshire was acting in accordance with the terms of its contract and was therefore not in violation of the Insurance Article.

Mr. Rosenstein sought reconsideration of this decision by writing a letter to Senator Barbara Mikulski. Senator Mikul-ski forwarded the letter to Governor Parris Glendening, who forwarded it to MIA. MIA subsequently reopened its investigation, and assigned to the case an investigator with special experience in handling disability claims. After this subsequent investigation, the MIA concluded that Berkshire’s refusal to pay total disability benefits based on the “abundance of medical documentation supporting Mr. Rosensteiris disability” was arbitrary and capricious and was in violation of Md.Code Ann. (1997), § 27-303 of the Insurance Article (“Ins.”).

Berkshire challenged this determination, and the matter was referred to the Office of Administrative Hearings (“OAH”). The Administrative Law Judge (“ALJ”) held a hearing on March 29-30, 1999. On April 16, 1999, the ALJ issued her Recommended Decision. The ALJ concluded that Berkshire’s refusal to pay total disability benefits for the period from March 1997 through October 1997 was not in violation of Md.Code Ann., Ins.

II, § 27-303(2) (1997 & Supp.l998).[ 2 ] I ⁶³⁹ further conclude, as a matter of law, that the Licensee’s decision to terminate review of the claim for total disability benefits for the period from November 1997 through July 1998 3 was arbitrary and capricious and in violation of Md.Code Ann., Ins. II § 27-303(2) (1997 & Supp.1998). MIA filed exceptions to the recommended decision, and on April 17, 2000, the Commissioner issued his Final Order (the “Order”), which reads, in pertinent part: ORDERED, that the Findings of Fact in the Recommended Decision issued in this matter by [the ALJ], is hereby AMENDED IN PART, REJECTED IN PART and AFFIRMED IN PART consistent with this Order; and it is hereby further ORDERED, that the refusal of [Berkshire] to pay total disability benefits for the period from January 13, 1997 (the date on which the “waiting period” commenced) through October 1997 was arbitrary and capricious in violation of [Ins. § 27-303(2)] and, consequently, that part of the ALJ’s recommended Conclusion of Law be and is hereby REJECTED; ORDERED, that [Berkshire’s] decision to terminate review of the claim for total disability benefits for the period from November 1997 through July 1998 was arbitrary and capricious in violation of [Ins. § 27-303(2)] and, consequently, that part of the ALJ’s recommended Conclusion of Law be and is hereby AFFIRMED; and it is hereby further ORDERED, that the Recommended Order of the ALJ that the claim for the period from November 1997 to July 1998 be remanded to [Berkshire] for a determination of [Mr. Rosenstein’s] eligibility for total disability benefits be and is hereby REJECTED; and it is further ⁶⁴⁰ ORDERED, that [Berkshire] pay restitution to [Mr. Ro-senstein], in the amount of benefits for coverage for “total disability” provided in each and all of [Mr. Rosenstein’s] three disability Policies for the period January 13, 1997 (when the “waiting period” commenced) through July 13, 1998, the cut-off in the MIA’s March 4, 1999 determination letter, less the amount already paid by [Berkshire] to [Mr. Rosenstein] for residual disability benefits[.] Berkshire then petitioned for judicial review in the Circuit Court for Baltimore County on May 17, 2000. On May 31, 2000, Berkshire filed a Motion for Stay of Administrative Order Pending Judicial Review.

The court held a hearing on the motion on July 5, 2000, and denied it the same day. Berkshire appealed this ruling, which is the subject of Appeal No. 1248, September Term 2000. The circuit court held a hearing on the merits of Berkshire’s petition for judicial review on October' 13, 2000. It affirmed the Commissioner’s Final Order in an oral ruling that same day.

The court filed a written order on October 16, 2000. Berkshire also appealed this ruling, which is the subject of Appeal No. 1935, September Term, 2000. DISCUSSION I. Appeal No. 1248, September Term, 2000 Berkshire’s first argument is that the circuit court abused its discretion by refusing to stay the Commissioner’s order. Berkshire argues that the court’s decision violated both the separation of powers doctrine and its due process rights.

Moreover, it argues that, because the court looked at the four factors for entitlement to preliminary injunctive relief and then ordered Berkshire to comply immediately with the Commissioner’s administrative order, its decision amounted to an improper injunction. It also argues that, because the Commissioner’s order was not stayed by operation of law, if Berkshire ignored it, it would risk further penalties. Thus, Berkshire argues, it “was required to do more to obtain a stay in this administrative case than it would had it been appealing ⁶⁴¹ a court order awarding disability benefits after the trial of a contract action.” MIA argues that the denial of a stay of an administrative order is not an appealable order. The parties advised this Court at oral argument that Berkshire had not yet paid Mr. Rosenstein, because its appeal to this Court operated as a stay.

Rule 8-422(a) provides that “an appellant may stay the enforcement of a civil judgment, other than for injunctive relief, from which an appeal is taken by filing a supersedeas bond.” Berkshire filed a supersedeas bond on August 11, 2000. Thus, the payment to Mr. Rosen-stein has effectively been stayed, rendering this issue moot. Even it if were not moot, we have no jurisdiction over this issue. We explain.

An order by the Insurance Commissioner is not automatically stayed by operation of law when a petition for judicial review is filed. Rather, “[w]hen a petition for judicial review is filed with the appropriate court, the court has jurisdiction over the case and shall determine whether the filing operates as a stay of the order or action from which the appeal is taken.” Ins. § 2 — 215(f)- 4 Of course, in this case Berkshire did not wait for the circuit court to make this decision on its own motion but filed a separate motion to stay. In any event, it is within the court’s discretion to determine whether the Commissioner’s order should be stayed. At the July 5, 2000 hearing on the motion to stay, the court made the following ruling: THE COURT: I — as I indicated previously, do not agree [with] the Maryland Insurance Administration’s contention that there is actually a test to determine a stay, I think that a stay is in fact, in the discretion of the Court and while I don’t intend to use the 4 elements of injunctive relief[ 5 ] I do ⁶⁴² think that it is appropriate to look at them as guides since injunctive relief is somewhat similar to a stay.

This is on the Baltimore City’s fast track, which means that this case will be resolved quickly and I’m satisfied that when you weigh the injury to Mr. Rosenstein against the injury to Berkshire that Mr. Rosenstein wins on that point and that the public interest is better served by this case going forward. So therefore, I’m going to deny the request to stay the order of judgment at this time. But I will do whatever I can to get this case in as quickly as possible, but not prematurely. [BERKSHIRE’S ATTORNEY]: Are you going — I take [it] Mr. Rosenstein has offered to post bond. THE COURT: I’m not.. [BERKSHIRE’S ATTORNEY]: We urge the Court to do that.

THE COURT: Well, it was not my intention, but I’ll hear you if you want me to consider it. [BERKSHIRE’S ATTORNEY]: I think it’s an offer that’s been made and I think Mr. Rosenstein’s attorney didn’t get up here and say that he is financially strapped and unable to survive without payment of this judgment, I think then he should be required to post the bond in the event that — to protect the insurance company’s interests. THE COURT: Well, as far as this Court is concerned, this is a case between the Maryland Insurance Commission and Berkshire Life Insurance, not Mr. — I allowed him to enter into this case for the sole purpose of arguing the motion to stay and feel that it is inappropriate. Now, it doesn’t mean that if you win this case, you can’t use the full force of the Court to go after Mr. Rosenstein. But, I’m not going to require him to post a bond.

Counsel, thank you very much. I’ll sign an order today to the effect that the motion to stay is denied and granting [Mr. Rosenstein’s] ⁶⁴³ motion to intervene for the limited purposes of arguing the motion to stay. It is clear that, although the court used the four preliminary injunction factors as a guide in exercising its discretion, it was not considering injunctive relief. Rather, the court was exercising the discretion provided to it by Ins. § 2-215(1) by not staying the Commissioner’s order.

Such an order is not appealable, as the Court of Appeals has explained: The circuit court’s order of March 18, 1996, simply denying a motion to stay the administrative decision and order, was in no sense an “injunction” as contended by the [Maryland] Commission [on Human Relations]. It was not a court “order mandating or prohibiting a specified act,” and thus did not amount to an “injunction” as defined by Maryland law. Although the March 18th denial of the motion for a stay left the earlier administrative decision operative, to the same extent as it was operative when rendered by the Commission, nothing in the court’s order of March 18th required or prohibited any party from doing anything. To whatever extent, if any, immediate action was then required, such requirement resulted entirely from the Commission’s order and not the court’s order.

No party could have been held in contempt for violating the March 18th court order. Moreover, we have held “that a trial court’s decision on a motion for a ... stay is ordinarily not appealable” as a grant or denial of an injunction, County Comm’rs v. Schro-del, 320 Md. 202, 213 , 577 A.2d 39, 45 (1990). See, e.g., Highfield Water Co. v. Wash. Co. San., 295 Md. 410, 416-417 , 456 A.2d 371, 374 (1983) (stay or refusal to stay proceedings in the same matter ordinarily does not constitute the grant or denial of an injunction), and cases there cited; Waters v. Smith, 277 Md. 189, 195-197 , 352 A.2d 793, 796-798 (1976).

LOOC, Inc. v. Kohli, 347 Md. 258, 265-66 , 701 A.2d 92 (1997)(footnote omitted; emphasis in original). The July 5th order denying a stay was not an order granting or denying an injunction, and Berkshire could not ⁶⁴⁴ have appealed that order pursuant to Md.Code (1974, 1998 Repl.Vol.), §§ 12-303(3)(i) of the Courts and Judicial Proceedings Article.

II

Appeal No. 1935, September Term, 2000 Berkshire next argues that the Commissioner erred in ordering it to pay restitution. Specifically, Berkshire contends that the Commissioner applied the wrong standard of review in the case. It also argues that, in any event, there was sufficient evidence in the record for the Commissioner to adopt the ALJ’s determinations, and that there was insufficient evidence in the record for MIA to be able to carry its burden of proof. A. Standard of Review Used by Commissioner Berkshire first argues that the Commissioner failed to use the appropriate standard of review by failing to review the ALJ’s proposed decision using the substantial evidence test, as Berkshire contends is required by the applicable regulations.

Therefore, “[t]he threshold question in this appeal concerns not what standard of review the courts apply, but, rather, what is the standard of review that the final agency decision maker in this case must apply in reviewing the intermediate decision of the intermediate administrative decision of the ALJ.” Kohli v. LOOC, Inc., 103 Md.App. 694, 711 , 654 A.2d 922 (1995), reversed in part and remanded by 347 Md. 258 , 701 A.2d 92 (1997). At oral argument, Berkshire suggested that we did not need to reach this issue. We disagree. If the Commissioner used the incorrect standard of review, we would be constrained to reverse the case without reaching the merits of Berkshire’s claims.

Thus, we will address this aspect of Berkshire’s argument. “In Maryland, administrative agencies are authorized to fashion their own rules by virtue of express or implied legislative delegations.” Kohli, 103 Md.App. at 711 , 654 A.2d 922 (citing Department of Natural Resources v. Linchester Sand & Gravel Carp., 274 Md. 211, 218 , 334 A.2d 514 (1975)). The Commission’s ability to promulgate its own procedural ⁶⁴⁵ rules is derived from Md.Code (1984, 1995 Repl.Vol.), § 10—206(b) of the State Government Article (“SG”), Administrative Procedures Act 6 (“APA”), which states that “[e]ach agency may adopt regulations to govern procedures under this subtitle and practice before the agency in contested cases.” In addition, APA § 10-205(a) allows agencies to delegate hearings in contested cases to the OAH. When the OAH hears a contested case, it is directed by statute to “prepare proposed findings of fact, conclusions of law, or orders in accordance with the agency’s delegation under § 10-205.” APA § 10-220(a). The agency then takes action on the proposed decision within sixty days.

APA § 10-220(c)(1). If the OAH “conducted the hearing and' the agency’s proposed decision includes any changes, modifications, or amendments to the [OAH’s] proposed findings, conclusions, or orders, [its order shall] contain an explanation of the reasons for each change, modification, or amendment.” APA § 10-220(d)(4). “When [the agency] delegates the hearing responsibility to an ALJ, the ALJ becomes an extension of [the agency]. Any responsibilities not expressly given the ALJ remain with [the agency] and, unless statutorily proscribed, [the agency] reserves the right to review any aspect of an ALJ decision.” Bragunier v. Masonry Contractors v. Maryland Comm’r of Labor & Indus., 111 Md.App. 698, 707 , 684 A.2d 6 (1996). MIA has enacted regulations allowing the Commissioner to delegate hearings to the OAH, as it did in this case.

COMAR 31.02.02.01(B). After an ALJ hears a case involving MIA, the ALJ is to submit a proposed decision to the Commissioner containing: “(1) [proposed findings of fact; (2)[p]roposed conclusions of law; and (3)[a] proposed order.” COMAR § 31.02.02.08(A). The parties may then file exceptions to the ALJ’s proposed order. COMAR § 31.02.02.10. ⁶⁴⁶ Whether or not the parties file exceptions, the Commissioner is given the case for a final decision: A. Issuance.

After consideration of the administrative law judge’s proposed decision, and any exceptions filed by the parties, the Commissioner shall issue a final order or a remand order. B. Effect of Findings of Fact, Proposed Conclusions of Law, and Proposed Order. In reviewing the administrative law judge’s proposed decision, the Commissioner is: (1) Bound by the findings of fact that are supported by competent, material, and substantial evidence; and (2) Not bound by any legal analysis, proposed conclusions of law, or proposed order. C. Types of Action by the Commissioner.

The Commissioner may affirm, reverse, or modify the proposed decision or remand the case to the Office for further proceedings by setting forth, with particularity, the basis for the Commissioner’s reversal, modification, or remand of the proposed decision. COMAR § 31.02.02.12. Berkshire argues that COMAR 31.02.02.12(B), binding the Commissioner to any factual findings made by the ALJ that are supported by “competent, material and substantial evidence,” requires the-Commissioner to review the ALJ’s findings under the substantial evidence test. Berkshire then points out that the “Commissioner, in his Final Order, expressly ruled that he was not required to employ the substantial evidence test in reviewing the Recommended Decision of the ALJ.” Berkshire argues that this was reversible error.

The Commissioner explained why he was not using the “substantial evidence” test and how he was evaluating the ALJ’s factual determinations: Indeed, to use the APA “substantial evidence test” in the context of the Commissioner’s review of the ALJ’s factual findings would flout the test’s very purpose. When reviewing an agency’s factual findings, courts defer to “the expertise of those persons who constitute the administrative ⁶⁴⁷ agency from which the appeal was taken.” Travers v. Balt. Police Dept., 115 Md.App. 395, 421 , 693 A.2d 378 (1997). The APA permits an agency, in adjudicating a complaint, to rely on “its experience, technical competence, and specialized knowledge in the evaluation of evidence.” Md.Code Ann., State Gov’t § 10-213(i).

Accordingly, in applying the substantial evidence test, the reviewing court does not “substitute its expertise for that of the agency.” State Admin. Bd. of Election Laws v. Billhimer, 314 Md. 46, 58 , 548 A.2d 819 (1988). The Commissioner then made the following ruling: COMAR 31.02.02.12B should be construed based on the “ordinary and common meaning” meaning [sic] of the words “competent, material, and substantial.” See Gordon Family Part. v. Gar On Jer, 348 Md. 129, 137-38 , 702 A.2d 753 (1997). For legal purposes, the word “competent” means “legally fit or qualified.” Webster’s II New Riverside University Dictionary, p. 290 (1984) (“Webster’s at-”).

The word “material” means “relevant, or of importance to a case.” Webster’s at 732. The word “substantial” means either “of considerable importance” or “of considerable amount, i.e. ample. [”] Webster’s at 1155. Because accepting the former definition would improperly make the word “material” surplusage, the later definition best indicates that the word “substantial” means “ample” in this context. Accordingly, the Commissioner is not bound by an ALJ’s factual findings unless the evidence supporting those findings' is legally appropriate, relevant and ample.

Because the term “substantial” is meaningful only when put into the context of the total quantum of evidence adduced at the hearing, the Commissioner will not be bound by an ALJ’s factual findings unless it is supported by substantial evidence in relation to all of the evidence adduced at the hearing. If, then, there is ample evidence supporting both parties and the ALJ has properly considered all of the evidence, the Commissioner will be bound by the ALJ’s findings of fact and will not reweigh the facts to come to a different conclusion. As well, so long as “credibility” is ⁶⁴⁸ synonymous with witness demeanor, and the oral testimony of witnesses is conflicting about a fact to be found, the Commissioner will give special deference to the ALJ’s finding about a witness’s credibility. See Dept. of Health and Mental Hyg. v. Shrieves, 100 Md.App. 283, 298-302 , 641 A.2d 899 (1994).

The Commissioner will not give such special deference, however, when an ALJ mislabels as a “finding of fact” a legal conclusion or a finding based on the application of law to fact-especially where that law involves insurance. Also, the Commissioner will not give such special deference when an ALJ, under the appearance of evaluating witness “credibility,” is simply concluding that one party made the more persuasive argument. Id. Finally, when required to fairly evaluate all of the evidence, the Commissioner may always find material and relevant facts additional to those found by the ALJ, if those facts are essentially uncontroverted and, thus, do not expressly conflict with the ALJ’s other factual findings.

This is because, if the ALJ’s legal analysis was faulty, then the ALJ would not have known that these additional facts were material. [Emphasis in original.] This Court has found that if an agency establishes a standard under which it reviews an ALJ’s proposed decision, it must apply that standard. Kohli, 103 Md.App. at 711-13 , 654 A.2d 922 . Kohli involved a decision of the Maryland Commission on Human Relations (“MCHR”) reversing an ALJ’s decision. The MCHR regulation in force at the time provided that “the Appeal Board may affirm, reverse, or modify the administrative law judge’s decision in accordance with the standards as set forth in” APA § 10-222(g).

COMAR § 14.03.01.019(F)(1) (1994). The pertinent statutory provision reads as follows: (h) Decision. — In a proceeding under this section, the court may: (1) remand the case for further proceedings; (2) affirm the final decision; or ⁶⁴⁹ (3) reverse or modify the decision if any substantial right of the petitioner may have been prejudiced because a finding, conclusion, or decision: (i) is unconstitutional; (ii) exceeds the statutory authority or jurisdiction of the final decision maker; (iii) results from an unlawful procedure; (iv) is affected by any other error of law; (v) is unsupported by competent, material, and substantial evidence in light of the entire record as submitted; or (vi) is arbitrary or capricious. APA § 10-222(h) (1994). The test set out in § 10-222(h) is the substantial evidence test.

The Court of Appeals has clarified the test in a recent case: A court’s role in reviewing an administrative agency adjudicatory decision is narrow; it ‘is limited to determining if there is substantial evidence in the record as a whole to support the agency’s findings and conclusions, and to determine if the administrative decision is premised upon an erroneous conclusion of law.’ In applying the substantial evidence test, a reviewing court decides ‘ “ ‘whether a reasoning mind reasonably could have reached the factual conclusion the agency reached.’ ” ’ A reviewing court should defer to the agency’s fact-finding and drawing of inferences if they are supported by the record. A reviewing court ‘ “must review the agency’s decision in the light most favorable to it; ... the agency’s decision is prima facie correct and presumed valid, and ... it is the agency’s province to resolve conflicting evidence” and to draw inferences from that evidence.’ Despite some unfortunate language that has crept into a few of our opinions, a court’s task on review is not to “ ‘ “substitute its judgment for the expertise of those persons who constitute the administrative agency,” ’ ” Even with regard to some legal issues, a degree of deference should often be accorded the position of the administrative agency. Thus, an administrative agency’s interpretation ⁶⁵⁰ and application of the statute which the agency administers should ordinarily be given considerable weight by reviewing courts. Furthermore, the expertise of the agency in its own field should be respected.

Marzullo v. Kahl, 366 Md. 158, 171-72 , 783 A.2d 169 (2001) (citing APA § 10-222) (other citations omitted). See also Ward v. Dep’t Pub. Safety & Correctional Servs., 339 Md. 343, 347 , 663 A.2d 66 (1995); Maryland Racing Comm’n v. Belotti, 130 Md.App. 23, 36-37 , 744 A.2d 558 (1999). This Court held that because “the Commission has elected to bind its Appeal Board, in cases involving discriminatory employment practices, to those same standards [as used by the courts] in reviewing the ALJ’s decision in the instant case,” it was required to use those standards in reviewing the ALJ’s decision.

Kohli, 103 Md.App. at 713 , 654 A.2d 922 . This suggests that, if it wishes, an agency may provide a different standard of review of the ALJ’s decision than the test set out in § 10-222(h). The provisions of § 10-222(h) are clearly limited to judicial review by circuit courts, and, because the General Assembly did not require the individual agencies to use this standard, we assume it intended to allow administrative agencies to establish their own internal standards of review. We have conducted a review of all of the titles of COMAR to determine the standards of review of ALJ decisions currently in use by the various agencies.

A number of agencies have no stated standard of review: the Attorney General’s Office, the Comptroller, the Department of Housing and Community Development, the Department of Human Resources, the Department of Natural Resources, the Department of Licensing and Regulation, the Department of Transportation, the Higher Education Commission, the Human Relations Commission, State Procurement, the Department of Business and Economic Development, Maryland Institute for Emergency Medical Services, and the Department of Aging. Three agencies have specifically bound themselves to the substantial evidence test set forth in APA § 10-222 with respect to their review of ⁶⁵¹ factual findings: the Retirement and Pension System, the Department of Public Works, and the State Treasurer’s Office. In addition to the Maryland Insurance Administration, the Department of Health and Mental Hygiene (“DHMH”), the Department of Juvenile Justice, and the Department of the Environment all provide for different standards of review for reviewing AL J decisions. The DHMH regulation provides: A. The Secretary is not bound by the hearing examiner’s recommendation even in those cases where no exceptions are filed.

B. If no exceptions have been filed and, after reviewing a proposed decision by a hearing examiner, the Secretary concludes that the Secretary is unable to approve that decision as written, the Secretary shall notify all parties and invite argument from the affected parties on the issues the Secretary is reconsidering. COMAR § 10.01.03.84. The Department of Juvenile Justice has promulgated a very similarly worded regulation: A. The Secretary is not bound by an administrative law judge’s recommendation even in cases where exceptions are not filed. B. If exceptions have not been filed and, after reviewing a proposed decision by an administrative law judge, the Secretary concludes that the Secretary is unable to approve that decision as written, the Secretary shall notify all parties and invite arguments from the affected parties on the issues the Secretary is reconsidering.

COMAR § 16.01.01.29. The Department of the Environment has also promulgated regulations allowing the final decision maker wide latitude in deciding whether to accept the hearing examiner’s findings and recommendations: ⁶⁵² A. The final decision maker is not bound by the hearing examiner’s proposed decision even in those cases when exceptions are not filed. B. If exceptions have not been filed and, after reviewing a proposed decision by a hearing examiner, the final decision maker concludes that he or she is unable to approve that decision as written, the final decision maker shall notify all parties and invite argument from the affected parties on the issues the final decision maker is reconsidering. COMAR § 26.01.02.34.

Different agencies have therefore made different decisions on how much deference to provide to ALJ proposed opinions. We will uphold an agency’s decision so long as it has properly applied its own standard of review. In this case, therefore, we uphold the Commissioner’s decision as to how he would review the ALJ’s proposed decision. 7 We now turn to our own review of the Commissioner’s decision, which we, of course, review pursuant to § 10-222(h) and the standards set forth therein. Our discussion will, however, necessarily contain an evaluation of whether he conducted his review in conformance with COMAR § 31.02.02.12.

B. Was the Commissioner’s Decision Supported by Substantial Evidence? As indicated supra, we review the Commissioner’s decision, not the decision of the ALJ. Ordinarily, a final order of the Commissioner must be upheld on judicial review if it is legally correct and reasonably supported by the evidentiary record. This standard of ⁶⁵³ review is both narrow and expansive.

It is narrow to the extent that reviewing courts, out of deference to agency expertise, are required to affirm an agency’s findings of fact, as well as its application of law to those facts, if reasonably supported by the administrative record, viewed as a whole. The standard is equally broad to the extent that reviewing courts are under no constraint to affirm an agency decision premised solely upon an erroneous conclusion of law. Ins. Comm’r v. Engelman, 345 Md. 402, 411 , 692 A.2d 474 (1997) (citations omitted). “The court’s task on review is not to ‘ “substitute its judgment for the expertise of those persons who constitute the administrative agency!)]” ’ A reviewing ‘Court may not uphold the agency order unless it is sustainable on the agency’s findings and for the reasons stated by the agency.’ A court’s role is limited to determining if there is substantial evidence in the record as a whole to support the agency’s findings and conclusions, and to determine if the administrative decision is premised upon an erroneous conclusion of law.” United Parcel Serv., Inc. v. People’s Counsel for Baltimore County, 336 Md. 569, 576-77 , 650 A.2d 226, 230 (1994) (citations omitted).

Prior to engaging in a discussion of specific points Berkshire has raised in its argument, we find it useful to review the accusation against Berkshire, the available remedy, and the remedy now sought. MIA has contended that Berkshire violated Ins. § 27-303(2): It is an unfair claim settlement practice and a violation of this subtitle for an insurer or nonprofit health service plan to: (2) refuse to pay a claim for an arbitrary or capricious reason based on all available information; If an insurer is found to have engaged in unfair claim settlement practices, it is subject to the following penalties: ⁶⁵⁴ (a) For violation of