Government Employees Insurance v. Insurance Commissioner

ROBERT M. BELL, Judge. We granted certiorari to determine whether an insurer, under whose rate-filings the premiums of drivers who reach age sixty-five automatically increase, albeit for actuarially valid reasons, violates Maryland Code (1957, 1991 Repl.Vol.) Article 48A, section 240F of the Insurance Code. Although Article 48A, section 242 provides that all insurance rates be actuarially justified, section 240F, without reference to the justification for it, prohibits an insurer from increasing premiums for drivers sixty-five years of age and older “exclusively” because of their age. The Insurance Commissioner, construing section 240F in light of section 242, determined, and the Circuit Court for Baltimore City agreed, that the insurer violated section 240F.

We shall do likewise. ¹²⁷ I. Prompted by complaints from Maryland drivers that their automobile insurance premiums were being raised when they reached their sixty-fifth birthday, the Insurance Division undertook a review of the rate filings 1 of certain insurers, including the petitioners, Government Employees Insurance Company and GEICO General Insurance Company (“GEICO” or “the insurers”). The purpose of the review was to determine if those filings complied with sections 240F and 242(c)(2), the latter of which prohibits “excessive, inadequate, or unfairly discriminatory” insurance rates. A hearing pursuant to section 242(f) was scheduled. At that hearing, GEICO’s 1988 rate filings were considered.

They revealed that GEICO groups risks by various classifications, including age. The age classifications run from seventeen and under to over seventy-five, and include the categories fifty to sixty-four and sixty-five to seventy-four. The Insurance Commissioner also found that each of the latter age groups is given a specific rating classification factor, corresponding to estimated mileage categories and reflecting GEICO’s loss experience for the applicable group. 2 The actuarial justification for the rating factors was not questioned by the Insurance Commissioner; however, GEICO conceded that a rating factor must always be actuarially justified: “there must be some demonstrable correlation between the factor and the loss experience of the group of insureds showing that common factor.” The filings also reflected, the Insurance Commissioner determined, that the applicable rating classification factor changes as the driver moves from one age group to another. Indeed, it increases as ¹²⁸ the age group increases.

The rating factor for age group sixty-five to seventy-four is higher than that for age group fifty to sixty-four. Because to compute the premiums for a particular driver, the initial premium amount must be multiplied by the factor corresponding to the driver’s age and mileage, the Insurance Commissioner found, as GEICO also conceded, the automobile insurance premiums for a driver who turns sixty-five will increase, whatever his or her driving record. 3 Although not challenging the Insurance Commissioner’s fact-finding, 4 GEICO argued that section 240F did not prohibit rate increases based on actuarial data and that, in any event, it does not increase premiums exclusively based on age. In a Memorandum and Order, the Insurance Commissioner determined that, because its rate filings effect an increase in the premiums of drivers as they turn sixty-five, GEICO had violated section 240F. Accordingly, it was ordered, effective September 1, 1992, that use of that rate filing, as it pertained to drivers sixty-five years old and older, be discontinued; GEICO was not permitted, thereafter, to use aged-based rating factors in setting the premiums of individual drivers sixty-five years and older.

GEICO’s appeal to the Circuit Court for Baltimore City was unsuccessful. After that court affirmed the Commissioner’s decision, it appealed to the Court of Special Appeals and simultaneously filed, in this Court, a Petition for Writ of ¹²⁹ Certiorari. We granted the petition before the intermediate appellate court considered the matter.

II

Section 242 sets out the factors to be used by insurers in setting rates. 5 Enacted in 1945 as section 140A of Article 48A, see ch. 926, Acts of 1945, and Maryland Code (1939, 1947 Cum.Supp.), its purpose was, and remains, to “promote the public welfare by regulating insurance rates to the end that they shall not be excessive, inadequate or unfairly discriminatory.” See Art. 48A, § 241. Section 242(c) provides, as pertinent: (c) Making of rates. — All rates shall be made in accordance with the following principles: (1) Due consideration shall be given to (i) past and prospective loss experience within and outside this State; (ii) conflagration and catastrophe hazards, if any; (iii) past and prospective expenses both countrywide and those specifically applicable to this State; (iv) underwriting profits; (v) contingencies; (vi) investment income from unearned premium reserve and reserve for losses; (vii) dividends, savings or unabsorbed premium deposits allowed or returned by insurers to their policyholders; (viii) and to all other relevant factors within and outside this State. ¹³⁰ (2) Rates shall not be excessive, inadequate, or unfairly discriminatory. **** (4)(i) Risks may be grouped by classifications for the establishment of rates and minimum premiums. Classification rates may be modified to produce rates for individual risks in accordance with rating plans which establish standards for measuring variations in hazards or expense provisions, or both. The standards may measure any difference among risks that are demonstrated objectively to the Commissioner to have had a direct and substantial effect upon losses or expenses.

However, no rate may be based partially or on geographic area itself, as opposed to underlying risk considerations, even though expressed in geographic terms. ******* Section 240F, a part of Subtitle 15, 6 dealing with unfair trade practices, provides: No policy or contract of motor vehicle insurance shall be cancelled or non-renewed exclusively for the reason of age of the holder of the policy or contract, nor shall any premium therefor be increased exclusively for the reason of age beyond 65 years of an insured under the policy or contract. ¹³¹ When proposed in 1969, what is now the first clause would have prohibited cancellation or non-renewal, an underwriting decision, of automobile insurance policies of drivers who had reached an “advanced age”, a practice the Legislature deemed to be against public policy. See Legislative Council of Maryland, Report to the Gen. Assembly of 1969: Proposed Bills at 124 (1969). As passed, however, ch. 175, acts of 1969, the legislation contained no such reference and, in fact, applied to drivers of any age.

Section 240F was amended in 1972 by adding the second clause, which involves its rating decision-making, prohibiting insurers from raising premiums exclusively based on the driver’s age beyond sixty-five. Ch. 394, Acts of 1972. That section expressly does not condition the prohibition against cancellation, non-renewal, or the raising of rates on whether there is actuarial justification for it. The factors applicable to insurance rating were a part of the fabric of Maryland law long before section 240F became law.

As GEICO forcefully points out, section 242 provides that insurance rates not be unfairly discriminatory, ie., arbitrary, Art. 48A, § 242(c)(2); see also § 241, and that they be calculated considering past and prospective loss experience. Art. 48A, § 242(c)(1). Furthermore, section 242(c)(4) has long permitted insurers to discriminate, albeit, not unfairly, between groups (classifications). As we have seen, this has been the law since 1945.

Section 240F was engrafted onto this statutory scheme. We are presented with an issue of statutory construction, the primary goal of which is determining the intent of the Legislature when it enacted the subject statute. We begin our search for legislative intent with the words of the statute to be interpreted, Harris v. State, 331 Md. 137, 145-46 , 626 A.2d 946, 950 (1993); State v. Crescent Cities Jaycees Found., Inc., 330 Md. 460, 468 , 624 A.2d 955, 959 (1993); State v. 149 Slot Machines, 310 Md. 356, 361 , 529 A.2d 817, 819 (1987); Kaczorowski v. Mayor & City Council of Baltimore, 309 Md. 505, 515 , 525 A.2d 628, 632 (1987), considered in light of the context in which the statute appears. Morris v. Prince George’s County, 319 Md. 597, 604 , 573 A.2d 1346, 1349 (1990); ¹³² 149 Slot Machines, 310 Md. at 361 , 529 A.2d at 819 ; Kaczorowski, 309 Md. at 515 , 525 A.2d at 632 ; Baltimore Gas & Elec.

Co. v. Public Serv. Comm’n, 305 Md. 145, 157 , 501 A.2d 1307, 1313 (1986). Context may include related statutes, pertinent legislative history and “other material that fairly bears on the ... fundamental issue of legislative purpose or goal ...” Kaczorowski, 309 Md. at 515 , 525 A2d at 632-33 . Where the statute to be construed is a part of a statutory scheme, the legislative intention is not determined from that statute alone, rather it is to be discerned by considering it in light of the statutory scheme.

Crescent Cities Jaycees, 330 Md. at 468 , 624 A.2d at 959 . When, in that scheme, two statutes, enacted at different times and not referring to each other, Farmers & Merchants Bank v. Schlossberg, 306 Md. 48, 56 , 507 A.2d 172, 176 (1986); Management Personnel Serv. v. Sandefur, 300 Md. 332, 341 , 478 A.2d 310, 314 (1984), address the same subject, they must be read together, State v. Bricker, 321 Md. 86, 93 , 581 A.2d 9, 12 (1990), i.e., interpreted with reference to one another, Schlossberg, 306 Md. at 61 , 507 A.2d at 178 ; Bridges v. Nicely, 304 Md. 1, 10 , 497 A.2d 142, 146 (1985), and harmonized, to the extent possible, both with each other and with other provisions of the statutory scheme. Balto. Gas & Elec., 305 Md. at 157 , 501 A.2d at 1313 .

Neither statute should be read, however, so as to render the other, or any portion of it, meaningless, surplusage, superfluous or nugatory. Tracey v. Tracey, 328 Md. 380, 387 , 614 A.2d 590, 594 (1992); D &Y, Inc. v. Winston, 320 Md. 534, 538 , 578 A.2d 1177, 1179 (1990); Kindley v. Governor of Md., 289 Md. 620, 625 , 426 A.2d 908, 912 (1981); Moberly v. Herboldsheimer, 276 Md. 211, 217 , 345 A.2d 855, 858 (1975). In attempting to harmonize them, we presume that, when the Legislature enacted the later of the two statutes, it was aware of the one earlier enacted. Cicoria v. State, 332 Md. 21, 43 , 629 A.2d 742, 752 (1993); Bricker, 321 Md. at 93 , 581 A.2d at 12 .

Even though two statutes may require conflicting results with regard to their common subject, they are not thereby necessarily rendered irreconcilable. Where provisions of one of the statutes deal with the common subject ¹³³ generally and those of the other do so more specifically, the statutes may be harmonized by viewing the more specific statute as an exception to the more general one. State v. Kennedy, 320 Md. 749, 755 , 580 A.2d 193, 196 (1990); Kee v. State Hwy. Admin., 313 Md. 445, 458 , 545 A.2d 1312, 1319 (1988), Prince George’s County v. Fitzhugh, 308 Md. 384 , 390 n. 4, 519 A.2d 1285 , 1288 n. 4 (1987); Schlossberg, 306 Md. at 63 , 507 A.2d at 180 ; Lumbermen’s Mutual Casualty v. Ins.

Comm’r, 302 Md. 248, 268-69 , 487 A.2d 271, 281-82 (1985). See Norman J. Singer, Sutherland, Statutory Construction, § 51.05 (4th ed. 1986) (footnotes omitted): Where one statute deals with a subject in general terms, and another deals with a part of the same subject in a more detailed way, the two should be harmonized if possible; but if there is any conflict, the latter will prevail, regardless of whether it was passed prior to the general statute, unless it appears that the legislature intended to make the general act controlling.

III

GEICO contends that its rates are not excessive, inadequate or unfairly discriminatory; consequently, its rate filings comply with section 242, rather than violate section 240F. It asserts that, pursuant to section 242(c), it may properly increase the rates of insureds sixty-five and older so long as the increases are actuarially justified. It also contends that, by enacting section 240F, the Legislature only intended to protect senior citizens from arbitrary and unfounded prejudice, Ins. Comm’r v. Allstate Ins.

Co., 268 Md. 428, 440-41 , 302 A.2d 200, 206 (1973), “not to eliminate seniors altogether from the cost-based, actuarial decision-making applied to all age groups.” Petitioner’s Reply Brief at 6. Urging us to give the term “exclusively” its literal meaning, see In re Arnold M., 298 Md. 515, 520 , 471 A.2d 313, 315 (1984), GEICO submits that this Court must conclude that GEICO bases its rates, not on age alone, but on other actuarial data. Thus, while it concedes that age is a “significant factor” in determining ¹³⁴ rates, GEICO nevertheless asserts that age is not the exclusive factor. See Petitioner’s Brief at 10.

Section 240F is straightforward, clear and unambiguous. Because it does not provide an exception for increases that are actuarially justified, it prohibits, absolutely, an insurer from increasing premiums of drivers sixty-five and older based solely on their age. Its failure to except actuarially justified increases, moreover, is understandable. Section 242 has long prohibited