Maryland Insurance Commissioner v. Central Acceptance Corp.

HARRELL, J. In 2008, Petitioner, the Maryland Insurance Commissioner (“Commissioner”), issued a Cease-and-Desist Order to Respondents purporting to prevent them from charging interest on loans to consumers to pay automobile insurance premiums in excess of the statutory maximum prescribed in Maryland Code (1957, 2011 Repl. Vol), Insurance Article, § 23-304. Respondents are eight of the largest premium finance companies 1 that provide loans primarily to customers of the Mary ⁷ land Automobile Insurance Fund (“MAIF”). Respondents requested a hearing on the Cease-and-Desist Order.

Respondents requested twice that the case be transferred to the Office of Administrative Hearings (“OAH”) for hearing and final decision, but the Commissioner denied the requests. Instead, the Commissioner delegated hearing authority to an Associate Deputy Insurance Commissioner (“ADIC”), who presided over the hearing at the Maryland Insurance Administration (“MIA”), and issued a Final Order affirming the Commissioner’s Cease-and-Desist Order. Respondents brought a successful judicial review action in the Circuit Court for Baltimore City. The Court of Special Appeals affirmed, agreeing with the Circuit Court’s reasoning that actual “command influence,” represented by the Commissioner’s delegation of the hearing and final administrative decision-making responsibility to a subordinate, tainted impermissibly Respondents’ right to a fair hearing.

We resolve, however, that the MIA hearing was fair and without undue “command influence.” Therefore, we vacate the judgment of the Court of Special Appeals and direct it to vacate the judgment of the Circuit Court. Further, we conclude that the Commissioner’s interpretation of Ins. Art., § 23-304 is correct, and that Respondents violated the statute when their premium finance agreements operated to assess a finance charge in excess of 1.15% for each 30 days. We conclude also that two Respondents were assessing improperly finance charges to customers whose underlying insurance policies were voided ab initio, because they charged more than 1.15% for each 30 days; however, lawfully applied finance charges on the premiums advanced for these policies before the policies were declared void, may be valid.

Accordingly, we shall direct that the Court of Special Appeals direct the Circuit Court for Baltimore City to affirm for the most part, and reverse in small part, the decision of the MIA. ⁸ I. Facts and Antecedent Administrative and Judicial Proceedings The material facts in this case are undisputed. The MAIF is the insurer of last resort for Maryland drivers, where automobile insurance is required statutorily for all motor vehicle owners. Maryland Code (1957, 2011 Repl.Vol.), Transp. Art., § 17-103 & Ins.

Art., § 20-301(a). The MAIF is prohibited by statute from accepting installment payments on insurance premiums. Ins. Art., § 20 — 507(f)(ii).

Premium finance companies (“PFCs”) provide loans, through premium finance agreements, to the MAIF’s customers who are unable to pay the premium in a lump sum. 2 PFCs must register with the MIA before making loans to the MAIF’s insurance customers, and must meet certain financial requirements. Ins. Art., §§ 23-201(a) & 23-202. The Premium Financing Article of the Insurance Article of the Maryland Code regulates the interest, fees, and charges that PFCs may collect from consumers. 3 The provision primarily at issue in this case is Ins.

Art., § 23-304, which addresses finance charges: The finance charge shall be computed: (1) on the amount of the entire premium loan advanced, including any taxes or fees that are financed under § 23- ⁹ 301.1 of this subtitle, after subtracting any down payment on the premium loan made be the insured; (2) from the inception date of the insurance contract or from the due date of the premium, disregarding any grace period or credit allowed for payment of the premium, through the date when the final installment under the premium finance agreement is payable; and (3) at a rate not exceeding 1.15% for each 30 days, charged in advance. Premium finance agreements may be cancelled, in the event of an installment payment default as specified in the contract, provided the implicated PFC provides the customer with a notice of intent to cancel at least 10 days prior to cancelling the contract. Ins. Art., §§ 23-402(a) & 23-403.

When an insurance contract is canceled — whether by the insurer, insured, or the PFC — the MAIF returns the gross unearned premiums due under the contract, computed pro rata, to the PFC. Ins. Art., § 23-405(a). The PFC then returns “to the insured the amount of unearned premium that exceeds any amount due under the premium finance agreement.” Ins.

Art., § 23-405(b). Respondents use the Rule of 78s (sometimes referred to as the “Rule”) to calculate the amount of interest due with each installment under the premium finance agreement. The Rule of 78s is an arithmetic method to calculate earned interest that allows the PFCs to collect more in interest during the first half of the loan repayment term than the latter half. 4 Respon ¹⁰ dents require typically ten-month repayment plans, so the Rule is modified to a “Rule of 55s” in such instances. The Rule is not prohibited specifically by the Insurance Article.

When a premium finance agreement is cancelled early, the Rule operates to the disadvantage of consumers because the interest charges are weighted more heavily in the early months of the contract repayment period. 5 Two of the Respondents, Insurance Billing Services and U.S. Capital Associates, assess finance charges using the Rule, even when the underlying insurance policy is cancelled or voided ab initio. 6 The MIA did not disapprove previously the use of the Rule by the PFCs and, in fact, states currently that the Rule is allowed for computing finance charges, so long as its use does not result in the consumer being required to pay more than 1.15% interest for any 30-day period. In May 2008, the predecessor Commissioner of the current Commissioner commenced an investigation into the earned ¹¹ interest calculations used by the PFCs from 1 November 2007 to 30 April 2008. In a 19 May 2008 letter, the predecessor Commissioner requested specific documents from Respondents in order to compile a “Market Conduct Investigation Report.” The investigation revealed that, because of how the PFCs used the Rule, consumers who cancelled their premium finance agreements in the first five months, or whose insurance policies were declared void ab initio, paid finance charges greater than 1.15% for each 30 days that the loan was outstanding. The predecessor Commissioner issued a Cease- and-Desist Order on 6 October 2008 that prevented Respondents from collecting interest in excess of 1.15% for each 30-day period on any and all premium finance agreements, including those canceled before maturity.

The Cease-and-Desist Order required also that Insurance Billing Services and U.S. Capital Associates identify customers who paid interest on insurance policies voided ab initio by the MAIF and for these PFC’s to refund all interest charged and pay pre-judgment interest of six percent to those consumers. Respondents requested timely a hearing on the Commissioner’s Cease-and-Desist Order. The request resulted in a stay of the Order, by operation of statute. Ins.

Art., § 2-212 (providing that a hearing demand made within ten days of an order of the Commissioner stays the effect of the order until the result of the hearing is set forth in another order). The Commissioner delegated to an ADIC the responsibility to conduct the hearing and make the final administrative decision. Respondents requested twice that the hearing be transferred to and conducted by the OAH, arguing that the ADIC could not be a fair and impartial presiding official with respect to the Cease-and-Desist Order issued by the Commissioner, the ADIC’s hierarchical superior. The Commissioner denied both requests. 7 The ADIC’s hearing took place over 9 December 2008 to 11 December 2008.

Respondents subpoenaed the Commissioner to attend the hearing, but he testified ¹² actually as a witness for the MIA. In that testimony, the Commissioner explained his rationale supporting the investigatory conclusions and the basis for the Cease-and-Desist Order. Respondents attempted to show that the Commissioner ratified previously the use of the Rule by, among other things (see n. 15 infra, introducing evidence that the MIA proposed twice, but withdrew, regulations that had the same effect as the Cease-and-Desist Order (to force PFCs to charge interest pro rata, rather than according to the Rule)). On 22 January 2009, the ADIC issued a Final Order affirming the conclusions of law and directions in the Commissioner’s Cease-and-Desist Order.

The Final Order concluded that Respondents were not entitled to have their administrative appeal' transferred to the OAH because the Insurance Article allowed specifically the Commissioner to delegate the role of hearing officer and that delegation to the OAH was purely discretionary. The Final Order required Insurance Billing Services and U.S. Capital Associates to identify customers who paid a finance charge on underlying policies found to be void ab initio, from and after 6 October 2008 (the date of the Cease-and-Desist Order), and issue refunds to those customers, with pre-judgment interest. The ADIC also found that the Commissioner’s Cease-and-Desist Order was within his statutorily-conferred powers in Ins. Art., § 2-108 and that he was not required to act, under the circumstances, by issuing a regulation, rather than an ad hoc decision.

Respondents filed a petition for judicial review in the Circuit Court for Baltimore City. The hearing judge, relying on Mayer v. Montgomery County, 143 Md.App. 261 , 794 A.2d 704 (2002), found “command influence” because the ADIC adjudicated the conclusions of her superior, the Commissioner; therefore, the administrative hearing violated Respondents’ right to fundamental fairness and due process of law. The hearing judge declined to address the issue of the statutory interpretation regarding the application of the finance rate “cap” and ordered the case remanded to the MIA with instructions to provide Respondents with a hearing on the Commissioner’s Cease-and-Desist Order before an impartial hearing ¹³ officer. On the Commissioner’s appeal, the Court of Special Appeals, in an unreported opinion, affirmed the Circuit Court’s judgment.

Petitioner filed timely a petition for writ of certiorari to this Court and Respondent, Premium Finance of America, Inc., filed timely a cross-petition. We granted the petition and the cross-petition, Maryland Insurance Commissioner v. Central Acceptance Corporation, 418 Md. 586 , 16 A.3d 977 (2011), to consider the following questions, which we reword somewhat for clarity: 1) Did the agency determine correctly that § 23-304 of the Insurance Article, which permits premium finance lenders to impose on borrowers a finance charge “at a rate not exceeding 1.15% for each 30 days, charged in advance,” prohibits (a) the practice of front-loading the imposition of finance charges, such that borrowers whose loan agreements terminate prior to the end of the loan term pay finance charges in excess of 1.15% for each 30 days, and (b) the practice of imposing finance charges even where the insurance policy never takes effect? 2) Does the “command influence” rule prohibit, as a matter of constitutional due process, an administrative agency from adjudicating a matter after it has issued a pre-hearing ex parte order in the matter? 3) Does the “command influence” rule apply to a regulatory proceeding where all material facts were undisputed, where the agency was deciding a pure question of law, and where the agency’s legal ruling was subject to judicial review? 4) Is the Commissioners Cease-and-Desist Order contrary to law because it implements a change in generally applicable policy that may be implemented only through the adoption of regulations, not adjudication? 5) Is the Commissioner’s Cease-and-Desist Order contrary to law because the Cease-and-Desist Order was issued without complying with the procedural requirements of §§ 2-209 and 23-207 of the Insurance Article, the sections cited in the Cease-and-Desist Order as the authority under which the Order was issued? ¹⁴ 6) Is the Commissioners Cease-and-Desist Order contrary to law because the MIA lack the statutory authority to issue cease-and-desist orders against premium finance companies? We hold that: (1) based on the facts and circumstances of this case, there was no undue “command influence” exercised by the Commissioner in delegating to the ADIC the responsibilities to hear and decide Respondents’ administrative appeal; (2) the MIA was permitted to adjudicate the legal issues in this case, rather than proceed by rulemaking; (3) the Commissioner had the statutory authority to issue the Cease-and-Desist Order; (4) any alleged procedural irregularities did not affect a substantial right of Respondents; (5) the MIA interpreted correctly Ins. Art., § 23-304 with respect to calculating the maximum finance charges; and (6) the PFCs may charge the lawful rate of interest on premiums advanced for insurance policies later voided ab initio.

Accordingly, we vacate the judgment of the Court of Special Appeals and remand the case to that court with directions to vacate the judgment of the Circuit Court and to remand the case to the Circuit Court with directions to affirm in part, and reverse in part, the MIA’s Final Order, consistent with the views expressed in this Court’s opinion.

II

Standards of Review In eases involving judicial review of actions by a State administrative agency, we review directly the action of the agency, rather than the decision of the intervening reviewing courts. Consumer Prot. Div. v. Morgan, 387 Md. 125, 160 , 874 A.2d 919, 939 (2005) (citation omitted). In a proceeding reviewing a contested case action, a reviewing court may: (1) remand the case for further proceedings; (2) affirm the final decision; or (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; ¹⁵ (ii) exceeds the statutory authority or jurisdiction of the final decisionmaker; (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 and capricious.

Maryland Code (1957, 2009 Repl.Vol.), State Government Article, § 10-222. We evaluate generally a challenge to an agency’s decision to proceed by adjudication rather than rulemaking under the abuse of discretion standard. Consumer Prot. Div. v. Consumer Publ’g Co., 304 Md. 731, 753-54 , 501 A.2d 48, 60 (1985) (“[T]he choice between rulemaking and adjudication lies ... within the [agency’s] discretion.”) (citations omitted).

This deferential standard of review is also applied to an agency’s decision whether to delegate a case for adjudication to the OAH. Spencer v. Md. State Bd. of Pharmacy, 380 Md. 515, 529 , 846 A.2d 341, 349 (2004) (“[T]he discretionary functions of the agency must be reviewed under a standard more deferential than either the de novo review afforded an agency’s legal conclusions or the substantial evidence review afforded an agency’s factual findings.”). Abuse of discretion review evaluates whether an agency’s action was arbitrary and capricious. Id.

(“[T]he standard set forth in § 10-222(h)(3)(vi), review of “arbitrary and capricious” agency actions, provides guidance for the courts as they seek to apply the correct standard of review to discretionary functions of the agency.”). When reviewing an agency’s departure from its procedures, the court looks to whether a “substantial right” of a party was violated and whether that party was prejudiced by the procedural irregularities. Pollock v. Patuxent Inst. Bd. of Rev., 374 Md. 463 , 469 n. 3, 823 A.2d 626 , 630 n. 3 (2003) (citing Bernstein v. Real Estate Comm’n of Md., 221 Md. 221, 230 , 156 A.2d, 657, 662 (1959)), appeal dismissed, 363 U.S. 419 , 80 S.Ct. 1257 , 4 L.Ed.2d 1515 (1960) (stating that the function of a reviewing court is to reverse or modify and order if ¹⁶ “substantial rights of a petitioner have been improperly prejudiced by a departure from procedures”).

When considering a question of statutory interpretation by an agency, we review the agency’s interpretation according to a non-deferential standard of review. Miller v. Comptroller of Md., 398 Md. 272, 280 , 920 A.2d 467, 472 (2007) (“[T]he question is one of statutory interpretation and [is], therefore, a purely legal inquiry.”) (internal quotes and citations omitted); State Dep’t of Assessments and Tax’n v. N. Balt. Ctr., Inc., 129 Md.App. 588, 595 , 743 A.2d 759, 763 (2000) (“The interpretation of a statute normally presents a question of law.”) (citations omitted). Nonetheless, we give frequently “weight to an agency’s experience in interpretation of a statute that it administers,” Schwartz v. Md. Department of Natural Resources, 385 Md. 534, 554 , 870 A.2d 168, 180 (2005), especially when that statute is ambiguous or unclear.

Div. of Labor & Indus. v. Triangle Gen. Contrs., Inc., 366 Md. 407, 417 , 784 A.2d 534, 539-40 (2001). On the other hand, when the language of the statute is clear and unambiguous, no deference is due the administrative interpretation. Id.

III

Discussion A. “Command Influence” Respondents’ threshold claim, and the only one decided by the earlier reviewing courts, is that the MIA’s hearing on the Commissioner’s Cease-and-Desist Order was contrary to the Court of Special Appeal’s discussion of Maryland law in its opinion in Mayer . In Mayer , a police sergeant filed an administrative grievance challenging the results of a promotional examination resulting in his classification as “qualified,” rather than “well qualified” as required for promotion to lieutenant. Mayer, 143 Md.App. at 264-65 , 794 A.2d at 706-07 . The basis for Mayer’s grievance was that the raters who evaluated his performance were incompetent or otherwise unqualified to judge him on specific areas of proficiency.

Mayer, 143 Md.App. at 267 , 794 A.2d at 708 . The County Director of the Office of Human Resources (“OHR”) denied ¹⁷ Mayer’s grievance in a written “Step II” response (according to the County Administrative Procedures), and Mayer appealed that decision by requesting a “Step III” hearing. Mayer, 143 Md.App. at 267-68 , 794 A.2d at 708 . The hearing officer assigned to Mayer’s Step III appeal was the subordinate of the County Director who denied Mayer’s grievance at the Step II level.

Mayer, 143 Md.App. at 268 , 794 A.2d at 708 . Mayer objected to the hearing officer’s appointment, arguing that a subordinate of the Director would be under “command influence” and “loath to render a decision adverse to that of her superior and therefore would not be impartial, or at least would not appear to be impartial.” Id. The Step III hearing officer affirmed the Step II written denial of Mayer’s grievance. Id.

Mayer appealed the Step III hearing to the Board of Appeals, which affirmed the OHR’s actions, and then to the Circuit Court for Montgomery County, which also affirmed. Mayer, 143 Md.App. at 269-70 , 794 A.2d at 709-10 . The Court of Special Appeals reversed, concluding that “there is a substantial likelihood that the hearing officer’s view of the case will be tainted and that he therefore will not render an impartial decision; and if there is no actual partiality, the process appears not to be impartial.” Mayer, 143 Md.App. at 277 , 794 A.2d at 714 . In reaching that conclusion, the Court of Special Appeals noted as significant that “the Step II responder and the Step III hearing officer engaged in nearly an identical adjudicatory-type function.” Mayer, 143 Md.App. at 280 , 794 A.2d at 715 .

In this case, the intermediate appellate court distinguished the facts in Mayer from those in our opinions in Spencer and Consumer Publishing, where we held that a combination of adjudicative and investigative functions within an agency was permissible. Respondents maintain their view that the ADIC was under the “command influence” of the Commissioner, who initiated the original investigation and issued the Cease-and-Desist Order; therefore, the hearing on the administrative appeal was unfair, or gave the appearance of being unfair. The MIA counters that the Commissioner was authorized by the Insurance Article expressly to delegate the hearing to an ADIC and ¹⁸ that a theory of “command influence” does not apply to hearings where the material facts are not in dispute and the ADIC was called upon to decide questions of law solely. We agree with the MIA that a theory of “command influence” does not apply to the facts of the present case and the delegation of the hearing and final decision-making to the ADIC was proper.

The due process concerns expressed by the Court of Special Appeals in Mayer were generated by a very specific factual and procedural scenario not analogous to the circumstances in the instant case. Unlike Mayer , the ADIC’s hearing was not an “identical adjudicatory-type function” to what the Commissioner engaged in leading to the issuance of the Cease-and-Desist Order. The Commissioner initiated the “market conduct investigation” into the PFCs’ finance practices and, upon concluding the report of the investigation, issued the Cease- and-Desist Order. The Commissioner’s actions were ex parte in large part Respondents’ demand for a hearing as to the Cease-and-Desist Order initiated the administrative adjudicatory process contemplated by the regulatory scheme.

The ADIC’s hearing was a contested case hearing with “trial type procedures,” including pre-trial notice, evidence, privileges, cross-examination, and burdens of proof. Maryland Code (1957, 2009 Repl.Vol.) State Gov’t Art., §§ 10-208, 10-213, 10-217. The fact-finding investigation and Cease-and-Desist Order engaged in by the Commissioner were not an “identical” function to the contested case hearing held by the ADIC; therefore, the predicate facts and procedures in Mayer are distinguishable from those in the present ease. Moreover, Mayer involved a hearing officer who was obliged to resolve disputed questions of fact.

Here, the ADIC was called upon to decide only questions of law. 8 Respondents ¹⁹ argue that this is a distinction without significance; we do not agree. As recognized by the Court of Special Appeals in Mayer , judicial review of an agency action on a question of law engages a generally non-deferential standard of review. 143 Md.App. at 271 , 794 A.2d at 710 (“In contrast to the deferential review accorded to an agency's factual findings, questions of law receive no deference on review; we are not bound by the agency’s interpretation of law.”) (citing Caucus Distribs. v. Md. Sec. Comm’r, 320 Md. 313, 324 , 577 A.2d 783, 788 (1990)). Judicial review of agency fact-finding, on the other hand, is given significant deference. Milliman, Inc. v. Md. State Ret.

Pension Sys., 421 Md. 130, 152 , 25 A.3d 988, 1001 (2011) (“[A] reviewing court must defer to the agency’s fact-finding and drawing of inferences if they are supported by the record.”) (quoting Motor Vehicle Admin. v. Shea, 415 Md. 1, 14 , 997 A.2d 768, 775-76 (2010)) (internal quotations omitted). Were the ADIC subject to the Commissioner’s “command influence,” and Respondents have not shown that she was, judicial review would cure any errors of law. 9 Respondents requested twice that the Commissioner transfer the administrative appeal to the OAH for hearing and decision, and twice the Commissioner denied that request. Under the State Administrative Procedures Act (“APA”), the decision to delegate a case to the OAH for hearing and a proposed or final administrative decision lies solely within the discretion of the agency, although the particular facts of a given case may compel a specific choice if fundamental fair ²⁰ ness demands. State Gov’t Art., § 10-205(a). 10 For example, in Spencer , several members of the Board of Pharmacy, having been involved in failed settlement negotiations with Spencer, refused to recuse themselves from the hearing on the merits that ensued. 380 Md. at 520-22 , 846 A.2d at 343-45 .

Spencer requested that the hearing be transferred to the OAH, was denied, and, on judicial review, argued that the refusal to transfer her case was a violation of due process. Spencer, 380 Md. at 524 , 846 A.2d at 346 . We held that the decision whether to transfer a case to the OAH was within the agency’s discretion, and would be reviewed under the “arbitrary and capricious” standard. Spencer, 380 Md. at 531 , 846 A.2d at 350 .

(“[A]n agency’s prerogative with respect to case referral to OAH is similar in scope to that of the prerogative in determining the severity of sanctions, or to that of forgoing prosecution of a particular individual.”). Even though the members of the Board in Spencer erred in not recusing themselves from hearing Spencer’s matter, we concluded that this error alone was not so egregious a problem that it could not be cured on remand by anything other than a delegation to the OAH to hold a new hearing. 380 Md. at 527 , 846 A.2d at 344-49 . In the present case, there has been no showing of “fraud or egregious behavior on behalf of the agency” that would persuade us that the Commissioner, the ADIC, or the MIA acted arbitrarily or capriciously. Spencer, 380 Md. at 533 , 846 A.2d at 352 .

The Commissioner was authorized by the State APA either to hold a hearing or delegate all or part of the hearing ²¹ and decision-making responsibilities to the OAH. State Gov’t Art., § 10-205(a). The Commissioner was authorized, also by statute, to delegate internally the hearing and decision-making responsibilities to the ADIC. Ins.

Art., § 2-210(d). The Commissioner initiated an investigation and issued a Cease-and-Desist Order based on his findings. Although the Commissioner did participate in the resultant hearing as a witness, he was questioned by both the MIA and Respondents about his reasons for issuing the Cease-and-Desist Order; his view of, and the alleged former position of the MIA, on the use of the Rule; his role in the MIA’s relevant legislative advocacy; and his view on the practice regarding premium refunds on policies voided ab initio. The transcripts of the MIA hearing do not indicate any episodic or systemic impropriety on the part of the Commissioner or the ADIC.

Respondents argue that the influence of the Commissioner was entwined impermissibly with the ADIC’s conduct of the hearing. Section 2-209 of the Insurance Article allows specifically the Commissioner to “testify and offer other proper evidence about [the] information obtained during an examination.” Ins. Art., § 2-209(d)(l), (d)(2). Notwithstanding that the ADIC was appointed by the Commissioner, without some additional evidence, we shall not assume that the ADIC, who is authorized to preside over hearings at the MIA, is unable to resist “command influence” in any given case and, therefore, unable to provide a fair hearing to Respondents.

Respondents maintain that they were not afforded a fair hearing because it is improper generally for an agency to conduct a hearing after the agency head issues an ex parte order. We, as well as our intermediate appellate court brethren, have held in numerous cases that the combination of adjudicatory and investigatory functions in an agency is not, per se, a violation of due process. Consumer Publ’g Co., 304 Md. at 763 , 501 A.2d at 64-65 ; Morgan, 387 Md. at 194 , 874 A.2d at 959-60 ; State Bd. of Physicians v. Bernstein, 167 Md.App. 714 , 894 A.2d 621 (2006); Rosov v. Md. State Bd. of Dental Exam’rs, 163 Md.App. 98 , 877 A.2d 1111 (2005). These cases relied on the U.S. Supreme Court’s decision in ²² Withrow v. Larkin, 421 U.S. 35 , 95 S.Ct. 1456 , 43 L.Ed.2d 712 (1975).

In Withrow , a physician argued that a state board violated his due process when the board conducted a hearing on charges it investigated before authorizing the bringing of charges. 421 U.S. at 40 , 95 S.Ct. at 1461 , 43 L.Ed.2d at 720 . The U.S. Supreme Court rejected the physician’s argument, reasoning that: [t]he contention that the combination of investigative and adjudicative function necessarily creates an unconstitutional risk of bias in an administrative adjudication ... must overcome a presumption of honesty and integrity in those serving as adjudicators; and it must convince that, under a realistic appraisal of psychological tendencies and human weakness, conferring investigative and adjudicative powers on the same individuals poses such a risk of actual bias or prejudgment that the practice must be forbidden if the guarantee of due process is to be adequately implemented. 421 U.S. at 47 , 95 S.Ct. at 1464 , 43 L.Ed.2d at 723-24 . Further, the Court found that “[i]t is also very typical for the members of administrative agencies to receive the results of investigations, to approve the filing of charges or formal complaints instituting enforcement proceedings, and then to participate in the ensuing hearings.” Withrow, 421 U.S. at 56 , 95 S.Ct. at 1469 , 43 L.Ed.2d at 729 . The Court held that the combination of adjudicatory and investigatory functions does not violate due process.

Id. The Court left open, however, the possibility that, in special circumstances, the combination of functions may present a “risk of unfairness [that] is intolerably high.” Withrow, 421 U.S. at 58 , 95 S.Ct. at 1470 , 43 L.Ed.2d at 730 . In Consumer Publishing, we upheld the Consumer Protection Division’s investigation, filing of charges, and adjudication of allegedly deceptive advertising of “diet pills” in Maryland newspapers. 304 Md. at 737 , 501 A.2d at 51-52 . The statutory enumeration of the express and implied powers of the Consumer Protection Division included: receiving and investigating consumer complaints; investigating possibly unfair or deceptive trade practices; seeking a temporary or permanent ²³ injunction; and exercising and performing “any other function, power and duty appropriate to protect and promote the welfare of consumers.” Consumer Publ’g, 304 Md. at 745 , 501 A.2d at 55 .

We concluded that the Consumer Protection Division’s actions did not exceed the tolerance of Withrow because the Consumer Protection Division of the Office of the Attorney General received the results of the investigation and approved the filing of charges, but did not officiate at the hearing. Consumer Publ’g, 304 Md. at 763 , 501 A.2d at 64-65 . Rather, a law school professor was appointed by the Chief of the Consumer Protection Division (to whom the Attorney General delegated the responsibility) to sit as a special hearing officer, pursuant to then-existing statutory authority. Consumer Publ’g, 304 Md. at 769 , 501 A.2d at 68 .

Conversely, the hearing officer did not participate in the investigation; therefore, there was no evidence of impropriety violative of due process. Consumer Publ’g, 304 Md. at 763 , 501 A.2d at 64-65 . Consumer Publishing also alleged irregularity because the Attorney General of Maryland issued a press release on the same day the charges were filed, thereby supplying evidence that the Attorney General “prejudged” the merits of the case. Consumer Publ’g, 304 Md. at 764 , 501 A.2d at 65 .

Unimpressed, we found the issuance of the press release, concurrent with issuing charges, did not violate due process. Id. (citing Roberts v. Morton, 549 F.2d 158, 164 (10th Cir.1976)), cert. denied, 434 U.S. 834 , 98 S.Ct. 121 , 54 L.Ed.2d 95 (1977). Even had the press release revealed that the Attorney General somehow “prejudged” the case, that alone did not rise necessarily to the level of a due process violation.

Consumer Publ’g, 304 Md. at 766 , 501 A.2d at 66 (citing Shaughnessy v. United States, 349 U.S. 280 , 75 S.Ct. 746 , 99 L.Ed. 1074 (1955)). Bias that rises to the level of a due process violation required “[statements on the merits by those who must make factual determination on contested fact issues ... where fact finding is critical.” Id. (citing Staton v. Mayes, 552 F.2d 908, 914 (10th Cir.1977)), cert. denied, 434 U.S. 907 , 98 S.Ct. 309 , 54 L.Ed.2d 195 (1977). ²⁴ In Morgan , the Consumer Protection Division’s investigation into, and hearing on charges of, improper home appraisals, passed muster when we found circumstances similar to those in Consumer Publishing. 387 Md. at 195 , 874 A.2d at 960 . Morgan did not meet the Withrow burden that a party alleging a violation of due process “must overcome a presumption of honesty and integrity in those serving as adjudicators.” Id.

In Morgan , there was no evidence or allegations of any facts or circumstances presenting an elevated risk of unfairness Morgan’s argument rested instead on the per se invalidity of the Consumer Protection Division’s general internal procedures for investigating, prosecuting, and adjudicating cases. Id. The present case falls squarely within the core reasoning of Consumer Publishing, Morgan, and Withrow . We proceed from the presumption that the ADIC conducted the MIA hearing with honesty and integrity, absent evidence to the contrary (having the Commissioner’s legal advisor at her side is insufficient).

The record does not reflect that the ADIC participated in the investigation or issuance of the Cease-and-Desist Order. Although the Commissioner participated as a witness at the hearing to explain his rationale for the Cease-and-Desist Order, there is no evidence in the record that he (or his legal advisor) participated in the ultimate administrative decision-making process or influenced improperly the ADIC. 11 Simply because the ADIC was delegated by the Commissioner to conduct the hearing does not make her a fortiori a slavish lapdog subject to the Commissioner’s will. 12 Respondents simply have not overcome the ²⁵ presumption that the ADIC was a proper delegee of the hearing and decision-making responsibilities. Respondents rest, as Morgan did, on the per se, blanket inability of an agency to hear fairly a contested case, after it investigates and issues a Cease-and-Desist Order. The argument that the Commissioner “prejudged” the merits of the eventual hearing is not persuasive, because the Commissioner delegated properly the hearing and decision-making responsibilities to the ADIC; therefore, the Commissioner was not a person who “must make factual determinations on contested fact issues ... where fact finding is critical.” There were no material factual disputes to be resolved at the administrative hearing.

Moreover, as discussed supra, there is no tangible evidence of actual or perceived “command influence.” Finally, even if the appearance of “command influence” existed, as Respondents allege, the reviewing court’s non-deferential standard of review of the issues of law decided by the ADIC would ensure that any errors of law would be considered fairly. Having resolved that the Circuit Court and the Court of Special Appeals erred in how they decided the only question reached by those courts, from among the several placed before them, we, in the exercise of our discretion (and because the other questions presented were pressed by the parties below and may fairly be decided on the record made), shall decide the other questions presented. B. Propriety of the Cease-and-Desist Order. i. Was the MIA required to proceed via formal rulemaking?

We review the MIA’s decision to proceed by adjudication, rather than rulemaking, according to the very deferential abuse of discretion standard, where only actions that are “arbitrary and capricious” are overturned. Consumer Publ’g, 304 Md. at 754-55 , 501 A.2d at 60 ; Spencer, 380 Md. at 529 , ²⁶ 846 A.2d at 349 . In Consumer Publishing, an advertising company argued that the Consumer Protection Division was required to proceed by rulemaking, rather than adjudication, because resolution of the dispute over alleged “deceptive” advertising practices would be industry-wide in impact. 304 Md. at 753 , 501 A.2d at 60 . We disagreed, concluding that even if the practices were shown to be industry-wide, the agency would not be limited to a rulemaking remedy because courts have held generally that agencies “[are] not precluded from announcing new principles in ... adjudicative proceeding^] and that the choice between rulemaking and adjudication lies ... within the [agency’s] discretion.” Id.

(quoting NLRB v. Bell Aerospace Co., 416 U.S. 267, 293 , 94 S.Ct. 1757, 1771 , 40 L.Ed.2d 134, 153 (1974)) (summarizing the holdings in SEC v. Chenery Corp., 332 U.S. 194 , 67 S.Ct. 1575 , 91 L.Ed. 1995 (1947) and NLRB v. Wyman-Gordon Co., 394 U.S. 759 , 89 S.Ct. 1426 , 22 L.Ed.2d 709 (1969)). The U.S. Supreme Court, in Chenery, emphasized the importance of allowing agencies to retain the flexibility to determine when to proceed by rulemaking in order to maintain an effective administrative process. 332 U.S. at 202-03 , 67 S.Ct. at 1580-81