PRINTER'S NO. 2284
No. 1825 Session of 1997
INTRODUCED BY ITKIN, BLAUM, THOMAS, LAWLESS, TANGRETTI, PESCI,
MELIO, DeWEESE, LLOYD, ORIE, GEORGE, LaGROTTA, LUCYK, BISHOP,
PETRARCA, LEVDANSKY, DONATUCCI, BELARDI, ROBINSON, TIGUE,
OLASZ, WASHINGTON, CASORIO, STURLA, STABACK, TRAVAGLIO,
LAUGHLIN, MANDERINO, SCRIMENTI, COWELL, C. WILLIAMS,
STEELMAN, PETRONE, TRICH, KENNEY, DALEY, PISTELLA, McCALL,
MUNDY, VAN HORNE, SURRA, MICHLOVIC, ROONEY, KIRKLAND,
CORPORA, RIEGER, TRELLO, BELFANTI, HALUSKA AND RAMOS,
SEPTEMBER 30, 1997
REFERRED TO COMMITTEE ON INSURANCE, SEPTEMBER 30, 1997
AN ACT
1 Amending the act of April 9, 1929 (P.L.177, No.175), entitled
2 "An act providing for and reorganizing the conduct of the
3 executive and administrative work of the Commonwealth by the
4 Executive Department thereof and the administrative
5 departments, boards, commissions, and officers thereof,
6 including the boards of trustees of State Normal Schools, or
7 Teachers Colleges; abolishing, creating, reorganizing or
8 authorizing the reorganization of certain administrative
9 departments, boards, and commissions; defining the powers and
10 duties of the Governor and other executive and administrative
11 officers, and of the several administrative departments,
12 boards, commissions, and officers; fixing the salaries of the
13 Governor, Lieutenant Governor, and certain other executive
14 and administrative officers; providing for the appointment of
15 certain administrative officers, and of all deputies and
16 other assistants and employes in certain departments, boards,
17 and commissions; and prescribing the manner in which the
18 number and compensation of the deputies and all other
19 assistants and employes of certain departments, boards and
20 commissions shall be determined," extending the powers and
21 duties of the Office of Consumer Advocate to matters relating
22 to insurance; and making an appropriation.
23 The General Assembly of the Commonwealth of Pennsylvania
24 hereby enacts as follows:
1 Section 1. Section 901-A of the act of April 9, 1929
2 (P.L.177, No.175), known as The Administrative Code of 1929,
3 added July 9, 1976 (P.L.903, No.161), is amended to read:
4 Section 901-A. Definitions.--As used in this article:
5 "Commission" means the Pennsylvania Public Utility
6 Commission.
7 "Consumer" means:
8 (1) any person (i) who makes a direct use or is the ultimate
9 recipient of a product or a service supplied by any person or
10 public utility subject to the authority of the commission or
11 (ii) who may be a direct user or ultimate recipient of a product
12 or service supplied by any person or public utility subject to
13 the authority of the commission and may be affected in any way
14 by any action within the authority of the commission. The term
15 "consumer" includes any "person," "corporation" or "municipal
16 corporation" as defined in [section 2 of the act of May 28, 1937
17 (P.L.1053, No.286), known as the "Public Utility Law."] 66
18 Pa.C.S. § 102 (relating to definitions); or
19 (2) any person who is a named insured, insured or
20 beneficiary of a policy of insurance or any other person who may
21 be affected in any way by the Insurance Department's exercise of
22 or the failure to exercise its authority.
23 "Department" means the Insurance Department of the
24 Commonwealth and includes the Insurance Commissioner.
25 "Fund" means the Consumer Advocate Insurance Fund established
26 pursuant to section 904-A.3.
27 "Insurer" means any "company," "association" or "exchange" as
28 such terms are defined in section 101 of the act of May 17, 1921
29 (P.L.789, NO.285), known as "The Insurance Department Act of
30 1921."
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1 "Public utility" means public utility as defined in [section
2 2(17), act of May 28, 1937 (P.L.1053, No.286), known as the
3 "Public Utility Law."] 66 Pa.C.S. § 102 (relating to
4 definitions).
5 Section 2. Section 902-A of the act, added July 9, 1976
6 (P.L.903, No.161) and repealed in part October 15, 1980
7 (P.L.950, No.164), is amended to read:
8 Section 902-A. Office of Consumer Advocate.--(a) There is
9 hereby established within the [Department of Justice] Office of
10 Attorney General an Office of Consumer Advocate to represent the
11 interest of consumers before the Pennsylvania Public Utility
12 Commission and the Pennsylvania Insurance Department.
13 (b) The Consumer Advocate shall be a person who by reason of
14 training, experience and attainment is qualified to represent
15 the interest of consumers. Compensation shall be set by the
16 Executive Board.
17 (c) No individual who serves as a Consumer Advocate shall,
18 while serving in such position, engage in any business,
19 vocation, other employment, or have other interests,
20 inconsistent with his official responsibilities, nor shall he
21 seek or accept employment nor render beneficial services for
22 compensation with any "person" or "corporation," as defined in
23 [section 2 of the act of May 28, 1937 (P.L.1053, No.286), known
24 as the "Public Utility Law,"]66 Pa.C.S. § 102 (relating to
25 definitions) subject to the authority of the commission, or with
26 a legal entity engaged in the business of insurance subject to
27 the authority of the department during the tenure of the
28 appointment and for a period of two years after the appointment
29 is served or terminated.
30 (d) Any individual who is appointed to the position of
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1 Consumer Advocate shall not seek election nor accept appointment
2 to any political office during the tenure as Consumer Advocate
3 and for a period of two years after the appointment is served or
4 terminated.
5 Section 3. Section 904-A(a) and (c) of the act, added July
6 9, 1976 (P.L.903, No.161), are amended to read:
7 Section 904-A. Powers and Duties of the Consumer Advocate.--
8 (a) In addition to any other authority conferred upon him by
9 this act, the Consumer Advocate is authorized, and it shall be
10 his duty, in carrying out his responsibilities under this act,
11 to represent the interest of consumers as a party, or otherwise
12 participate for the purpose of representing an interest of
13 consumers, before the commission or the department in any matter
14 properly before the commission or the department, and before any
15 court or agency, initiating proceedings if in his judgment such
16 may be necessary, in connection with any matter involving
17 regulation by the commission or the department or the
18 corresponding regulatory agency of the United States whether on
19 appeal or otherwise initiated.
20 * * *
21 (c) In addition to any other authority conferred upon him by
22 this act, the Consumer Advocate is authorized to represent an
23 interest of consumers which is presented to him for his
24 consideration upon petition in writing by a substantial number
25 of persons, (i) who make direct use or are ultimate recipients
26 of a product or service supplied by a person, corporation, or
27 municipal corporation subject to regulation by the commission or
28 (ii) who are consumers of an insurer subject to regulation by
29 the department. The Consumer Advocate shall notify the principal
30 sponsors of any such petition within a reasonable time after
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1 receipt of any such petition of the action taken or intended to
2 be taken by him with respect to the interest of consumers
3 presented in such petition. If the Consumer Advocate declines or
4 is unable to represent such interest, he shall notify such
5 sponsors and shall state his reasons therefor.
6 * * *
7 Section 4. Section 904-A.1 (a) and (g) of the act, amended
8 July 20, 1983 (P.L.48, No.25) are amended to read:
9 Section 904-A.1. Assessment Upon Public Utilities,
10 Disposition, Appropriation and Disbursement of such
11 Assessments.--(a) Before November 1, 1983 for fiscal year 1984-
12 1985 and before November 1 of each year hereafter, the Office of
13 Consumer Advocate shall estimate the total expenditures for the
14 Office of Consumer Advocate and submit the estimate to the
15 Governor in accordance with section 610 of the act. At the same
16 time the Consumer Advocate submits his estimate to the Governor,
17 the Consumer Advocate shall also submit that estimate to the
18 General Assembly. Such estimate shall not with respect to public
19 utility consumers exceed five one hundredths of one per centum
20 (.05%) of the total gross intrastate operating revenues of all
21 public utilities subject to the jurisdiction of the Pennsylvania
22 Public Utility Commission for the preceding calendar year and
23 with respect to insurance consumers shall not exceed the amount
24 provided under section 904-A.2. The Consumer Advocate or his
25 designated representatives shall be afforded an opportunity to
26 appear before the Governor and the Senate and House
27 Appropriations Committees regarding his estimate. If the General
28 Assembly fails to approve the Consumer Advocate's budget for the
29 purposes of this section by March 30, the Public Utility
30 Commission shall assess public utilities on the basis of the
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1 last approved allocation. At such time as the General Assembly
2 approves the proposed budget, the Consumer Advocate and the
3 commission shall make an adjustment in the assessments to
4 reflect the approved budget. The Office of Consumer Advocate
5 shall subtract from the budget finally approved by the General
6 Assembly any balance of the appropriation to be carried over
7 into such fiscal year from the preceding one. The remainder so
8 determined shall constitute the total assessment, and shall be
9 allocated to, and paid by, public utilities in the manner
10 hereafter prescribed.
11 * * *
12 (g) All assessments received, collected, or recovered under
13 this [act] section shall be paid by the commission into the
14 General Fund of the State Treasury through the Department of
15 Revenue.
16 * * *
17 Section 5. The act is amended by adding sections to read:
18 Section 904-A.2 Assessments Upon Insurance Entities.--(a)
19 Prior to the first day of April following the effective date of
20 this section and prior to the first day of April of each year
21 thereafter so long as this section shall remain in effect, each
22 insurer who writes coverages for fire and casualty, accident and
23 health, credit accident and health under life/annuity/accident,
24 health and life including annuities in this Commonwealth, as a
25 condition of its authorization to transact business in this
26 Commonwealth, shall pay into the fund in trust an amount equal
27 to the product obtained by multiplying five million dollars
28 ($5,000,000) by a fraction, the numerator of which is the direct
29 premium collected for all coverages by that insurer in this
30 Commonwealth during the preceding calendar year and the
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1 denominator of which is the direct premium written on such
2 coverages in this Commonwealth by all insurers in the same
3 period. Any insurer who fails to pay the required assessment
4 under this section shall be prohibited from writing any
5 insurance within this Commonwealth.
6 (b) In succeeding years the General Assembly may vary the
7 base amount of five million dollars ($5,000,000) based upon the
8 actual funding experience and requirements of the Office of
9 Consumer Advocate.
10 (c) Assessments under this section shall be imposed and
11 collected by the department. Moneys collected by the department
12 under this section shall be transferred to the Consumer Advocate
13 Insurance Fund established in section 904-A.3.
14 Section 904-A.3. Consumer Advocate Insurance Fund.--(a)
15 There is hereby established a separate account in the State
16 Treasury to be known as the Consumer Advocate Insurance Fund.
17 This fund shall be administered by the State Treasurer.
18 (b) All moneys deposited into the fund shall be held in
19 trust and shall not be considered general revenue of the
20 Commonwealth but shall be held in trust solely for the purpose
21 of defraying the cost of the administration and performance of
22 the duties of the Office of Consumer Advocate relating to
23 proceedings before the department, the corresponding regulatory
24 agencies of the United States, related judicial proceedings, and
25 other similar matters within the jurisdiction of the Office of
26 Consumer Advocate, and shall be earmarked for the use of, and
27 annually appropriated to, the Office of Consumer Advocate for
28 disbursement solely for that purpose.
29 (c) Assessments made under this section shall not be
30 considered burdens and prohibitions under section 212 of the act
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1 of May 17, 1921 (P.L.789, No.285), known as The "Insurance
2 Department Act of 1921."
3 (d) In the event that the trust fund is dissolved or the
4 Office of Consumer Advocate is terminated by operation of law,
5 any balance remaining in the fund, after deducting
6 administrative costs for liquidation, shall be returned to
7 insurers in proportion to their financial contributions to the
8 fund in the preceding calendar year.
9 Section 6. Sections 905-A and 906-A of the act, added July
10 9, 1976 (P.L.903, No.161), are amended to read:
11 Section 905-A. Duties of the Commission and of the
12 Department.--In dealing with any proposed action which may
13 substantially affect the interest of consumers, including but
14 not limited to a proposed change of rates and the adoption of
15 rules, regulations, guidelines, orders, standards or final
16 policy decisions, the commission or the department, as
17 appropriate, shall:
18 (1) Notify the Consumer Advocate when notice of the proposed
19 action is given to the public or at a time fixed by agreement
20 between the Consumer Advocate and the commission or the
21 department in a manner to assure the Consumer Advocate
22 reasonable notice and adequate time to determine whether to
23 intervene in such matter.
24 (2) Consistent with its other statutory responsibilities,
25 take such action with due consideration to the interest of
26 consumers.
27 Section 906-A. Savings Provision; Construction.--(a)
28 Nothing contained herein shall in any way limit the right of any
29 consumer to bring a proceeding before either the commission, the
30 department or a court.
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1 (b) Nothing contained herein shall be construed to impair
2 the statutory authority or responsibility of the commission to
3 regulate public utilities in the public interest or
4 responsibility of the department to regulate insurance entities
5 in the public interest.
6 Section 7. The sum of $2,500,000 is hereby appropriated to
7 the Consumer Advocate Insurance Fund for fiscal year July 1,
8 1997 to June 30, 1998. Such appropriation shall be returned to
9 the General Fund from money deposited in the fund under section
10 904-A.2.
11 Section 8. This act shall take effect immediately.
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