PRINTER'S NO. 81
No. 86 Session of 1999
INTRODUCED BY BELL, BELAN, WHITE, TILGHMAN, KASUNIC, SALVATORE,
MELLOW, MUSTO, KUKOVICH AND BOSCOLA, JANUARY 8, 1999
REFERRED TO BANKING AND INSURANCE, JANUARY 8, 1999
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; making an appropriation; and making editorial
23 changes.
24 The General Assembly of the Commonwealth of Pennsylvania
25 hereby enacts as follows:
26 Section 1. Section 901-A of the act of April 9, 1929
27 (P.L.177, No.175), known as The Administrative Code of 1929,
28 added July 9, 1976 (P.L.903, No.161), is amended to read:
1 Section 901-A. Definitions.--As used in this article:
2 "Commission" means the Pennsylvania Public Utility
3 Commission.
4 "Consumer" means:
5 (1) any person (i) who makes a direct use or is the ultimate
6 recipient of a product or a service supplied by any person or
7 public utility subject to the authority of the commission or
8 (ii) who may be a direct user or ultimate recipient of a product
9 or service supplied by any person or public utility subject to
10 the authority of the commission and may be affected in any way
11 by any action within the authority of the commission. The term
12 "consumer" includes any "person," "corporation" or "municipal
13 corporation" as defined in [section 2 of the act of May 28, 1937
14 (P.L.1053, No.286), known as the "Public Utility Law."] 66
15 Pa.C.S. § 102 (relating to definitions); or
16 (2) any person (i) who has been issued an insurance policy
17 or insurance contract or (ii) who should have been issued an
18 insurance policy or insurance contract and may be affected by an
19 action within the authority of the department.
20 "Department" means the Insurance Department of the
21 Commonwealth.
22 "Insurance policy" or "insurance contract" means a contract
23 of insurance, indemnity, health care, suretyship, title
24 insurance, or annuity issued, proposed for issuance or intended
25 for issuance by a legal entity engaged in the business of
26 insurance.
27 "Public utility" means public utility as defined in [section
28 2(17), act of May 28, 1937 (P.L.1053, No.286), known as the
29 "Public Utility Law."] 66 Pa.C.S. § 102 (relating to
30 definitions).
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1 Section 2. Section 902-A of the act, added July 9, 1976
2 (P.L.903, No.161) and repealed in part October 15, 1980
3 (P.L.950, No.164), is amended to read:
4 Section 902-A. Office of Consumer Advocate.--(a) There is
5 hereby established within the [Department of Justice] Office of
6 Attorney General an Office of Consumer Advocate to represent the
7 interest of consumers before the Pennsylvania Public Utility
8 Commission and the Pennsylvania Insurance Department.
9 (b) The Consumer Advocate shall be a person who by reason of
10 training, experience and attainment is qualified to represent
11 the interest of consumers. Compensation shall be set by the
12 Executive Board.
13 (c) No individual who serves as a Consumer Advocate shall,
14 while serving in such position, engage in any business,
15 vocation, other employment, or have other interests,
16 inconsistent with his official responsibilities, nor shall he
17 seek or accept employment nor render beneficial services for
18 compensation with any "person" or "corporation," as defined in
19 [section 2 of the act of May 28, 1937 (P.L.1053, No.286), known
20 as the "Public Utility Law,"]66 Pa.C.S. § 102 (relating to
21 definitions) subject to the authority of the commission, or with
22 a legal entity engaged in the business of insurance subject to
23 the authority of the department during the tenure of the
24 appointment and for a period of two years after the appointment
25 is served or terminated.
26 (d) Any individual who is appointed to the position of
27 Consumer Advocate shall not seek election nor accept appointment
28 to any political office during the tenure as Consumer Advocate
29 and for a period of two years after the appointment is served or
30 terminated.
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1 Section 3. Section 904-A(a) and (c) of the act, added July
2 9, 1976 (P.L.903, No.161), are amended to read:
3 Section 904-A. Powers and Duties of the Consumer Advocate.--
4 (a) In addition to any other authority conferred upon him by
5 this act, the Consumer Advocate is authorized, and it shall be
6 his duty, in carrying out his responsibilities under this act,
7 to represent the interest of consumers as a party, or otherwise
8 participate for the purpose of representing an interest of
9 consumers, before the commission or the department in any matter
10 properly before the commission or the department, and before any
11 court or agency, initiating proceedings if in his judgment such
12 may be necessary, in connection with any matter involving
13 regulation by the commission or the department or the
14 corresponding regulatory agency of the United States whether on
15 appeal or otherwise initiated.
16 * * *
17 (c) In addition to any other authority conferred upon him by
18 this act, the Consumer Advocate is authorized to represent an
19 interest of consumers which is presented to him for his
20 consideration upon petition in writing by a substantial number
21 of persons, (i) who make direct use or are ultimate recipients
22 of a product or service supplied by a person, corporation, or
23 municipal corporation subject to regulation by the commission or
24 (ii) who have been or should have been issued an insurance
25 policy or contract by a legal entity in the business of
26 insurance subject to regulation by the department. The Consumer
27 Advocate shall notify the principal sponsors of any such
28 petition within a reasonable time after receipt of any such
29 petition of the action taken or intended to be taken by him with
30 respect to the interest of consumers presented in such petition.
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1 If the Consumer Advocate declines or is unable to represent such
2 interest, he shall notify such sponsors and shall state his
3 reasons therefor.
4 * * *
5 Section 4. Section 904-A.1 of the act is repealed.
6 Section 5. The act is amended by adding sections to read:
7 Section 904-A.2. Appropriation.--Before November 1, the
8 Office of Consumer Advocate shall estimate the total
9 expenditures for the Office of Consumer Advocate and submit the
10 estimate to the Governor in accordance with section 610 of this
11 act. At the same time the Consumer Advocate submits his estimate
12 to the Governor, the Consumer Advocate shall also submit that
13 estimate to the General Assembly. The estimate shall not, with
14 respect to public utility consumers, exceed five one hundredths
15 of one per centum (.05%) of the total gross intrastate operating
16 revenues of all public utilities subject to the jurisdiction of
17 the commission for the preceding calendar year and, with respect
18 to insurance consumers, shall not exceed five one hundredths of
19 one per centum (.05%) of the total gross intrastate operating
20 revenues of all insurance entities subject to the jurisdiction
21 of the Insurance Department for the preceding calendar year. The
22 Consumer Advocate or his designated representatives shall be
23 afforded an opportunity to appear before the Governor, the
24 Appropriations Committee of the Senate and the Appropriations
25 Committee of the House of Representatives regarding his
26 estimate. If the General Assembly fails to approve the Consumer
27 Advocate's budget for the purposes of this section by March 30,
28 the commission shall assess public utilities on the basis of the
29 last approved allocation and the department shall assess
30 insurance entities on the basis of the last approved allocation.
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1 When the General Assembly approves the proposed budget, the
2 Consumer Advocate and the commission shall make an adjustment in
3 the assessments to reflect the approved budget. The Office of
4 Consumer Advocate shall subtract from the budget finally
5 approved by the General Assembly any balance of the
6 appropriation to be carried over into such fiscal year from the
7 preceding one. The remainder so determined shall constitute the
8 total assessment, and shall be allocated to, and paid by, public
9 utilities or insurance entities in the manner hereafter
10 prescribed.
11 Section 904-A.3. Assessment Upon Public Utilities.--(a) For
12 each fiscal year the allocation shall be made as follows:
13 (1) The Office of Consumer Advocate shall determine for the
14 preceding calendar year the amount of its expenditures directly
15 attributable, or in its judgment properly allocable, to its
16 activities in connection with each group of utilities furnishing
17 the same kind of service and debit the amount so determined to
18 the group.
19 (2) The Office of Consumer Advocate shall then allocate the
20 total assessment prescribed by section 904-A.2 to each group in
21 the proportion which the sum of the debits made to it bears to
22 the sum of the debits made to all groups. The Office of Consumer
23 Advocate shall transmit to the commission the result of the
24 allocation.
25 (3) The commission shall thereafter complete the assessment
26 procedure and collect the assessments as follows: each public
27 utility within a group shall then be assessed for and shall pay
28 to the commission the proportion of the amount allocated to its
29 group as the gross intrastate operating revenues of the public
30 utility for the preceding calendar year bear to the total gross
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1 intrastate operating revenues of its group for that year, but,
2 for the fiscal year 1997-1998, every public utility shall be
3 assessed for and shall pay to the commission such proportion of
4 the total assessment as the gross intrastate operating revenues
5 of the public utility for the preceding calendar year bear to
6 the total gross intrastate operating revenues of all public
7 utilities that are assessed. The commission shall give notice by
8 registered or certified mail to each public utility of the
9 amount lawfully charged against it under the provisions of this
10 section, which amount shall be paid by the public utility within
11 thirty (30) days of receipt of the notice, unless the commission
12 specifies on the notices sent to all public utilities an
13 installment plan of payment, in which case each insurance entity
14 shall pay each installment on or before the date specified
15 therefor by the commission. Within fifteen (15) days after
16 receipt of the notice, the public utility against which the
17 assessment has been made may file with the commission objections
18 setting out in detail the grounds upon which the objector
19 regards the assessment to be excessive, erroneous, unlawful or
20 invalid. The commission, after notice to the objector, shall
21 hold a hearing upon the objections. After the hearing, the
22 commission shall record upon its minutes its findings on the
23 objections and shall transmit to the objector, by registered or
24 certified mail, notice of the amount, if any, charged against it
25 in accordance with the findings, which amount, or any
26 installment thereof, then due shall be paid by the objector
27 within ten (10) days after receipt of notice of the findings of
28 the commission with respect to the objections. If payment
29 prescribed by this subsection is not made as described in this
30 subsection, the commission may suspend or revoke certificates of
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1 public convenience, certify automobile registrations to the
2 Secretary of Transportation for suspension or revocation or,
3 through the Office of Attorney General, may institute an
4 appropriate action at law for the amount lawfully assessed,
5 together with additional costs incurred by the commission or the
6 Office of Attorney General by virtue of the failure to pay.
7 (b) It is the intent and purpose of this section that each
8 public utility shall advance to the Office of Consumer Advocate
9 its reasonable share of the cost of administering this act. The
10 Office of Consumer Advocate shall keep records of the costs
11 incurred in connection with the administration and enforcement
12 of this act or any other act. The Office of Consumer Advocate
13 and the commission shall also keep a record of the manner in
14 which it shall have computed the amount assessed against every
15 public utility. These records shall be open to inspection by all
16 interested parties. The determination of costs and assessments
17 by the Office of Consumer Advocate and the commission, and the
18 records and data upon which the costs and assessments are made,
19 shall be considered prima facie correct. In a proceeding
20 instituted to challenge the reasonableness or correctness of an
21 assessment under this section, the party challenging the
22 assessment shall have the burden of proof.
23 (c) All assessments, allocated to and paid by public
24 utilities shall be held in trust solely for the purpose of
25 defraying the cost of the administration and performance of the
26 duties of the Office of Consumer Advocate relating to
27 proceedings before the commission, the corresponding regulatory
28 agencies of the United States, related judicial proceedings, and
29 other similar matters within the jurisdiction of the Office of
30 Consumer Advocate, and shall be earmarked for the use of, and
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1 annually appropriated to, the Office of Consumer Advocate for
2 disbursement solely for that purpose.
3 Section 904-A.4. Assessment Upon Insurance Entities.--(a)
4 For each fiscal year the allocation shall be made as follows:
5 (1) The Office of Consumer Advocate shall determine for the
6 preceding calendar year the amount of its expenditures directly
7 attributable, or in its judgment properly allocable, to its
8 activities in connection with each group of insurance entities
9 furnishing the same kind of service and debit the amount so
10 determined to such group.
11 (2) The Office of Consumer Advocate shall then allocate the
12 total assessment prescribed by section 904-A.2 to each group in
13 the proportion which the sum of the debits made to it bears to
14 the sum of the debits made to all groups. The Office of Consumer
15 Advocate shall transmit to the department the result of the
16 allocation.
17 (3) The department shall thereafter complete the assessment
18 procedure and collect the assessments as follows: each insurance
19 entity within a group shall then be assessed for and shall pay
20 to the department the proportion of the amount allocated to its
21 group as the gross intrastate operating revenues of the
22 insurance entity for the preceding calendar year bear to the
23 total gross intrastate operating revenues of its group for that
24 year, but, for the fiscal year 1997-1998, every insurance entity
25 shall be assessed for and shall pay to the commission such
26 proportion of the total assessment as the gross intrastate
27 operating revenues of the insurance entity for the preceding
28 calendar year bear to the total gross intrastate operating
29 revenues of all insurance entities that are assessed. The
30 department shall give notice by registered or certified mail to
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1 each insurance entity of the amount lawfully charged against it
2 under the provisions of this section, which amount shall be paid
3 by the insurance entity within thirty (30) days of receipt of
4 the notice, unless the department specifies on the notices sent
5 to all insurance entities an installment plan of payment, in
6 which case each insurance entity shall pay each installment on
7 or before the date specified therefor by the department. Within
8 fifteen (15) days after receipt of the notice, the insurance
9 entity against which the assessment has been made may file with
10 the commission objections setting out in detail the grounds upon
11 which the objector regards the assessment to be excessive,
12 erroneous, unlawful or invalid. The department, after notice to
13 the objector, shall hold a hearing upon the objections. After
14 the hearing, the department shall record upon its minutes its
15 findings on the objections and shall transmit to the objector,
16 by registered or certified mail, notice of the amount, if any,
17 charged against it in accordance with the findings, which
18 amount, or any installment thereof, then due shall be paid by
19 the objector within ten (10) days after receipt of notice of the
20 findings of the department with respect to the objections. If
21 payment prescribed by this subsection is not made as described
22 in this subsection, the department may suspend or revoke the
23 license or, through the Office of Attorney General, may
24 institute an appropriate action at law for the amount lawfully
25 assessed, together with additional costs incurred by the
26 department or the Office of Attorney General by virtue of the
27 failure to pay.
28 (b) All assessments, allocated to and paid by insurance
29 entities shall be held in trust solely for the purpose of
30 defraying the cost of the administration and performance of the
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1 duties of the Office of Consumer Advocate relating to
2 proceedings before the department, the corresponding regulatory
3 agencies of the United States, related judicial proceedings, and
4 other similar matters within the jurisdiction of the Office of
5 Consumer Advocate, and shall be earmarked for the use of, and
6 annually appropriated to, the Office of Consumer Advocate for
7 disbursement solely for that purpose.
8 (c) It is the intent and purpose of this section that each
9 insurance entity shall advance to the Office of Consumer
10 Advocate its reasonable share of the cost of administering this
11 act. The Office of Consumer Advocate shall keep records of the
12 costs incurred in connection with the administration and
13 enforcement of this act or any other act. The Office of Consumer
14 Advocate and the department shall also keep a record of the
15 manner in which it shall have computed the amount assessed
16 against every insurance entity. These records shall be open to
17 inspection by all interested parties. The determination of costs
18 and assessments by the Office of Consumer Advocate and the
19 department, and the records and data upon which the costs and
20 assessments are made, shall be considered prima facie correct.
21 In a proceeding instituted to challenge the reasonableness or
22 correctness of an assessment under this section, the party
23 challenging the assessment shall have the burden of proof.
24 Section 904-A.5. Dispute of Assessments.--(a) No suit or
25 proceeding shall be maintained in a court for the purpose of
26 restraining or delaying the collection or payment of an
27 assessment made under section 904-A.3 or 904-A.4, but every
28 public utility and insurance entity against which an assessment
29 is made shall pay the same as provided. A public utility or
30 insurance entity making payment may, within two (2) years from
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1 the date of payment, sue the Commonwealth in an action at law to
2 recover the amount paid, or any part thereof, upon the ground
3 that the assessment was excessive, erroneous, unlawful, or
4 invalid, in whole or in part, provided objections were filed
5 with the commission, or the department and payment of the
6 assessment was made under protest either as to all or part
7 thereof. In an action for recovery of payments made under this
8 section, the claimant shall be entitled to raise every relevant
9 issue of law, but the findings of fact made by the commission,
10 or the department pursuant to this section, shall be prima facie
11 evidence of the facts therein stated. Records, books, data,
12 documents and memoranda relating to the expenses of the Office
13 of Consumer Advocate shall be admissible in evidence in court
14 and shall be prima facie evidence of the truth of their
15 contents. If it is finally determined in an action that all or
16 any part of the assessment for which payment was made under
17 protest was excessive, erroneous, unlawful or invalid, the
18 Office of Consumer Advocate shall make a refund to the claimant
19 out of the appropriation specified herein as directed by the
20 court.
21 (b) The procedure in this section providing for the
22 determination of the lawfulness of assessments and the recovery
23 of payments made pursuant to the assessments shall be exclusive
24 of all other remedies and procedures.
25 Section 904-A.6. Payment to General Fund and Requisitions.--
26 (a) All assessments received, collected or recovered under this
27 act shall be paid by the commission or the department into the
28 General Fund of the State Treasury through the Department of
29 Revenue.
30 (b) All requisitions upon the annual appropriations shall be
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1 signed by the Consumer Advocate or those deputies as he may
2 designate in writing to the State Treasurer and shall be
3 presented to the State Treasurer and dealt with by him and the
4 Treasury Department in the manner prescribed by the act of April
5 9, 1929 (P.L.343, No.176), known as "The Fiscal Code."
6 Section 6. Sections 905-A and 906-A of the act, added July
7 9, 1976 (P.L.903, No.161), are amended to read:
8 Section 905-A. Duties of the Commission and of the
9 Department.--In dealing with any proposed action which may
10 substantially affect the interest of consumers, including but
11 not limited to a proposed change of rates and the adoption of
12 rules, regulations, guidelines, orders, standards or final
13 policy decisions, the commission or the department, as
14 appropriate, shall:
15 (1) Notify the Consumer Advocate when notice of the proposed
16 action is given to the public or at a time fixed by agreement
17 between the Consumer Advocate and the commission or the
18 department in a manner to assure the Consumer Advocate
19 reasonable notice and adequate time to determine whether to
20 intervene in such matter.
21 (2) Consistent with its other statutory responsibilities,
22 take such action with due consideration to the interest of
23 consumers.
24 Section 906-A. Savings Provision; Construction.--(a)
25 Nothing contained herein shall in any way limit the right of any
26 consumer to bring a proceeding before either the commission, the
27 department or a court.
28 (b) Nothing contained herein shall be construed to impair
29 the statutory authority or responsibility of the commission to
30 regulate public utilities in the public interest or
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1 responsibility of the department to regulate insurance entities
2 in the public interest.
3 Section 7. The sum of $250,000, or as much thereof as may be
4 necessary, is hereby appropriated from the General Fund to the
5 Office of Consumer Advocate to begin operations relating to the
6 Insurance Department. Whatever moneys of this amount are
7 expended shall be returned to the General Fund from assessments
8 upon insurance entities.
9 Section 8. This act shall take effect in 90 days.
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