PRINTER'S NO. 163
No. 157 Session of 2001
INTRODUCED BY BELL, M. WHITE, BOSCOLA, COSTA, STOUT AND TARTAGLIONE, JANUARY 30, 2001
REFERRED TO BANKING AND INSURANCE, JANUARY 30, 2001
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). 20010S0157B0163 - 2 -
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 Insurance Department of the Commonwealth. 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. 20010S0157B0163 - 3 -
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. 20010S0157B0163 - 4 -
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. 20010S0157B0163 - 5 -
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 20010S0157B0163 - 6 -
1 intrastate operating revenues of its group for that year, but, 2 for the fiscal year 2001-2002, 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 20010S0157B0163 - 7 -
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 article. 10 The Office of Consumer Advocate shall keep records of the costs 11 incurred in connection with the office's duties of 12 administration and enforcement under this act or any other act. 13 The Office of Consumer Advocate and the commission shall also 14 keep a record of the manner in which it shall have computed the 15 amount assessed against every public utility. These records 16 shall be open to inspection by all interested parties. The 17 determination of costs and assessments by the Office of Consumer 18 Advocate and the commission, and the records and data upon which 19 the costs and assessments are made, shall be considered prima 20 facie correct. In a proceeding instituted to challenge the 21 reasonableness or correctness of an assessment under this 22 section, the party challenging the assessment shall have the 23 burden of proof. 24 (c) All assessments, allocated to and paid by public 25 utilities shall be held in trust solely for the purpose of 26 defraying the cost of the administration and performance of the 27 duties of the Office of Consumer Advocate relating to 28 proceedings before the commission, the corresponding regulatory 29 agencies of the United States, related judicial proceedings, and 30 other similar matters within the jurisdiction of the Office of 20010S0157B0163 - 8 -
1 Consumer Advocate, and shall be earmarked for the use of, and 2 annually appropriated to, the Office of Consumer Advocate for 3 disbursement solely for that purpose. 4 Section 904-A.4. Assessment Upon Insurance Entities.--(a) 5 For each fiscal year the allocation shall be made as follows: 6 (1) The Office of Consumer Advocate shall determine for the 7 preceding calendar year the amount of its expenditures directly 8 attributable, or in its judgment properly allocable, to its 9 activities in connection with each group of insurance entities 10 furnishing the same kind of service and debit the amount so 11 determined to such group. 12 (2) The Office of Consumer Advocate shall then allocate the 13 total assessment prescribed by section 904-A.2 to each group in 14 the proportion which the sum of the debits made to it bears to 15 the sum of the debits made to all groups. The Office of Consumer 16 Advocate shall transmit to the department the result of the 17 allocation. 18 (3) The department shall thereafter complete the assessment 19 procedure and collect the assessments as follows: each insurance 20 entity within a group shall then be assessed for and shall pay 21 to the department the proportion of the amount allocated to its 22 group as the gross intrastate operating revenues of the 23 insurance entity for the preceding calendar year bear to the 24 total gross intrastate operating revenues of its group for that 25 year, but, for the fiscal year 2001-2002, every insurance entity 26 shall be assessed for and shall pay to the commission such 27 proportion of the total assessment as the gross intrastate 28 operating revenues of the insurance entity for the preceding 29 calendar year bear to the total gross intrastate operating 30 revenues of all insurance entities that are assessed. The 20010S0157B0163 - 9 -
1 department shall give notice by registered or certified mail to 2 each insurance entity of the amount lawfully charged against it 3 under the provisions of this section, which amount shall be paid 4 by the insurance entity within thirty (30) days of receipt of 5 the notice, unless the department specifies on the notices sent 6 to all insurance entities an installment plan of payment, in 7 which case each insurance entity shall pay each installment on 8 or before the date specified therefor by the department. Within 9 fifteen (15) days after receipt of the notice, the insurance 10 entity against which the assessment has been made may file with 11 the commission objections setting out in detail the grounds upon 12 which the objector regards the assessment to be excessive, 13 erroneous, unlawful or invalid. The department, after notice to 14 the objector, shall hold a hearing upon the objections. After 15 the hearing, the department shall record upon its minutes its 16 findings on the objections and shall transmit to the objector, 17 by registered or certified mail, notice of the amount, if any, 18 charged against it in accordance with the findings, which 19 amount, or any installment thereof, then due shall be paid by 20 the objector within ten (10) days after receipt of notice of the 21 findings of the department with respect to the objections. If 22 payment prescribed by this subsection is not made as described 23 in this subsection, the department may suspend or revoke the 24 license or, through the Office of Attorney General, may 25 institute an appropriate action at law for the amount lawfully 26 assessed, together with additional costs incurred by the 27 department or the Office of Attorney General by virtue of the 28 failure to pay. 29 (b) All assessments, allocated to and paid by insurance 30 entities shall be held in trust solely for the purpose of 20010S0157B0163 - 10 -
1 defraying the cost of the administration and performance of the 2 duties of the Office of Consumer Advocate relating to 3 proceedings before the department, the corresponding regulatory 4 agencies of the United States, related judicial proceedings, and 5 other similar matters within the jurisdiction of the Office of 6 Consumer Advocate, and shall be earmarked for the use of, and 7 annually appropriated to, the Office of Consumer Advocate for 8 disbursement solely for that purpose. 9 (c) It is the intent and purpose of this section that each 10 insurance entity shall advance to the Office of Consumer 11 Advocate its reasonable share of the cost of administering this 12 article. The Office of Consumer Advocate shall keep records of 13 the costs incurred in connection with the office's duties of 14 administration and enforcement under this act or any other act. 15 The Office of Consumer Advocate and the department shall also 16 keep a record of the manner in which it shall have computed the 17 amount assessed against every insurance entity. These records 18 shall be open to inspection by all interested parties. The 19 determination of costs and assessments by the Office of Consumer 20 Advocate and the department, and the records and data upon which 21 the costs and assessments are made, shall be considered prima 22 facie correct. In a proceeding instituted to challenge the 23 reasonableness or correctness of an assessment under this 24 section, the party challenging the assessment shall have the 25 burden of proof. 26 Section 904-A.5. Dispute of Assessments.--(a) No suit or 27 proceeding shall be maintained in a court for the purpose of 28 restraining or delaying the collection or payment of an 29 assessment made under section 904-A.3 or 904-A.4, but every 30 public utility and insurance entity against which an assessment 20010S0157B0163 - 11 -
1 is made shall pay the same as provided. A public utility or 2 insurance entity making payment may, within two (2) years from 3 the date of payment, sue the Commonwealth in an action at law to 4 recover the amount paid, or any part thereof, upon the ground 5 that the assessment was excessive, erroneous, unlawful, or 6 invalid, in whole or in part, provided objections were filed 7 with the commission, or the department and payment of the 8 assessment was made under protest either as to all or part 9 thereof. In an action for recovery of payments made under this 10 section, the claimant shall be entitled to raise every relevant 11 issue of law, but the findings of fact made by the commission, 12 or the department pursuant to this section, shall be prima facie 13 evidence of the facts therein stated. Records, books, data, 14 documents and memoranda relating to the expenses of the Office 15 of Consumer Advocate shall be admissible in evidence in court 16 and shall be prima facie evidence of the truth of their 17 contents. If it is finally determined in an action that all or 18 any part of the assessment for which payment was made under 19 protest was excessive, erroneous, unlawful or invalid, the 20 Office of Consumer Advocate shall make a refund to the claimant 21 out of the appropriation specified herein as directed by the 22 court. 23 (b) The procedure in this section providing for the 24 determination of the lawfulness of assessments and the recovery 25 of payments made pursuant to the assessments shall be exclusive 26 of all other remedies and procedures. 27 Section 904-A.6. Payment to General Fund and Requisitions.-- 28 (a) All assessments received, collected or recovered under this 29 article shall be paid by the commission or the department into 30 the General Fund of the State Treasury through the Department of 20010S0157B0163 - 12 -
1 Revenue. 2 (b) All requisitions upon the annual appropriations shall be 3 signed by the Consumer Advocate or those deputies as he may 4 designate in writing to the State Treasurer and shall be 5 presented to the State Treasurer and dealt with by him and the 6 Treasury Department in the manner prescribed by the act of April 7 9, 1929 (P.L.343, No.176), known as "The Fiscal Code." 8 Section 6. Sections 905-A and 906-A of the act, added July 9 9, 1976 (P.L.903, No.161), are amended to read: 10 Section 905-A. Duties of the Commission and of the 11 Department.--In dealing with any proposed action which may 12 substantially affect the interest of consumers, including but 13 not limited to a proposed change of rates and the adoption of 14 rules, regulations, guidelines, orders, standards or final 15 policy decisions, the commission or the department, as 16 appropriate, shall: 17 (1) Notify the Consumer Advocate when notice of the proposed 18 action is given to the public or at a time fixed by agreement 19 between the Consumer Advocate and the commission or the 20 department in a manner to assure the Consumer Advocate 21 reasonable notice and adequate time to determine whether to 22 intervene in such matter. 23 (2) Consistent with its other statutory responsibilities, 24 take such action with due consideration to the interest of 25 consumers. 26 Section 906-A. Savings Provision; Construction.--(a) 27 Nothing contained herein shall in any way limit the right of any 28 consumer to bring a proceeding before either the commission, the 29 department or a court. 30 (b) Nothing contained herein shall be construed to impair 20010S0157B0163 - 13 -
1 the statutory authority or responsibility of the commission to 2 regulate public utilities in the public interest or 3 responsibility of the department to regulate insurance entities 4 in the public interest. 5 Section 7. The sum of $250,000, or as much thereof as may be 6 necessary, is hereby appropriated from the General Fund to the 7 Office of Consumer Advocate to begin operations relating to the 8 Insurance Department. Whatever moneys of this amount are 9 expended shall be returned to the General Fund from assessments 10 upon insurance entities. 11 Section 8. This act shall take effect in 90 days. L20L71BIL/20010S0157B0163 - 14 -