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State Separation of Powers Wooley v. State Farm Fire and Cas. Ins. Co., 893 So.2d 746 (La. 2005)
State Regulation of Insurance McCarron-Ferguson Act - 1945 • With a few exceptions, leaves the regulation of insurance to the states • Insurers are organized by state • States do not have the information or expertise to do the job • Limits the risk sharing to small pools • ERISA is the big exception - no regulation at all • Fundamentally changed by the health care law • There is a big role for state insurance regulators in the insurance exchanges - will ALJs run these in LA?
Office of Insurance Commissioner • Became an elected constitutional office in 1973 • Did the 1973 constitution provide specific powers and duties for the insurance commissioner? • Any problems with the office over the past few commissioners? • What are the inherent conflicts with an elected insurance commissioner? • Think about hurricane wind coverage
ALJs in LA • Prior to the creation of DAL the LA APA did not have specific provisions authorizing ALJs or their credentials • Who employed them at this time? • Were there uniform criteria for selection? • Should there be? • Should they be lawyers?
Key Provisions of the DAL - 1995 • The DAL shall handle all adjudications required by the LAPA, • that the ALJ shall issue the final decision or order and • the agency shall have no authority to override the decision or order, • no agency or official thereof shall be entitled to judicial review of an adjudication. • that the governor shall appoint, and the Senate confirm, a director for DAL, who, in turn, shall employ the ALJs, and that the current ALJs employed by the various affected agencies shall be transferred to and employed in the DAL. • (Some agencies such as medical licensing are excluded)
The Big Picture • Pushed by concerns about fairness to the regulated parties • Smoke screen to pass the law • Like family farming and the farm bill • Protects little guys, like Exxon • But there are big problems in a lot of little agencies • LA has 300+ boards and agencies • No systematic staffing or procedure • Gresham's law in the big agencies
Key Questions • How does a central panel improve fairness? • Fairness to whom - who is the agency representing? • What core agency attribute do you lose? • Why does finality mean that the ALJs are deciding legal and not just factual questions? • What do other states and the feds do?
** The Regulatory Ratchet ** What is the effect of having the ALJ bind the agency without appeal, while allowing the regulated party to appeal to the courts?
Realities of Government • The rule of (honest) agencies • Agencies can do effective regulation • Agencies can give extensive due process to regulated parties • Agencies can be cheap • Agencies can work quickly • PICK 2, at most
What are the Two Questions Before the Court? • Are ALJs unconstitutionally acting as unelected judges? • Has the legislature unconstitutionally limited the power of a constitutional officer, the Insurance Commissioner? • The District court focused on the ALJs calling themselves judges and using the judges entrance • Are these really legal factors? • Why are they politically significant?
Article V Courts in LA • Article V, sec. 1 vests the judicial power of the state in the courts making up the judicial branch of government, the supreme court, courts of appeal, district courts, and other constitutionally-authorized courts. • Further, La. Const. art. V, sec. 22(A) provides that all judges shall be elected. • Finally, Article V, sec. 16 grants district courts original jurisdiction of all civil and criminal matters and appellate jurisdiction as provided by law. • While a court's jurisdiction and judicial power traditionally flow from these constitutional grants, Article II, secs. 1 and 2 also establish the basis for inherent judicial powers which are not specifically enumerated in the constitution.
Original Jurisdiction • Turning to the issue of whether Act 739 divests the district courts of original jurisdiction, we find that because the approval of insurance policy forms is not a civil matter within the meaning of La. Const. art. V, sec. 16(A), they are not within the scope of the district courts' constitutional grant of original jurisdiction. • Can the legislature change original jurisdiction?
How are Agencies Hybrids? • (This looks like a 1930s United States Supreme Court delegation case) • What are the legislative functions of an agency? • What are the executive functions? • What are the judicial functions? • Why are these only "quasi-judicial"? • Does this make "quasi-judicial" a circular definition?
The Holding on Whether ALJs are Judges • "Turning now to the issue of whether the Act violates the constitutional mandate of an elected judiciary, we find that because the executive branch ALJs employed by the DAL do not exercise judicial power, they are not required to be elected. Pursuant to our constitutional scheme, the authority to exercise judicial power is vested in elected officials. ... Because we have already determined that the ALJs are authorized to perform quasi-judicial, rather than judicial, functions, there is no constitutional requirement that they be elected." • "Because we find the ALJs are not authorized to exercise judicial power, we find the Act 739 does not violate La. Const. art. V, sec. 22(A)."
What does the Court see as defining Judicial Power? • ...The testimony in the record reveals that ALJs do not have the power to enforce their decisions and orders, a power that unquestionably lies in Article V courts. The ALJs simply are not constitutionally allowed to exercise the judicial power of the state and Act 739 does not impermissibly attempt to authorize the exercise of judicial power. • "The ALJs make administrative law rulings that are not subject to enforcement and do not have the force of law."
What is the Effect of an ALJ Ruling if it cannot be Enforced? • Who does have the enforcement power? • What did the legislature intend for the agency to do with the ALJ's ruling? • Did the court ignore the plain language of the DAL enabling law? • What did the legislature intend? • What would the court have to rule if they read the law the way legislature intended? • Why would they dodge this?
You Are Counsel for State Farm • What are you worried that the agency will do? • How would you have to fight that? • What court would you end up in? • Can you mandamus the agency to approve it? • Mandamus is a proceeding to force an agency to act • As we see, it is not a perfect solution • Do you tell State Farm to go ahead and use the policy based on the ALJ's ruling? • What about the res judicata act?
Does the Res Judicata Statute, La. R.S. 13:4231, Apply to the Agency? • Pursuant to this statute, then, a second action is precluded when all of the following criteria are satisfied: • (1) the judgment is valid; • (2) the judgment is final; • (3) the parties are the same; • (4) the cause or causes of action asserted in the second suit existed at the time of final judgment in the first litigation; and • (5) the cause or causes of action asserted in the second suit arose out of the transaction or occurrence that was the subject matter of the first litigation. • Burguieres v. Pollingue, 02-1385, p. 8 (La. 2/25/03), 843 So.2d 1049, 1053. • Judgment by whom? Why does res judicata not apply?
Legislative Power over the Insurance Commission • What does the court say about the legislature's authority to limit the office of Insurance Commissioner? • What is the general rule about the right of an agency to judicially appeal the decision of another agency? • What is the commissioner's legal argument for declaring this part of the law unconstitutional? • What does basic adlaw tell us the legislature can do? • How is this different from changing the original jurisdiction of the courts?
Does The Commissioner Have Another Way to Get Into Court? • What is a declaratory ruling? • Why would it be exactly on point in this case? • Has the legislature prevented the commissioner from requesting one? • Could the legislature block this avenue of appeal? • This was remanded to the Appeals Court
Remand: Wooley v. State Farm, 928 So.2d 618, 2005-1490 (La.App. 1 Cir. 06) • On Remand: • The "existing facts" of the present controversy, for our purposes, are simply these: The ALJ made an adjudication that the RCU form met La. R.S. 22:621's requirement of compliance with law, an adjudication which is not subject to judicial review at the request of the Commissioner and with which the Commissioner is now bound by law to comply. A litigant not asserting a substantial existing legal right is without standing to seek a declaratory judgment, and such lack of standing renders any judicial opinion sought an impermissible advisory opinion. Such is the present position of the Commissioner.
Changing this Ruling • Can the legislature change the Wooley decision by statute? • What about the law they passed saying we really mean it? • The worker compensation law declared unconstitutional in Moore v. Roemer because the judges were making final decisions • How was that fixed? • The legislature tried this with Wooley, but the voters rejected the amendment.
Where does the Remand Leave the Issue of the What Happens after the ALJ Rules?
Bonvillian v. Dep't of Insurance, 906 So.2d 596 (La.App. Cir.1 2005) • What is the underlying dispute? • Insurance Commission refused to renew a bail bond agent's license • Why do we bond this folks? • What did the plaintiff do? • Went to the ALJ, who overruled the agency • What did the agency do? • Refused to issue the license
The District Court • What did plaintiff request in District Court? • What did the district court do? • Why doesn't the statue prohibit the agency appealing this action? • "[n]o agency or official thereof, or other person acting on behalf of an agency or official thereof shall be entitled to judicial review under this Chapter." • What does this prohibition apply to? • What is the Department appealing?
Mandamus • What is the most famous mandamus case? • Was it successful? • Must be a specific, non-discretionary right • In mandamus proceedings against a public officer involving the performance of official duty, nothing can be inquired into but the question of duty on the face of the statute and the ministerial character of the duty he is charged to perform. • The remedy is not available to command the performance of an act that contains any element of discretion, however slight. • Why is mandamus so limited?
When May Mandamus be used Against the Insurance Commission? • "writ of mandamus may be sought to compel the commissioner of insurance to perform a ministerial duty as established by law, where it is alleged that the commissioner of insurance is acting fraudulently or not impartially fulfilling his duties, or where the delay involved in obtaining ordinary relief may cause injustice." • Does issuing a license involve discretion? • How does plaintiff claim that the ALJ ruling changes this?
The Effect of Wooley • The [Wooley] Court further determined that "[b]ecause the decision and order of the ALJ was not a valid and final judgment for purposes of res judicata, ... the ALJ's judgment is not entitled to res judicata effect." Wooley, 2004-0882 at p. 19, ___ So.2d at ___. • We still do not know what that really means - stay tuned for the next chapter of Bonvillian.
What did the Court Rule? • In sum, Bonvillian has not met his burden of showing that a delay in obtaining ordinary relief would cause injustice sufficient to warrant the issuance of a writ of mandamus or that there were no ordinary remedies available through which he could obtain relief. As set forth in Wiginton, mandamus presumably can not lie in cases that are doubtful.
Bonvillian v. Dep't of Insurance, 25 So.3d 233 (La.App. Cir.1 2008) Round II
Procedure in this Case • After Bonvillian lost his mandamus proceeding, he was left with a declaratory judgment action. • He then filed a motion for partial summary judgment. • What was his theory as to why he was entitled to summary judgment? • What did the district court rule?
The Commissioner's Points of Error on Appeal • 1. The district court erred by ordering the reinstatement of Bonvillian'slicense in a declaratory judgment action because the function of a declaratory judgment is only to establish the rights of the parties or express the court's opinion on a question of law. • 2. The district court abused its discretion and was clearly wrong by granting summary judgment on a declaratory judgment action when it was biased by the findings of an ALJ that were contrary to the law. • 3. The District Court abused its discretion by disregarding a decision of the Louisiana Supreme Court, Wooley v State Farm Fire Cas Ins CO, in deciding that there was a case in controversy.
What Changed After Wooley I? • In this regard we also observe that La. R. S. 49.992 (B)(2) was amended by Acts 2005 No 204 to add the following significant language: • "Upon the issuance of such a final decision or order the agency or any official thereof shall comply fully with the final order or decision of the administrative law judge. This language is interpretive and remedial and is to be given retroactive effect. Wooley v State Farm Fire and Cas Ins Co., 928 So 2d 618, 622 (2006)
What does the Court say is the Effect of this Language? • Once the ALJ s decision became a final judgment principles of res judicata preclude re litigation. • But what judgments did the SC say were the only ones entitled to res judicata? • Why are worker's compensation tribunal decisions an exception?
The Court's Order • On our de novo review we conclude that the material facts are undisputed and that Bonvillian is entitled to judgment in his favor as a matter of law. The undisputed facts include the following: • The ALJ decision and order became a final enforceable judgment at the latest when the Louisiana Supreme Court did not consider writs in Bonvillian v. Department of Ins. 901 So 2d 1081 ... The ALJs final enforceable judgment ordered the Department to issue the license.
What did the Supreme Court in Wooley I hold about ALJ orders? • "The ALJs make administrative law rulings that are not subject to enforcement and do not have the force of law. " • Compare to this Court's holding: • The ALJs final enforceable judgment ordered the Department to issue the license. • If the Legislature has transformed ALJ rulings into final enforceable judgments, were does this leave Wooley I?