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For some of class today we will be looking at the web site of the Oregon Insurance Division (if we can get internet in the class). I wanted to spend a day on state regulation because the regulation of insurance is done primarily at the state level. Each state has its own insurance commissioner/administrator (is Oregon's elected or appointed?) with a large staff which normally presents itself as a "mediator" between the consumer and the insurers. Its mission is to make sure that insurers are solvent, that their policies are nondiscriminatory and that consumers are protected. How to parse those duties is the stuff of state insurance regulation. By the way, you should know that the Insurance Code is in ORS 731-750.

The best way to get acquainted with the state insurance division is to read its web page. The first question I always ask is whether the page provides you with the kind of information you really need. What do you think? Someone has to think through what to put on the page. I, for one, would have appreciated more information on the nature of policies and what insurers can and can't do in writing them. I asked you to focus on one or two areas from the page. What I will do here is to share what I "studied" in my "45 minutes."

The Statutes/Enforcement Actions

I decided to put the Insurance Code on my desktop. How many pages of relevant statutes? About 500, and with allied statutes, about 600. This is truly amazing and rather mind-boggling. For example, the health and life insurance policy statutes cover more than 100 pages, with five pages alone just given to a listing of all the sections in the statute. There are statutes dealing with individual and group policies, and various permutations of these. You know that these statutes are only meant to supplement the policy provisions of any one policy; hence the complexity increases.

Rather than spend my time just poring through statutes, I decided to look at a few enforcement actions. I didn't do so to see what dumb thinks people did (though that is really interesting). I primarily was interested in the way the statutes are used in an enforcement proceeding.

A Case

Let's take a case from 2004. A Mr. Abrantes was fined by the Division for misrepresenting aspects of his past. Note how the case proceeds. The action is brought under the authority of ORS 731.256. (page 20 of the online text). That section provides, in part, that "The Director of the Department of Consumer and Business Services may institute such actions or other lawful proceedings as the director may deem necessary for the enforcement of any provision of the Insurance Code..." ORS 731.256(1). What I then tend to do is "read around" in the statutes nearby. When I did that I saw that in (2) the director also has the option of pursuing criminal charges through the DA or the DOJ. Hm, I thought, when would one do one rather than the other? I also looked at 731.258, which talks about reciprocal enforcement of orders (from other jurisdictions). Hm, I thought. What is a "reciprocal state?" Do all states have reciprocity with Oregon?

But then, I moved back to the enforcement action, and saw that Mr. Abrantes would not be contesting his case. This brought up the issue of how a case proceeds when the director brings one. It is subject to the Oregon Administrative Procedures Act, a sort of "baby" federal APA, found in ORS 183. They refer to ORS 183.415(5) here, so I thought I would look that up (pages 561-62 of the online text). The basic provision is in (1): "In a contested case, all parties shall be afforded an opportunity for hearing after reasonable notice, servied personally or by registered or certified mail." Ok, this is a familiar "notice and hearing" provision. Very predictable but very important. (2) then tells what the notice must consist of; (3) assures the right to counsel; (4) speaks of the agency's right to adopt rules of procedure for "limited" parties. Hm. Who might these be? (5) tells us about informal disposition of a case, which we have before us here. That is, he chooses not to "contest" the findings. It is still a "contested case," but within that category of cases he will dispose of it informally. I wonder to what extent the enforcement actions are ever contested or whether the Division only has resources to go after the "slam dunk" cases?

Specifically (5)(a) provides that "unless precluded by law (when might that be?), informal disposition may be made of any contested case by stipulation, agreed settlement, consent order or default...then, (b) talks about the need to have things be in writing in the case of an "informal disposition by default." The third paragraph of Abrantes' case then states specifically which rights that Abrantes has given up by going through with the stipulation under (5)(a). You can read them.

Facts and Disposition of Abrantes' Case

So, the case then goes on to say what he has done and how that has violated the Code. We go to ORS 744 for this--Licenses and Administrators and especially the provisions of ORS 744.013 touching on disciplinary actions available to the director. The section talks about the director's authority (1) "with respect to an adjuster or insurance consultant or an applicant for an adjuster or insurance consultant license." We would want to make sure that an agent is an "insurance consultant," wouldn't we? But in (2) the grounds for disciplinary actions are listed. The ground in this case is (2)(b): "Falsification by the application or adjuster or insurance consultant....or engagement in any dishonest act in relation to the application...." You can read the whole list of grounds. It makes for nice reading...In this case Abrantes apparently "forgot" that he had been convicted of drunk driving, as well as a few other offenses, in CA more than a decade ago. Memory lapses increase with age, I have been told.

Then we move on to penalties and that is in ORS 731.988. The 900 series are usually the remedies sections under Oregon statutes. Civil penalties are described. 731.988 provides for fines up to $10,000 for violations, but apparently only $1,000 for an "insurance consulant." Why do you think that he was therefore fined $2,000? How does ORS 731.988(1) interact with 731.988(2)?

Conclusion

I did this primarily as an exercise in learning to see how statutes are used by the OID when they pursue an enforcement action. If you were in this line of work you would have to have a "feel" for the entire law, but seeing how it "works" in several instances gives you a sense of the thread that runs through the code, at least from the enforcement perspective.