Transcript State Separation of Powers Wooley v. State Farm Fire and Cas. Ins.

State Separation of Powers
Wooley v. State Farm Fire and Cas.
Ins. Co.,
893 So.2d 746 (La. 2005)
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Background Information
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State Regulation of Insurance
McCarron-Ferguson Act - 1945
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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?
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Wooley
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Office of Insurance Commissioner
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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
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ALJs in LA
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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?
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Key Provisions of the DAL - 1995
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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)
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The Big Picture
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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
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Key Questions
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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?
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** 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?
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Realities of Government
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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
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What are the Two Questions Before the
Court?
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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?
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Article V Courts in LA
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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 constitutionallyauthorized 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.
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Original Jurisdiction
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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?
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How are Agencies Hybrids?
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(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?
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The Holding on Whether ALJs are Judges
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"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 quasijudicial, 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)."
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What does the Court see as defining
Judicial Power?
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[92]...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."
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What is the Effect of an ALJ Ruling if it
cannot be Enforced?
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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?
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You Are Counsel for State Farm
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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?
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Does the Res Judicata Statute, La. R.S.
13:4231, Apply to the Agency?
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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?
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Legislative Power over the Insurance
Commission
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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?
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Does The Commissioner Have Another
Way to Get Into Court?
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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
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Remand: Wooley v. State Farm, 928 So.2d 618,
2005-1490 (La.App. 1 Cir. 06)
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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.
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Changing this Ruling
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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.
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Where does the Remand Leave the Issue
of the What Happens after the ALJ Rules?
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Bonvillian v. Dep't of Insurance, 906 So.2d
596 (La.App. Cir.1 2005)
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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
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The District Court
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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?
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Mandamus
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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?
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When May Mandamus be used Against the
Insurance Commission?
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"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?
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The Effect of Wooley
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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.
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What did the Court Rule?
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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.
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Bonvillian v. Dep't of Insurance, 25 So.3d
233 (La.App. Cir.1 2008)
Round II
Procedure in this Case
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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?
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The Commissioner's Points of Error on
Appeal
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1. The district court erred by ordering the reinstatement of
Bonvillian's license 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.
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What Changed After Wooley I?
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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)
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What does the Court say is the Effect of
this Language?
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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?
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The Court's Order
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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.
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What did the Supreme Court in Wooley I
hold about ALJ orders?
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"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?
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