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07/26/83 WISCONSIN PHYSICIANS SERVICE INSURANCE

July 26, 1983

WISCONSIN PHYSICIANS SERVICE INSURANCE CORPORATION, PETITIONER-APPELLANT,
v.
SUSAN MITCHELL, COMMISSIONER OF INSURANCE, RESPONDENT



Appeal from an order of the Circuit Court for Dane County: Robert R. Pekowsky, Judge.

Gartzke, P.j., Dykman, J. and W. L. Jackman, Reserve Judge.

The opinion of the court was delivered by: Dykman

Wisconsin Physicians Service Insurance Corporation (WPS) appeals the trial court's order affirming an order by the Commissioner of Insurance requiring WPS to pay interest on claims pursuant to sec. 636.10, Stats. *fn1

WPS contends that the Office of the Commissioner of Insurance's (OCI) hearing should have been conducted as a class 2, rather than a class 1 hearing, that the hearing examiner should not have been an employe of OCI, and that sec. 636.10, Stats., does not apply to it because it is a service insurance corporation. We affirm because we conclude that the classification of the hearing and the employe status of the hearing examiner were harmless error, if error at all, and that sec. 636.10 applies to WPS. *fn2

The facts are undisputed. In September 1980, OCI performed a limited market conduct examination to determine whether WPS was complying with sec. 636.10, Stats. On December 3, 1980, the examination report was given to WPS.

WPS demanded a hearing to review the report pursuant to sec. 601.44(6), Stats. The hearing was held before an examiner who was an employe of OCI. WPS presented both testimonial and documentary evidence at the hearing. The hearing examiner issued his proposed findings of fact, Conclusions of law and order on April 22, 1981. On May 18, 1981, the Commissioner adopted the proposed findings, Conclusions and order and the December 3, 1980, examination report. On May 28, 1981, the Commissioner ordered WPS to comply with the examination report's recommendations within three months. WPS petitioned the circuit court for review of the order on June 15, 1981. On July 20, 1982, the court issued an order affirming the Commissioner's orders and dismissing WPS's petition for review.

This court is not bound by an administrative agency's construction of a statute. Milwaukee v. ILHR Department, 106 Wis. 2d 254, 257, 316 N.W.2d 367, 369 (1982). The construction placed on a statute by the agency that must administer it, however, is entitled to great weight. Environmental Decade v. ILHR Dept., 104 Wis. 2d 640, 644, 312 N.W.2d 749, 751 (1981). The facts which prompt a court to accord weight to an administrative construction are longstanding and consistent interpretation, contemporaneous interpretation, comparative expertise of the agency and the courts with respect to the particular problem, and whether the statute has been reenacted while a rule is outstanding. American Motors Corp. v. ILHR Dept., 101 Wis. 2d 337, 357 n. 11, 305 N.W.2d 62, 71 (1981). Without going into extensive examination of each of these factors, we note that none of these factors exist in this case to prompt us to accord great weight to the Commissioner's construction of sec. 636.10, Stats. "Questions of law such as statutory construction are reviewable ab initio by this court and are properly subject to judicial substitution of judgment." Revenue Dept. v. Milwaukee Brewers, 111 Wis. 2d 571, 577, 331 N.W.2d 383, 386 (1983).

HEARING PROCEDURES

WPS contends that it was denied due process of law because the hearing to adopt the examination report was improperly held as a class 1, not a class 2, hearing under sec. 227.01(2), Stats. The hearing examiner in a class 2 proceeding cannot be an official of OCI under sec. 227.09(5).

The Commissioner's finding of fact number 10 states that WPS stipulated that the twelve complaint files referred to in the examination report did involve undue delay in claim payment. WPS has not disputed this finding on appeal. Therefore, the appeal centers on the applicability of sec. 636.10, Stats., to WPS, a service insurance corporation.

The applicability of a statute to a set of facts is a question of law which we review ab initio. Heileman Brewing Co. v. City of La Crosse, 105 Wis. 2d 152, 162, 312 N.W.2d 875, 880 (Ct. App. 1981). The hearing examiner's main function was to determine whether sec. 636.10, Stats., applied to WPS. Because we review that determination independently, WPS was not harmed by possible bias in the examiner's interpretation.

CONSTRUCTION OF SECTION 636.10, STATS.

WPS contends that the requirement to pay claims within thirty days contained in sec. 636.10, Stats., does not apply to it as a service insurance corporation. It recognizes that sec. 636.10, which provides, "nless otherwise provided by law, an insurer shall promptly pay every insurance claim" applies to all insurance companies, including service insurance corporations. It argues, however, that sec. 636.10 contains an additional requirement to pay claims within thirty days which applies only to indemnity-type insurance companies, not service insurance corporations such as itself. It concludes that if OCI wanted to apply the thirty-day requirement to service insurance corporations, it had to utilize the administrative rule-making procedures contained in ch. 227, Stats. *fn3

WPS points to the "covered loss," "amount of the loss" and "proof of loss" language used throughout sec. 636.10, Stats., to support its claim. The phrases "covered loss," "amount of the loss" and "proof of loss" are usually identified with indemnity-type insurance companies, not service insurance corporations because service insurance corporations do not receive any notice or proof of loss from insureds, but rather pay the health care providers directly for services rendered to insureds. WPS contends that the legislature, by using this ...


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