SC Administrative Law Court Decisions

The South Carolina Department of Insurance (DOI) filed a transmittal letter of October 28, 1997 notifying the Administrative Law Judge Division (ALJD) that a hearing was required in this matter. The need for the hearing arose due to the Director of Insurance revoking the license of the Allen Watson Agency, Inc. (Watson). Watson opposed the Director's decision and timely notified DOI that Watson desired a review by the ALJD of the Director's decision. Watson asserts the Director's decision is incorrect and thus no revocation is warranted. After a through review of the record and the applicable law, this case must be dismissed for lack of jurisdiction.

A. Background Administrative Law in DOI Licensing Disputes

Every agency that transacts the business of an insurance agent must be licensed. S.C. Code Ann. § 38-43-30 (Supp. 1997). Further, all statutes addressing agents are deemed to be applicable to agencies as well. Id. Accordingly, the Director's authority to revoke an agent's license allows revoking an agency license as well.

The license of an agency may be revoked by the Director or his designee when the agency has violated any provision of the insurance laws found in Title 38. S.C. Code Ann. § 38-43-130 (Supp. 1997). Prior to the Director ordering a revocation, however, the agency whose license is being revoked is entitled to a ten day notice and, given the demands of due process, is presumably allowed to present reasons explaining why the revocation should not occur. S.C. Code Ann. § 38-43-130 (Supp. 1997). The insurance agency whose license is the subject of the revocation is entitled to an evidentiary hearing. See 1976-77 Op. Atty. Gen., No. 77-150, p. 126 (evidentiary hearing appropriate to address the revocation of an agent's license); Regs. 69-31.

When a party is entitled to a hearing resulting from an agency's power seeking to revoke a license, a contested case arises. S.C. Code Ann. § 1-23-310(2) (Supp. 1997). Here, DOI is unquestionably an agency. See S.C. Code Ann. §1-30-55 (Supp. 1997). Further, an equally as clear, DOI is authorized to revoke the insurance license. See §38-43-130 (Supp. 1997). Thus, a contested case arises in this dispute.

B. Placing Contested Case Jurisdiction With DOI In Licensing Disputes

The issue becomes identifying the agency with jurisdiction to conduct the contested case. For the case here in dispute, a review of the statutes granting hearing authority to DOI and the ALJD shows DOI holds contested case jurisdiction while the ALJD holds appellate case jurisdiction.

1. General Contested Case Jurisdiction in both DOI and ALJD

In 1993, general jurisdiction over contested cases was placed in the ALJD by § 1-23-600(B)'s language that "[a]n Administrative Law Judge of the division shall preside over all hearings of contested cases ..." (emphasis added) except specifically listed types of contested cases "unless otherwise by law specifically assigned to the jurisdiction of the Administrative Law Judge Division." In the same 1993 enactment, however, the General Assembly, by amendment to existing laws, granted statutory authority to DOI to hold contested case hearings. Under § 38-3-150, as amended effective July 1, 1995, the General Assembly directed that "[a]ll hearings must be held by the director or by one of his duly authorized assistants or agents when authorized to do so in writing by the director." (emphasis added). Were there no other statutory language, a possible result could be reached that the ALJ was intended to act as the authorized agent of the DOI director. However, other language precludes such a position since statutory language placed appellate jurisdiction, but not contested case jurisdiction, in the ALJD.

2. Legislative History Confirms Appellate Jurisdiction in ALJD

Prior to the 1993 enactment, § 38-43-130 allowed an appeal from a DOI decision to the circuit court with the circuit court obviously hearing the case in its appellate capacity. The 1993 enactment removed "circuit court" and replaced it with the Administrative Law Judge Division. The intent of replacing circuit court with ALJ was to grant appellate jurisdiction in the ALJD. Finally, in the same enactment, the General Assembly chose to amend S.C. Code Ann. § 38-3-150 by removing "Commissioner" and inserting the words "director," as opposed to an ALJ, as the party required to hold hearings. These amendments all demonstrate the ALJD lacks contested case jurisdiction but holds appellate jurisdiction.

3. Consistent Legislative Use of Terms Places Appellate Jurisdiction in ALJD

Finally, the language of S.C. Code Ann. § 38-3-210 (Supp. 1997) confirms such a conclusion. Section 38-3-210 provides that upon the issuance of an order or decision of the director, an "appeal" is made to the ALJD. The language provides that an appeal of the director's decision "must be heard in the Administrative Law Judge Division, as provided by law." In the 1993 enactment, the word "appeal" (when used to direct that a hearing must be held by an ALJ) is found only in the appellate jurisdiction of the ALJD. See § 1-23-600(D) (contested cases heard by the Department of Labor, Licensing, and Regulation are presented to the ALJD under the appellate jurisdiction of the ALJ as an "appeal" from the various boards); Smalls v. Weed, 293 S.C. 364, 360 S.E.2d 531 (Ct. App. 1987) (where the same word is used more than once in an enactment, it is presumed to have the same meaning throughout unless a different meaning is necessary to avoid an absurd result.) Thus, a reference to an appeal of the director's decision gives a hearing by the ALJD only under its appellate jurisdiction.

C. Need For Dismissal

No order of the director or his designee is effective unless made in writing and signed by the director or his designee. S.C. Code Ann. § 38-3-200 (Supp. 1997). In this case, while it is clear that DOI seeks the revocation of Watson's agency license, the statutorily required written and signed order of the director or his designee is not present. Further, the matter heard by the ALJD was heard as a contested case when no jurisdiction exists for a contested case hearing in this dispute. Accordingly, both circumstances separately and collectively deprive the ALJD of subject matter jurisdiction with the lack of jurisdiction properly raised at this stage of the proceeding. See Johnson v. State, 319 S.C. 62, 459 S.E.2d 840 (1995) (issues relating to subject matter jurisdiction may be raised at any time, cannot be waived even by consent, and should be taken notice of by the court on its own motion.).

Jurisdiction over an agency's license revocation contested case hearing is in DOI and not in the ALJD. §§ 38-3-150, 38-43-130 and 38-3-210. After DOI holds a hearing and issues a final order, Watson, if he is aggrieved, may seek an appeal to the ALJD under the appellate jurisdiction of the ALJD. §§ 38-3-150, 38-43-130 and 38-3-210. Due to the lack of subject matter jurisdiction, I do not reach any other matters raised by the Petition. Addressing such issues would be premature for an appellate review until DOI holds a contested case hearing and enters a written order signed by the director or his designee. Accordingly, this matter is dismissed.

AND IT IS SO ORDERED.

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RAY N. STEVENS

Administrative Law Judge

This 17th day of March, 1998

Columbia, South Carolina