ORDERS:
ORDER GRANTING INJUNCTION
This matter is before the Administrative Law Judge Division pursuant to the Motion for Temporary Injunction filed on
October 8, 2001, by Liberty Life Insurance Company ("Liberty Life"). Liberty Life seeks injunctive relief with respect to a
final report issued by the South Carolina Department of Insurance ("Department") in connection with an examination as to
the market conduct affairs of Liberty Life. The motion seeks to require the Department to provide Liberty Life with a copy
of the final report and to require the Department to abide by the provisions of S.C. Code Ann. § 38-13-30(E)(1) (Supp.
2000). The undersigned judge held a hearing on October 9, 2001, at which counsel for both parties presented argument.
Following the hearing, the undersigned judge granted Liberty Life's motion for an injunction.
In accordance with the procedure set forth in S.C. Code Ann. § 38-13-30(B) (Supp. 2000), the Department served the initial
examination report on Liberty Life on May 14, 2001, and Liberty Life served its responses to the initial examination report
on the Department on June 13, 2001. In a letter dated October 2, 2001, served upon Liberty Life by certified mail, the
Department indicated it had received and reviewed Liberty Life's responses to the initial examination report (referred to as
"Report of Target Multi-State Examination" or "Report"). In the letter, the Department responded to each of Liberty Life's
responses and indicated the "Report" would be released as a public document after October 10, 2001.
According to § 38-13-30(C), when the thirty-day period allowed for the receipt of written submissions or rebuttals has
expired, the Director or his designee must review the initial examination report, any written submissions or rebuttals, and
any relevant portions of the examiner's work papers and then must enter an order: (1) adopting the initial examination
report as filed or with modifications or corrections; (2) rejecting the initial examination report with directions to the
examiners to reopen the examination; or (3) calling for an investigatory hearing. Based on the letter dated October 2, 2001,
it appears the Department intended to adopt the initial examination report as filed pursuant to § 38-13-30(C)(1).
The Department, however, failed to comply with the requirements of § 38-13-30(C)(1) and (D)(1). If the Department
decides to adopt the initial examination report as filed, the Department must issue an order clearly indicating that intent.
The Department's order must be accompanied by findings and conclusions and "must be served upon the insurer by
certified mail, with a copy of the adopted examination report." S.C. Code Ann. § 38-13-30(D)(1) (Supp. 2000) (emphasis
added). The Department did not issue an order as required by the statute. The Department merely sent a letter to Liberty
Life on October 2, 2001, which was so vague that a reasonable person could not know for certain that the Department
intended to adopt the initial examination report as filed. In addition, the Department failed to serve Liberty Life with a
copy of its final report, notwithstanding that the final report actually may be a copy of the initial examination report.
S.C. Code Ann. § 38-13-30(E)(1) (Supp. 2000), provides:
Upon completion of the examination report under subsection (C)(1), the director or his designee shall hold the content of
the examination report as private and confidential information for the thirty-day period provided for written submissions or
rebuttals. Thirty days after the examination report has been submitted to it if the insurer examined has neither notified the
director or his designee of its acceptance and approval of the report nor requested to be heard on it, the report must be filed
as a public document and is open to public inspection, as long as no court of competent jurisdiction has stayed its
publication. (1)
Based upon this provision, Liberty Life is entitled to be served with a copy of the final report before the final report is
released as a public document. Pursuant to § 38-13-30(E)(1), the Department may not make the final report a public
document until Liberty Life notifies the Department that it accepts and approves the final report, Liberty Life requests and
receives a hearing and final order, or Liberty Life does neither, in which case the final report would become a public
document thirty days after it was submitted to Liberty Life.
IT IS HEREBY ORDERED that the Department shall issue an order pursuant to S.C. Code Ann. § 38-13-30(C)(1) and
(D)(1) and shall provide Liberty Life with a copy of the final report as required by S.C. Code Ann. § 38-13-30(D)(1).
IT IS FURTHER ORDERED that the Department shall maintain the confidentiality of the final report in accordance with
S.C. Code Ann. § 38-13-30(E)(1) (Supp. 2000) as provided in this order.
AND IT IS SO ORDERED.
__________________________________
MARVIN F. KITTRELL
Chief Administrative Law Judge
October 17, 2001
Columbia, South Carolina
1. The phrase "for the thirty-day period provided for written submissions or rebuttals" is inconsistent with the rest of § 38-13-30. In
interpreting a statute, the language of the statute must be read in harmony with its subject matter and in accord with its general
purpose. Any ambiguity in a statute must be resolved in favor of a just, equitable, and beneficial operation of the law. Crescent Mfg.
Co. v. Tax Comm'n, 129 S.C. 480, 124 S.E. 761 (1924). Reading the statute as a whole, it is clear the legislature intended for the
Department's examination report to remain confidential pending the insurer's action or inaction regarding the report. Based on § 38-13-30(E)(1), after an order is issued pursuant to subsection (C)(1), the report presumably will remain confidential: (1) until the
insurer accepts and approves the report; (2) until the insurer requests and receives a hearing and final order; or (3) for thirty days after
the date the order is issued if the insurer fails to notify the Department of its acceptance of the report or request for a hearing.
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