On appeal from the final decision of the Commissioner of Insurance and from final judgment of the Superior Court, Law Division, Mercer County.
Bischoff, King and Polow. The opinion of the court was delivered by Polow, J.A.D.
In July 1979 the Department of Insurance charged Progressive Life Insurance Company (PLICO) with engaging in unfair claims settlement practices, unfair competition and other deceptive practices. Extensive hearings were conducted by an administrative law judge (ALJ) who concluded that PLICO had engaged in unfair practices in violation of the Unfair Claim Settlement Practices Act, N.J.S.A. 17B:30-2. In her initial decision Administrative Law Judge Dower-LaBastille made specific, detailed factual findings on each of 114 charges against PLICO. She also found that "a terrible injustice" had been done to 17 individual claimants, not represented by counsel, who were entitled to receive insurance benefits aggregating in excess of $17,000 which had been unjustifiably denied. Although she recommended that a cease and desist order be issued as to each of the improper practices specifically set forth in her opinion, she also determined that the Commissioner of Insurance lacks jurisdiction to order "restitution" (i.e. , payment of insurance benefit claims).
The Commissioner in his final decision accepted and adopted the findings and conclusions of Judge Dower-LaBastille except for her determination that he lacked jurisdiction to order payment
of claims to individual claimants by way of "restitution." Hence, he modified the initial decision to include "restitution" of the disputed benefits to the 17 individual claimants in the amounts set forth, together with 8% interest, payable within 30 days from the date of his order.
PLICO did not make the "restitution" payments but instead filed its notice of appeal to the Appellate Division from the final agency determination. Shortly thereafter the Commissioner instituted suit in the Law Division for imposition of statutory penalties against the insurer for its failure to comply and enjoining further noncompliance with the "restitution" order. The Law Division judge refused to consider the merits of the agency determination then on appeal. He nonetheless ordered PLICO to comply with the "restitution" order pursuant to R. 2:9-1(a), refused to stay enforcement of the order pending appeal and imposed a $5,000 penalty for previous noncompliance. PLICO paid the $5,000 penalty to avoid contempt proceedings, posted a cash bond to guarantee such payments to claimants as it might ultimately be required to make and obtained a stay of the final agency and Law Division rulings pending appeal. Its appeal from the Law Division judgment has been consolidated with that from the agency determination.
PLICO attacks the final agency decision and the judgment, asserting that the administrative law judge should have disqualified herself; that the agency acted arbitrarily, unreasonably and in violation of due process; that there cannot have been 114 separate violations of the Unfair Claims Settlement Practices Act and that the Commissioner lacks power to order payment of insurance benefits to individual claimants.
PLICO insists that Judge Dower-LaBastille should have disqualified herself because she previously had been associated with the Commissioner of Insurance in private law practice and as a hearing officer appointed by him to the Department of Insurance. We cannot agree that her rejection of PLICO's demand for her recusal from the administrative law hearing was "highly improper" as it is characterized by appellant.
Judge Dower-LaBastille is not disqualified under the express terms of the applicable statute, N.J.S.A. 2A:15-49, by R. 1:12-1 or by the Code of Judicial Conduct, Canon 3. She developed expertise as a hearing officer in the Department of Insurance prior to the establishment of the Office of Administrative Law within the Executive Branch of State Government. N.J.S.A. 52:14F-1. Appellant suggests no specific evidence of bias, prejudice or impropriety on her part. Although the criteria applicable to members of the judiciary may differ in some respects from those which apply to administrative adjudicators, see 3 Davis, Administrative Law Treatise (2 ed. 1980), § 19:1 et seq. , we conclude that similar standards are generally applicable. Judge Dower-LaBastille had no interest in the outcome other than her responsibility to act in her official capacity according to law. Her primary concern was, as it should be, not that the Commissioner of Insurance be the "successful" litigant, but rather that he arrive at the proper factual and legal conclusions. He, after all, must make the ultimate findings of fact and conclusions of law in his "final decision" by accepting or rejecting any or all of the recommendations in the ALJ's "initial decision."
Upon establishment of the administrative law courts it was inevitable that many hearing officers previously employed by their respective agencies would be transferred to the new Office of Administrative Law, and many of them were. It would be unfortunate, indeed, if they could not now be assigned to hear cases referred from the agencies with which they had been previously associated. The expertise they have developed over the years is a valuable asset. Without some other reason therefore, there is no inference of bias based solely upon such prior association with the agency or department head who, under our statutory scheme, continues to have authority "to adopt, reject or modify the findings of fact and conclusions of law of any administrative law judge." N.J.S.A. 52:14F-7; N.J.S.A. 52:14B-10.
We neither expect nor desire the "total absence of preconceptions." See In re J.P. Linahan, Inc. , 138 F.2d 650, 651-52 (2 Cir. 1943). There is no suggestion here that the judge manifested any prejudgment of the adjudicative facts or any bias during the conduct of the hearing. Nor has appellant challenged any of her 257 findings of fact as being dictated by prejudice. Several counts of the order to show cause were dismissed and she rejected one of the Department's major demands as not within the Commissioner's jurisdiction. The Commissioner, in turn, rejected Judge Dower-LaBastille's legal conclusion in this regard, asserting that he has the jurisdiction to order payment of policy benefits.
In essence, we believe that creation of the Office of Administrative Law has in fact freed the former hearing officers from possible domination by the department head to whom the proposed findings of fact and conclusions of law are directed. Whether any such influence may still exist, consciously or subliminally, is a question which is appropriately left to the conscientious judgment of the individual judge. See R. 1:12-1(f). We discern no basis for the conclusion that such influence existed here.
Defendant next argues that in failing to promulgate administrative rules and regulations governing the conduct of insurance companies, the Department could not determine, consistent with due process, whether PLICO's business practices were unacceptable. It maintains that there were no standards established for investigation of insurance company practices nor any guidelines adopted with which insurance firms must comply. Although PLICO concedes that an applicable statute exists, it urges that the "vague language" therein vests investigative officials with unbridled discretion to determine whether a company's practices are acceptable. PLICO fears that the absence of established regulations will cause the practices of similarly situated insurance firms to be treated differently.
The Commissioner asserts that the pertinent standards enumerated in N.J.S.A. 17B:30-1 et seq. sufficiently regulate practices in the insurance industry and adequately alert companies of that which is prohibited conduct. He urges that "there is no rigid legal or constitutional requirement that legislative standards must be ...