TWO CHALLENGES TO FILED RATES FROM THE FRD CASE LAW.

The filed rate doctrine is coming in insurance law.  Indeed in some places it is already here.

          Since the filed rate doctrine originated with rates charged by utilities and regulated by federal or state government agencies, a good start in learning how to challenge the filed rate doctrine in insurance cases comes from studying FRD case law.  In Public Citizen, Inc. v. Fed. Energy Reg. Comm'n, 7 F.4th 1177, 1198 (D.C. Cir. August 6, 2021),  the federal statute authorizing FERC provides for a way to challenge the filed rates that FERC approves: 

    As the Commission agrees, Section 206 allows a complainant to allege that market manipulation led to unjust and unreasonable rates. See Rehearing Order ¶ 14 (J.A. 131–132); Oral Arg. Tr. 35:2–5 (Oral Arg. Rec. 45:38–45:52). Yet the Commission's orders wholly failed to adequately address Public Citizen's allegation that Dynegy's market manipulation produced unjust and unreasonable results in the 2015 Auction.

(Emphasis added.)  Because the Commission did not adequately explain its conclusion about "just and reasonable" rates based on the evidence presented, the Circuit Court of Appeals remanded "to the Commission for further analysis and explanation."  Public Citizen, 7 F.4th at 1200.

          In a similar way, if the regulatory body charged with determining just and reasonable insurance rates, for example, fails to adequately explain its conclusion that the filed insurance rates at issue in the given case were just and reasonable, one way to attack the filed insurance rates is to attack the way in which the rates were approved by the regulator.

          Further, where customer charges were made "additionally imprecise" because of the defendant utility's billing practices, even though the rates were set by private contracts they could be successfully challenged particularly where the billing practices were set by the utility without disclosing "what it was doing either to its customers or to the Commission."  Hanson v. Kansas Corp. Comm'n, 490 P.3d 1216, 1227 (Kan. 2021).

          Similarly, where charges are included in the premium paid by the consumer or by the policyholder, or by the homeowner in the case of force-placed insurance, by a parity of reasoning even filed insurance rates approved by the appropriate regulator should be subject to challenge where the rates are set by private contracts following formulas that are not disclosed either to the customers or to the regulator.

          There are challenges to filed rates approved by regulatory agencies extant in the FRD case law.  Insurance counsel should consult them whenever faced with filed insurance rates approved by the appropriate regulatory agency.

Please read the disclaimer.  ©2021 Dennis J. Wall.  All rights reserved.