PRIOR PRINTER'S NOS. 651, 926, 2021 PRINTER'S NO. 2223
No. 589 Session of 1989
INTRODUCED BY CARN, WESTON, JOSEPHS, THOMAS, JAMES, ROEBUCK, ACOSTA, COHEN, PRESTON, SALOOM, FOX, OLIVER, TIGUE, CAWLEY, HARPER, DALEY, ROBINSON, BELARDI, RICHARDSON, EVANS, WILLIAMS AND J. TAYLOR, FEBRUARY 15, 1989
AS AMENDED ON THIRD CONSIDERATION, HOUSE OF REPRESENTATIVES, JUNE 27, 1989
AN ACT 1 To provide an optional automobile insurance plan to cover, at an 2 affordable rate, all responsible drivers in cities of the <-- 3 first class; and creating the Philadelphia IN PENNSYLVANIA; <-- 4 AND CREATING THE PENNSYLVANIA FAIR Automobile Insurance 5 Authority and defining its powers and duties. 6 TABLE OF CONTENTS 7 Section 1. Short title. 8 Section 2. Definitions. 9 Section 3. Authority created. 10 Section 4. Rights, powers and purposes. 11 Section 5. Operating budgets. 12 Section 6. Governing board. 13 Section 7. Sovereign immunity. <-- 14 Section 8 7. Moneys of authority. <-- 15 Section 9 8. Additional Commonwealth pledge. <-- 16 Section 10 9. Exemption from taxation. <-- 17 Section 11. Appropriation. <-- 18 Section 12 10. Effective date. <--
1 The General Assembly of the Commonwealth of Pennsylvania 2 hereby enacts as follows: 3 Section 1. Short title. 4 This act shall be known and may be cited as the Philadelphia <-- 5 PENNSYLVANIA FAIR Automobile Insurance Authority Act. <-- 6 Section 2. Definitions. 7 The following words and phrases when used in this act shall 8 have the meanings given to them in this section unless the 9 context clearly indicates otherwise: 10 "Authority" or "Philadelphia "PENNSYLVANIA FAIR Automobile <-- 11 Insurance Authority." An agency and public instrumentality of 12 this Commonwealth and a body politic and corporate created 13 pursuant to this act. 14 "Board." The governing body of an authority. 15 "City." Any city or county of the first class. <-- 16 "Commissioner." The Insurance Commissioner of the 17 Commonwealth. 18 "Federal agency" or "Federal Government." The United States, 19 the President of the United States and any department or 20 corporation, agency or instrumentality heretofore or hereafter 21 created, designated or established by the United States. 22 "Plan." The detailed proposals and recommendations issued by 23 the authority which would provide adequate and fair coverage to 24 all responsible drivers within cities of the first class <-- 25 PENNSYLVANIA and which address the issues of fraud, high rates <-- 26 and other insurance problems that plague large cities. <-- 27 "Secretary." The Secretary of the Budget of the 28 Commonwealth. 29 "State public body." The Commonwealth and its agencies 30 (executive, administrative and independent), departments, 19890H0589B2223 - 2 -
1 officers, boards, authorities, commissions and 2 instrumentalities. 3 Section 3. Authority created. 4 A body corporate and politic, to be known as the Philadelphia <-- 5 PENNSYLVANIA FAIR Automobile Insurance Authority, is hereby <-- 6 created as a public authority and government instrumentality to 7 have continuing succession until its existence is terminated by 8 law. The exercise by the authority of the powers conferred by 9 this act is hereby declared to be and shall for all purposes be 10 deemed and held to be the performance of an essential public 11 function. The Philadelphia PENNSYLVANIA FAIR Automobile <-- 12 Insurance Authority is exempt from participation in the 13 Pennsylvania Insurance Guaranty Association provided by the act 14 of November 25, 1970 (P.L.716, No.232) known as The Pennsylvania 15 Insurance Guaranty Association Act. 16 Section 4. Rights, powers and purposes. 17 (a) General powers and purposes.--Every authority created by 18 this act shall be a public body, corporate and politic, 19 exercising public powers of the Commonwealth as an agency and 20 instrumentality thereof and shall be for the purpose, without 21 limitation, by itself or by agreement in cooperation with 22 others, of acquiring, providing, holding, managing, operating, 23 financing, insuring or guaranteeing assets for the purposes of 24 providing automobile insurance other motor vehicle insurance and 25 establishing automobile and other motor vehicle insurance rates 26 that are fair to most drivers in cities of the first class <-- 27 DRIVERS IN PENNSYLVANIA. <-- 28 (b) Specific powers and purposes.--The authority is granted 29 all powers necessary or convenient for the carrying out of the 30 aforesaid purposes, including, without limiting the generality 19890H0589B2223 - 3 -
1 of the foregoing, the following rights, powers and purposes: 2 (1) To implement a health care cost containment program 3 with set fees for services and a peer review process. 4 (2) To require the use of anti-theft and anti-vandalism 5 techniques and devices and provide for discounts with their 6 use. 7 (3) To exempt participants in the authority's insurance 8 plan from established minimum required auto coverages to the 9 following minimum requirements: 10 (i) Bodily injury liability of $15,000 per person. 11 (ii) Bodily injury liability of $30,000 per 12 accident. 13 (iii) Property damage liability of $5,000. 14 (4) To provide collision and comprehensive coverages 15 with a $500 deductible or more. 16 (5) To require medical bills to exceed $10,000 or 17 injuries resulting in permanent disability or disfigurement 18 before a suit can be filed in court. 19 (6) To implement fraud control programs and other 20 activities. 21 (7) To have continuing succession. 22 (8) To sue and be sued, implead and be impleaded, 23 complain and defend in all courts. 24 (9) To adopt, use and alter, at will, a corporate seal. 25 (10) To acquire by gift or otherwise, purchase, hold, 26 receive, lease, sublease and use any license, franchise or 27 property, real, personal or mixed, tangible or intangible, or 28 any interest therein. 29 (11) To sell, transfer or dispose of any property or 30 interest therein with adequate and fair consideration. 19890H0589B2223 - 4 -
1 (12) To make bylaws for the management and regulation of 2 its affairs and issue rules, regulations and policies in 3 connection with the performance of its functions and duties. 4 (13) To appoint officers, agents, employees and 5 servants, to prescribe their duties and to fix their 6 compensation. 7 (14) To fix, alter, charge and collect insurance 8 premiums, payments, fees and other charges. 9 (15) To borrow money for the purpose of paying the costs 10 of any plan and to evidence the same. 11 (16) To make, enter into and award contracts of every 12 name and nature and to execute all instruments necessary or 13 convenient for the carrying out of its business. 14 (17) To borrow money and accept grants and to enter into 15 contracts, leases, subleases, licenses or other transactions 16 with any Federal agency, State public body, political 17 subdivision, person, association, partnership or corporation. 18 (18) To pledge, hypothecate or otherwise encumber any of 19 its property, real, personal or mixed, tangible or 20 intangible, and its revenues or receipts. 21 (19) To invest its money. 22 (20) To cooperate with any Federal agency, State public 23 body or political subdivision. 24 (21) To invest any funds held in reserve or sinking 25 funds, or any funds not required for immediate disbursements, 26 as authorized by section 13(d). 27 (22) To appoint all officers, agents and employees 28 required for the performance of its duties and fix and 29 determine their qualifications, duties and compensation and 30 retain or employ other agents or consultants, including, but 19890H0589B2223 - 5 -
1 not limited to, auditors, private counsel and private
2 consultants on a contract basis or otherwise for rendering
3 professional or technical services and advice.
4 (23) To enroll its employees in an existing retirement
5 system of the State, city or other governmental entity.
6 (24) To appoint and fix the compensation of chief
7 counsel and such assistant counsel to provide it with legal
8 assistance, for which purpose the authority shall not be
9 considered either an executive agency or an independent
10 agency for the purpose of the act of October 15, 1980
11 (P.L.950, No.164), known as the Commonwealth Attorneys Act,
12 but shall possess the same status for such purpose as the
13 Auditor General, State Treasurer and the Pennsylvania Public
14 Utility Commission, except that the provisions of section
15 204(b) and (f) of the Commonwealth Attorneys Act shall not
16 apply to the authority, and, notwithstanding the provisions
17 of 42 Pa.C.S. § 8525 (relating to legal assistance), the
18 authority through its counsel shall defend actions brought
19 against the authority and its officers and employees when
20 acting within the scope of their official duties.
21 (25) To maintain an office in the city OFFICES. <--
22 (26) To appoint an executive director, who shall be the
23 chief executive officer of the authority, who shall devote
24 his full time during business hours to the duties of his
25 office and who shall receive compensation as the board shall
26 determine.
27 (27) To do all acts and things necessary or convenient
28 for the promotion of its purposes and the general welfare of
29 the authority and to carry out the powers granted to it by
30 this act or any other acts.
19890H0589B2223 - 6 -
1 (c) Limitation.--The authority shall have no power to pledge 2 the credit or taxing powers of any State public body, any 3 political subdivision or the city, nor shall any of its 4 obligations be deemed obligations of any State public body, any 5 political subdivision or the city, nor shall any State public 6 body, any political subdivision or the city, be liable for the 7 payment of principal or interest on such obligations. 8 (d) Affirmative action.--The authority shall develop and 9 implement an affirmative action plan to assure that all persons 10 are accorded equality of opportunity in treatment, employment 11 and contracting by the authority, its contractors, 12 subcontractors, assignees, lessees and agents. 13 Section 5. Operating budgets. 14 (a) Operating budget.--At least 90 days before the 15 commencing of the ensuing fiscal year of the authority, the 16 board shall cause to be prepared and submitted to it a 17 recommended operating budget. The operating budget shall set 18 forth the estimated receipts and revenues of the authority 19 during the next fiscal year. The board shall, at least 30 days 20 before the end of the fiscal year, adopt, by a majority vote of 21 its members, an operating budget for the next fiscal year. 22 (b) Insurance plan.--Notwithstanding any other provisions of 23 this law to the contrary, the design for any plan undertaken by 24 the authority shall be submitted to the commissioner for 25 approval. No such plan may be undertaken by the authority unless 26 and until approved by the commissioner. Upon approval, the 27 commissioner may issue a certificate of authority to do 28 business. 29 Section 6. Governing board. 30 (a) Power.--The power of the authority shall be exercised by 19890H0589B2223 - 7 -
1 a governing board (hereinafter called the "board") composed of
2 seven FIVE members. <--
3 (1) The Governor shall appoint two members who shall be
4 residents of counties of the first class. The members
5 initially appointed pursuant to this paragraph shall serve
6 two years. If any vacancy is created by any of the members
7 provided by this subsection, appointments shall be made by
8 the governor.
9 (2) The Governor shall appoint two members who shall
10 represent the Commonwealth at large, who shall not be members
11 of the same political party. The members initially appointed
12 pursuant to this paragraph shall serve for terms coincident
13 with the term of the Governor. The Governor shall appoint the
14 two members from each of two lists of at least four nominees,
15 each prepared and submitted to the Governor respectively by
16 the floor leaders of the Senate and the House of
17 Representatives who belong to the same political party. Each
18 floor leader may contribute at least two names to the
19 appropriate list and shall submit such nominees to the
20 Governor. The Governor shall select a member from each list
21 within 30 days of receipt of each list, or else may request
22 one substitute list of nominees from both or either group of
23 floor leaders. If both or either group of floor leaders fail
24 to submit a list of nominees within 30 days of a request to
25 do so by the Governor or fail to submit a receipt of a
26 request to do so, the Governor may appoint such member or
27 members, for which lists of nominees were not submitted, at
28 his discretion. In the event one of the two floor leaders
29 responsible for the submission of nominees for a list fails
30 to submit such nominees, the Governor shall act upon the
19890H0589B2223 - 8 -
1 nominees submitted by the other floor leader as if he had 2 received nominees from both floor leaders. If the Governor 3 fails to select a member from either list of nominees within 4 30 days of receipt of such list and fails to request a 5 substitute list, or fails to select a member from the 6 substitute list within 30 days of receipt of such list, the 7 floor leaders who prepared the list may appoint a member to 8 serve on the board. Whenever a vacancy occurs prior to the 9 completion of the term of office of a member appointed 10 pursuant to this subsection, the floor leaders belonging to 11 the same political party as the board member whose seat has 12 become vacant did at the time of appointment of such member 13 shall submit a list of nominees to replace such member to the 14 Governor. In the event of a vacancy in the office of an 15 initial gubernatorial appointee, a replacement member shall 16 be appointed pursuant to the procedures set forth in this 17 subsection. 18 (3) The chief executive officer of the city of the first <-- 19 class shall appoint two members. The terms of office of such 20 members shall run concurrently with the term of office of 21 such appointing authority. 22 (4) (3) The initial appointment of board members shall 23 have no force and effect unless and until the six FOUR <-- 24 members provided by paragraphs (1), (2) and (3) AND (2) have <-- 25 been appointed, which event shall constitute the formation of 26 the board. 27 (5) The six (4) THE FOUR members so appointed shall <-- 28 appoint a seventh FIFTH member, who shall serve as chairman <-- 29 of the board, by a vote of at least four THREE members of the <-- 30 board. The initial term of the chairman shall be for a term 19890H0589B2223 - 9 -
1 of four years. In the event that the members cannot agree on 2 the initial seventh FIFTH member within 90 days of the <-- 3 creation of the authority, or the members cannot agree upon 4 the selection of a chairman in the event the office of 5 chairman becomes vacant within 90 days of the occurrence of 6 such vacancy, the Governor shall appoint the member. The 7 chairman may be removed and a new chairman may be selected by 8 the vote of five THREE members of the board. <-- 9 (6) (5) If, at any time, the commissioner is not an <-- 10 appointed member of the board, he shall serve as a nonvoting 11 ex officio member of the board. 12 (b) Terms and vacancies.--Except as otherwise provided, 13 initial board members shall serve until their successors have 14 been appointed and qualified. Thereafter, except as otherwise 15 provided, members shall serve a term from the date of their 16 appointment and until their successors have been appointed and 17 qualified. If a vacancy shall occur by means of the death, 18 disqualification, resignation or removal of a member or the 19 chairman, subject to the provisions of subsection (a), the 20 appointing authority shall appoint a successor to fill his 21 unexpired term. 22 (c) Compensation.--Subject to such aggregate per annum 23 limitation and any other rules and regulations as the board 24 shall determine, a member shall receive $125 per diem when 25 engaged in the exercise of his duties for the authority and 26 shall also be entitled to necessary expenses, including 27 traveling expenses, incurred in the discharge of his duties. In 28 addition, the chairman of the board of the authority shall be 29 entitled to receive such additional compensation as the board 30 shall determine. No other member of the board shall be entitled 19890H0589B2223 - 10 -
1 to any additional compensation for extra service provided to the 2 authority. The per diem amount may be increased by a vote of 3 five THREE members of the board, but any such increase shall not <-- 4 apply during the term of office of board members voting or 5 eligible to vote on such per diem increase. 6 (d) Organization.--The members of the board shall select 7 from among themselves a vice chairman and such other officers as 8 the board may determine. Except as otherwise provided, all 9 actions of the board shall be taken by a vote of at least four <-- 10 THREE members of the board, which shall constitute a majority of <-- 11 the board, unless the bylaws of the authority shall provide for 12 a greater vote. The board shall have full authority to manage 13 the business of the authority and to prescribe, amend and repeal 14 bylaws, rules and regulations governing the manner in which the 15 business of the authority may be conducted and the powers 16 granted to it may be exercised and embodied. Notwithstanding any 17 other law, court decision, precedent or practice to the 18 contrary, no actions by or on behalf of the board shall be taken 19 by any officer of the board except upon the approval of a 20 majority of the board. The term "actions by or on behalf of the 21 board" means any action whatsoever of the board, including, but 22 not limited to, the hiring, appointment, removal, transfer, 23 promotion or demotion of any officers and employees, the 24 retention, use or remuneration of any advisors, counsel, 25 auditors or consultants, the initiation of any legal action, the 26 making of any contracts, agreements, notes or covenants, the 27 approval of requisitions, purchase orders, investments and 28 reinvestments, and the adoption, amendment, revision or 29 rescission of any rules and regulations, orders or other 30 directives. The chairman, vice chairman or any other officer, 19890H0589B2223 - 11 -
1 committee or employee of the board may take actions by or on 2 behalf of the board as authorized at least annually by a vote of 3 four THREE members of the board and subject always to the <-- 4 supervision and control of the board. 5 (e) Nonliability of members.--Members of the board shall not <-- 6 be liable personally on obligations of the authority, and the 7 rights of creditors shall be solely against such authority. The 8 authority, itself or by contract, shall defend board members, 9 and the authority shall indemnify and hold harmless board 10 members, whether currently employed by the authority or not, 11 against and from any and all personal liabilities, actions, 12 causes of action, and any and all claims made against them for 13 whatever actions they perform within the scope of their duties 14 as board members. 15 Section 7. Sovereign immunity. 16 It is hereby declared to be the intent of the General 17 Assembly that the authority created pursuant to this act and its 18 officers, officials and employees shall enjoy sovereign and 19 official immunity, as provided in 1 Pa.C.S. § 2310 (relating to 20 sovereign immunity reaffirmed; specific waiver), and remain 21 immune from suit except as provided by and subject to the 22 provisions of 42 Pa.C.S. §§ 8501 (relating to definitions) 23 through 8528 (relating to limitations on damages). 24 Notwithstanding the provisions of 42 Pa.C.S. § 8525 (relating to 25 legal assistance), the authority through its counsel shall 26 defend actions brought against the authority and its officers 27 and employees when acting within the scope of their official 28 duties. 29 Section 8 7. Moneys of authority. <-- 30 (a) Paid to treasurer.--All moneys of the authority, from 19890H0589B2223 - 12 -
1 whatever source derived, shall be paid to the treasurer of the 2 authority. 3 (b) Funds to be invested.--The board shall invest authority 4 funds consistent with sound business practice. 5 (c) Investment program.--The board shall provide for an 6 investment program subject to restrictions contained in this act 7 and in any other applicable statute and any rules and 8 regulations adopted by the board. 9 (d) Authorized types of investments.--Authorized types of 10 investments for authority funds shall be: 11 (1) Direct obligations of or obligations guaranteed by 12 the United States of America. 13 (2) Any bond, debenture, note, participation certificate 14 or other similar obligation issued by any one or combination 15 of the following agencies: Government National Mortgage 16 Corporation, Federal Land Banks, Federal Home Loan Banks, 17 Federal Intermediate Credit Banks, Banks for Cooperatives, 18 Tennessee Valley Authority, United States Postal Service, 19 Farmers Home Administration, the Student Loan Marketing 20 Association and Export-Import Bank of the United States. 21 (3) Any bond, debenture, note, participation certificate 22 or other similar obligation issued by the Federal National 23 Mortgage Corporation to the extent such obligations are 24 guaranteed by the Government National Mortgage Corporation or 25 issued by any other Federal agency and backed by the full 26 faith and credit of the United States of America. 27 (4) Deposits in interest-bearing time or demand 28 deposits, or certificates of deposit, fully insured by the 29 Federal Deposit Insurance Corporation, or its successors, or 30 the Federal Savings and Loan Insurance Corporation, or its 19890H0589B2223 - 13 -
1 successor, or fully secured by any of the obligations 2 described above to the extent not so insured. 3 (5) Repurchase agreements relating to, or investment 4 agreements secured by or providing for the acquisition of 5 and, if applicable, resale of, obligations described in 6 paragraphs (1) through (4) or obligations of Federal Home 7 Loan Mortgage Corporation or Federal National Mortgage 8 Association, with: 9 (i) banks or trust companies (which may include any 10 banking entity or depository); 11 (ii) brokers or broker-dealers registered under the 12 Securities Exchange Act of 1934 (48 Stat. 881, 15 U.S.C. 13 §§ 78a-78jj) acceptable to the authority; or 14 (iii) insurance companies rated A+ or better by 15 Best's having a net capital and surplus of at least 16 $25,000,000 or certificates of deposit with such banks or 17 trust companies fully secured as to principal and accrued 18 interest by obligations described in paragraphs (1) 19 through (4) deposited with or subject to the control of 20 the authority. 21 (6) Money market deposit accounts of banks or trust 22 companies having a net capital and surplus of at least 23 $25,000,000 (which may include any banking entity or 24 depository). 25 (7) The description of authorized investments as set 26 forth herein in paragraphs (5) and (6) shall only be met if 27 the agreements referenced therein provide for the repayment 28 of the principal amount invested at an amount not less than 29 that so invested. Whenever security is required as set forth 30 herein in paragraphs (4) through (6), such security shall be 19890H0589B2223 - 14 -
1 deposited with the treasurer of the authority or be held by a 2 trustee or agent satisfactory to the authority. Moneys of the 3 authority shall be paid out on the warrant or other order of 4 the chairman of the authority or of such other person or 5 persons as the authority may authorize to execute such 6 warrants or orders. 7 (e) Annual report to be filed; annual audits.--Every 8 authority shall file an annual report with the Department of 9 Insurance. The authority shall have its books, accounts and 10 records audited annually in accordance with generally accepted 11 auditing standards by an independent auditor who shall be a 12 certified public accountant or competent public accountant, and 13 a copy of his audit report shall be attached to and be made a 14 part of the aforesaid annual report. A concise financial 15 statement shall be published annually in the Pennsylvania 16 Bulletin. The Philadelphia PENNSYLVANIA FAIR Automobile <-- 17 Insurance Authority will submit detailed information on claims, 18 premiums, investment income and losses to the Department of 19 Insurance in a computerized format so that the department may 20 better represent the interests of policyholders in reviewing 21 rate requests. 22 Section 9 8. Additional Commonwealth pledge. <-- 23 The Commonwealth does hereby pledge to and agree with any 24 person who, contracts an authority created pursuant to this act, 25 that the Commonwealth will not limit or alter the rights and 26 powers hereby vested in the authority or otherwise created by 27 this act in any manner which impairs the obligations of the 28 authority until all such obligations of the authority under such 29 lease or sublease are fully met and discharged. 30 Section 10 9. Exemption from taxation. <-- 19890H0589B2223 - 15 -
1 The effectuation of the authorized purposes of authorities
2 created under this act shall and will be in all respects for the
3 benefit of the people of this Commonwealth, for the increase of
4 their commerce and prosperity and for the improvement of their
5 health and living conditions; and, since authorities will, as
6 public instrumentalities of the Commonwealth, be performing
7 essential governmental functions in effectuating such purposes,
8 such authorities shall not be required to pay any taxes or
9 assessments upon any property acquired or used or permitted to
10 be used by them.
11 Section 11 10. Effective date. <--
12 This act shall take effect immediately.
B9L53RDG/19890H0589B2223 - 16 -