PRINTER'S NO. 3939
No. 2903 Session of 1992
INTRODUCED BY PESCI, KOSINSKI, OLASZ, TIGUE, DURHAM, J. TAYLOR,
MIHALICH, SALOOM, JOSEPHS, VEON, TRELLO, DeLUCA, FREEMAN,
KRUSZEWSKI, ACOSTA AND CARONE, JULY 2, 1992
REFERRED TO COMMITTEE ON BUSINESS AND COMMERCE, JULY 2, 1992
AN ACT
1 Relating to the business of insurance; prohibiting contracts,
2 combinations and conspiracies in restraint of trade or
3 commerce; prohibiting monopolies and attempts to monopolize
4 trade or commerce; prescribing powers and duties of certain
5 State officers and agencies; providing for remedies, fines
6 and penalties for violations of this act; and barring certain
7 causes of action.
8 TABLE OF CONTENTS
9 Section 1. Short title.
10 Section 2. Declaration of policy.
11 Section 3. Definitions.
12 Section 4. Contract, combination or conspiracy to restrain
13 trade.
14 Section 5. Establishment, maintenance or use of a monopoly.
15 Section 6. Additional unlawful conduct.
16 Section 7. Exclusions.
17 Section 8. Investigation.
18 Section 9. Violations; injunctive or equitable relief; civil
19 penalties.
20 Section 10. Damages and injunctive relief.
1 Section 11. Criminal penalties.
2 Section 12. Judgment in favor of Commonwealth as prima facie
3 evidence.
4 Section 13. Limitation of actions.
5 Section 14. Cumulative remedies.
6 Section 15. Effective date.
7 The General Assembly of the Commonwealth of Pennsylvania
8 hereby enacts as follows:
9 Section 1. Short title.
10 This act shall be known and may be cited as the Pennsylvania
11 Insurance Antitrust Act.
12 Section 2. Declaration of policy.
13 The General Assembly finds and declares that the purpose of
14 this act is to promote the public interest by fostering a
15 competitive environment for conducting the business of
16 insurance.
17 Section 3. Definitions.
18 The following words and phrases when used in this act shall
19 have the meanings given to them in this section unless the
20 context clearly indicates otherwise:
21 "Insurer." An entity subject to any of the following:
22 (1) The act of May 17, 1921 (P.L.682, No.284), known as
23 The Insurance Company Law of 1921.
24 (2) 40 Pa.C.S. Chs. 61 (relating to hospital plan
25 corporations), 63 (relating to professional health services
26 plan corporations) and 65 (relating to fraternal benefit
27 societies).
28 (3) The act of December 29, 1972 (P.L.1701, No.364),
29 known as the Health Maintenance Organization Act.
30 "Person." An individual, corporation, business trust,
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1 partnership, association or any other legal entity. The term
2 includes a political subdivision.
3 "Political subdivision." The term includes an agency, a
4 board, a commission or an authority of a political subdivision.
5 "Relevant market." The geographical area of actual or
6 potential competition in a line of trade or commerce, all or any
7 part of which is within this Commonwealth.
8 "Trade or commerce." The conduct of a business for profit or
9 not-for-profit producing or providing goods, commodities,
10 property or services and includes, without limitation,
11 advertising, franchising, solicitation, offering for sale, lease
12 or distribution of a service or property, tangible or
13 intangible, real, personal or mixed, or any other article of
14 commerce.
15 "Trade secret." Anything which constitutes, represents,
16 evidences or records secret or confidential scientific,
17 technical, merchandising, production, management or commercial
18 information.
19 Section 4. Contract, combination or conspiracy to restrain
20 trade.
21 A contract, combination or conspiracy between two or more
22 insurers in restraint of trade or commerce is unlawful.
23 Section 5. Establishment, maintenance or use of a monopoly.
24 The establishment, maintenance or use of a monopoly, or any
25 attempt to establish a monopoly of trade or commerce in a
26 relevant market by any insurer or insurers, for the purpose of
27 excluding or limiting competition or controlling, fixing or
28 maintaining prices, is unlawful.
29 Section 6. Additional unlawful conduct.
30 (a) Unlawful conduct.--In addition to the unlawful conduct
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1 described under sections 4 and 5, the following conduct on the
2 part of an insurer is unlawful:
3 (1) Allocation with a competitor of a geographical area
4 in which, or persons to whom, insurance will be offered for
5 sale.
6 (2) Unlawful tying the sale or purchase of:
7 (i) one type of insurance to the sale or purchase of
8 another type of insurance; or
9 (ii) any type of insurance to the sale or purchase
10 of any other service or product.
11 (b) Exceptions.--Unlawful conduct on the part of an insurer
12 under section 4 or 5 or this section shall not include making a
13 contract or engaging in a combination or conspiracy:
14 (1) To collect, compile or disseminate historical loss
15 data.
16 (2) To determine a loss development factor applicable to
17 historical loss data.
18 (3) To perform actuarial services if the contract,
19 combination or conspiracy does not involve a restraint of
20 trade.
21 (4) To determine a trend factor. This paragraph shall
22 only apply during the transition period.
23 (c) Definitions.--As used in this section, the following
24 words and phrases shall have the meanings given to them in this
25 subsection:
26 "Historical loss data." Information respecting claims paid,
27 or reserves held for claims reported, by any person engaged in
28 the business of insurance.
29 "Loss development factor." An adjustment to be made to
30 reserves held for losses incurred for claims reported by any
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1 person engaged in the business of insurance, for the purpose of
2 bringing the reserves to an ultimate paid basis.
3 "Transition period."
4 (1) The four-year period beginning on the effective date
5 of this act, in the case of a person that wrote insurance
6 having an aggregate amount of annual premiums less than
7 $20,000,000 in the then most recently ended one-year period,
8 not more than 50% of which was owned or controlled by another
9 person engaged in the business of insurance.
10 (2) The two-year period beginning on the effective date
11 of this act, in the case of any person to which paragraph (1)
12 does not apply.
13 "Trend factor." An adjustment to be made to losses incurred
14 for claims reported by any person engaged in the business of
15 insurance to reflect a change in inflation or any other change
16 in the estimated loss costs incurred by persons engaged in the
17 business of insurance.
18 Section 7. Exclusions.
19 Any activity or conduct authorized under Pennsylvania
20 statutory law granting a right, power or authority, or exempt
21 under Pennsylvania statutory law, which would otherwise
22 constitute a violation under section 4, 5 or 6, shall be exempt
23 from the provisions of this act.
24 Section 8. Investigation.
25 (a) General power.--If the Attorney General has reason to
26 believe that a violation of this act has occurred, the Attorney
27 General shall have authority to investigate on behalf of the
28 Commonwealth, its citizens or a political subdivision.
29 (b) Required attendance.--
30 (1) Prior to the institution of a civil action by the
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1 Attorney General, he is authorized to require the attendance
2 and testimony of witnesses and the production of books,
3 accounts, papers, records, documents and files relating to
4 the investigation; and, for this purpose, the Attorney
5 General or his representatives may sign subpoenas, administer
6 oaths or affirmations, examine witnesses and receive evidence
7 during the investigation.
8 (2) A request for information shall state the subject
9 matter of the investigation, the conduct constituting the
10 alleged violation which is under investigation and the
11 provisions of this act applicable to the alleged violation. A
12 request for documentary material shall describe the material
13 to be produced with reasonable particularity so as to fairly
14 identify the documents demanded, provide a return date within
15 which the material is to be produced and identify the member
16 of the Attorney General's staff to whom the material shall be
17 given.
18 (3) In case of disobedience of a subpoena or the
19 contumacy of a witness appearing before the Attorney General
20 or his representative, the Attorney General or his
21 representative may, for good cause shown, invoke the aid of a
22 court of record of the Commonwealth, and the court may
23 thereupon issue an order requiring the person subpoenaed to
24 obey the subpoena or to give evidence or to produce books,
25 accounts, papers, records, documents and files relative to
26 the matter in question. Failure to obey an order of the court
27 may be punished by the court as a contempt.
28 (c) Confidentiality.--
29 (1) No information, procedure, testimony or documentary
30 material produced under a demand under this section shall,
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1 unless otherwise ordered by a court for good cause shown, be
2 produced for inspection or copying by, nor shall the contents
3 thereof be disclosed to, a person other than the Attorney
4 General or his representative without the consent of the
5 person who produced the information or material; except that
6 the Attorney General or his representative shall disclose
7 information or documentary material produced under this
8 section or information derived therefrom to officials of a
9 governmental agency affected by the alleged violation, and,
10 at the discretion of the Attorney General, may disclose to
11 the United States Department of Justice, the Federal Trade
12 Commission, another state or territory of the United States
13 or the District of Columbia, for use by that agency or entity
14 in connection with an investigation or proceeding within its
15 jurisdiction and authority, upon the prior certification of
16 an appropriate official of the agency that the information
17 shall be maintained in confidence other than use for official
18 purposes.
19 (2) Under reasonable terms and conditions as the
20 Attorney General or his representative shall prescribe, the
21 documentary material shall be available for inspection and
22 copying by the person who produced the material or a duly
23 authorized representative of that person. The Attorney
24 General or his representative may use such documentary
25 material or information or copies thereof as he determines
26 necessary in the enforcement of this act, including
27 presentation before any court. Material which contains trade
28 secrets or other highly confidential matter shall not be
29 presented except with the approval of the court in which a
30 proceeding is pending after adequate notice to the person
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1 furnishing the material.
2 (d) Wrongful disclosure of information.--Any person who
3 publishes or communicates any procedure, testimony or material
4 produced, which is required to be kept confidential pursuant to
5 this section, commits a misdemeanor of the third degree.
6 Section 9. Violations; injunctive or equitable relief; civil
7 penalties.
8 The Attorney General may bring an action for appropriate
9 injunctive or other equitable relief and civil penalties in the
10 name of the Commonwealth for a violation of this act. The court
11 may assess for benefit of the Commonwealth a civil penalty of
12 not more than $100,000 for each violation of this act and for
13 the cost of suit, including reasonable attorney fees.
14 Section 10. Damages and injunctive relief.
15 (a) Commonwealth or political subdivision.--The Commonwealth
16 or a political subdivision threatened with injury or injured
17 directly or indirectly in its business or property by a
18 violation of this act may bring an action for appropriate
19 injunctive or other equitable relief, damages sustained by
20 reason of a violation of this act, and, as determined by the
21 court, interest on the damages from the date of the complaint,
22 taxable costs and reasonable attorney fees.
23 (b) Other persons.--Any other person threatened with injury
24 directly or injured directly in his business or property by a
25 violation of this act may bring an action for appropriate
26 injunctive or other equitable relief against immediate
27 irreparable harm, damages sustained by reason of a violation of
28 this act, and, as determined by the court, interest on the
29 damages from the date of the complaint, taxable costs and
30 reasonable attorney fees.
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1 (c) Damages.--Damages recoverable under this section by
2 persons shall be three times the actual damages sustained
3 thereby, taxable costs and reasonable attorney fees. Damages
4 recoverable under this section by the Commonwealth shall be
5 actual damages sustained, taxable costs and reasonable attorney
6 fees.
7 (d) Liability.--Liability under this section shall be joint
8 and several. Persons subject to liability under this section
9 shall be entitled to contribution under 42 Pa.C.S. Ch. 83 Subch.
10 B (relating to contribution among tort-feasors).
11 (e) Authority of Attorney General.--The Attorney General
12 shall have authority under this section:
13 (1) To bring all actions on behalf of the Commonwealth.
14 (2) To bring an action as parens patriae on behalf of
15 individuals who have suffered an injury to their property by
16 reason of a violation of section 4 and who resided in this
17 Commonwealth when the violation occurred.
18 (3) To bring an action on behalf of a political
19 subdivision, if requested to do so by the political
20 subdivision.
21 (f) Notice to Attorney General.--Within 30 days of filing a
22 complaint under this section, the plaintiff shall serve a copy
23 of the complaint upon the Attorney General in accordance with
24 the rules of civil procedure for service of original process. A
25 copy of the certificate of service shall be filed with the
26 court.
27 Section 11. Criminal penalties.
28 (a) Institution of criminal action.--The Attorney General
29 shall have the authority to institute criminal proceedings for
30 violations of sections 4, 5 and 6.
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1 (b) Entity penalty.--A partnership, corporation, association
2 or other entity which violates section 4, 5 or 6 commits a
3 felony of the third degree and shall, upon conviction, be
4 sentenced to pay a fine of not more than $1,000,000.
5 (c) Individual penalty.--An individual who violates section
6 4, 5 or 6 commits a felony of the third degree and shall, upon
7 conviction, be sentenced to pay a fine of not more than $100,000
8 or to imprisonment for not more than three years, or both.
9 (d) Disposition of funds.--All fines collected pursuant to
10 this section shall be paid into the State Treasury.
11 (e) Double jeopardy.--A criminal prosecution under this
12 section may not be brought against a person previously charged
13 by information or indictment with a criminal violation of a
14 Federal antitrust statute if the prosecution is based upon
15 substantially the same conduct upon which a prosecution under
16 this section could be based and jeopardy has attached under the
17 prosecution.
18 Section 12. Judgment in favor of Commonwealth as prima facie
19 evidence.
20 A final judgment or decree determining that a person has
21 violated this act in an action brought by the Commonwealth under
22 section 9, 10(a) or 11 other than a consent judgment or decree
23 entered before any testimony has been taken, is prima facie
24 evidence against the person in any other action against the
25 person under section 10 as to all matters with respect to which
26 the judgment or decree would be an estoppel between the parties
27 to the action. This section does not affect the application of
28 collateral estoppel or issue preclusion.
29 Section 13. Limitation of actions.
30 (a) Actions under sections 9 and 11.--An action under
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1 section 9 or 11 is barred if not commenced within four years
2 after the claim for relief or cause of action accrues.
3 (b) Actions under section 10.--
4 (1) An action to recover damages under section 10 for
5 violation of section 4 or 6 is barred if not commenced within
6 four years after the conduct in violation of section 4 or 6
7 is discovered or should have been discovered or, for a
8 continuing violation, at the time the latest violation of
9 section 4 or 6 is discovered or should have been discovered.
10 (2) An action to recover damages under section 10 for
11 violation of section 5 is barred if not commenced within four
12 years after the claim for relief or cause of action accrues.
13 (c) Actions under sections 10 and 11.--During the pendency
14 of any timely action brought by the Commonwealth under section
15 10(a) or 11 and for one year after the action is completed, the
16 limitation under this subsection is tolled if the action under
17 this subsection is based in whole or in part on any matter
18 complained of in the action brought by the Commonwealth under
19 section 10(a) or 11.
20 Section 14. Cumulative remedies.
21 The remedies provided in this act are cumulative.
22 Section 15. Effective date.
23 This act shall take effect in 60 days.
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