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Physician's Professional Liab. Trust v. Wilcox

OPINION FILED OCTOBER 11, 1977.

THE PHYSICIAN'S PROFESSIONAL LIABILITY TRUST ET AL., PLAINTIFFS-APPELLEES,

v.

ROBERT B. WILCOX, DIRECTOR, DEPARTMENT OF INSURANCE, DEFENDANT-APPELLANT.



APPEAL from the Circuit Court of Cook County; the Hon. DANIEL A. COVELLI, Judge, presiding.

MR. PRESIDING JUSTICE GOLDBERG DELIVERED THE OPINION OF THE COURT:

The issues raised by this appeal may, in our opinion, be readily disposed of by a statement of the pertinent facts and an examination of the applicable statutes. Business Motivators, Inc., Planned Security, Inc., Lionel W. Bourdage and Anthony Guzauskas (plaintiffs) filed two suits against Robert B. Wilcox, Director of Insurance of Illinois (defendant). Motions to dismiss both were filed by defendant. The cases were consolidated and the motions to dismiss were denied by the trial court. The court certified issues to this court for permissive appeal. (Supreme Court Rule 308(a), Ill. Rev. Stat. 1975, ch. 110A, par. 308(a).) This court granted permission to appeal.

The record shows that on January 14, 1976, defendant issued a warrant for examination appointing certain persons to examine the insurance business and affairs of plaintiffs. The warrant directed these persons to furnish defendant with a statement of the condition of plaintiffs' insurance business and affairs and the manner in which the same were conducted. On January 26, 1976, defendant issued a cease and desist order against plaintiffs. The order required cessation of all activities whereby plaintiffs sought to provide medical malpractice benefits to licensed physicians. The order recited that plaintiffs were conducting their business in a manner hazardous to persons participating therein and to the public. (See Ill. Rev. Stat. 1975, ch. 73, par. 1013.1(2).) The order further recited that plaintiffs had engaged in the insurance business in Illinois without a certificate of authority from defendant. (See Ill. Rev. Stat. 1975, ch. 73, par. 733.) On the same date defendant issued notice of the time and place of an administrative hearing in the office of defendant concerning the subject matter of the order.

On March 3, 1976, an administrative hearing was held in the office of defendant pursuant to the notice. Plaintiffs participated in this hearing. Before any further action had been taken by defendant, on March 24, 1976, plaintiffs filed a suit in the circuit court (No. 76 CH 1676), seeking dissolution of the order to cease and desist and injunctional and other relief. Defendant filed a motion to dismiss this first suit upon the theory that the Administrative Review Act of Illinois was the exclusive method of judicial review open to plaintiffs.

On April 5, 1976, the hearing officer appointed by defendant issued findings of fact, conclusions of law and recommendations. This document recited the finding that plaintiffs had attempted to create an alternative solution to the availability problem of professional liability insurance coverage. It concluded that all of the plaintiffs (except Anthony Guzauskas) were conducting an insurance business within Illinois. It recommended that the cease and desist order be dissolved as regards Guzauskas and that the previous cease and desist order be continued in force regarding the remaining plaintiffs until they had obtained a certificate of authority under Illinois law. On April 6, 1976, the defendant issued a final order in accordance with these recommendations. A copy of this order was mailed to counsel of record for plaintiffs on April 7, 1976. The covering letter provided that the enclosed order was "subject to review in accordance with Section 407 of the Illinois Insurance Code [Ill. Rev. Stat. 1975, ch. 73, par. 1019] which allows for a 30 day period from date of receipt of the Order to begin proceedings." The letter and order were received by counsel for plaintiffs on April 8, 1976.

On May 10, 1976, all of the plaintiffs, except Anthony Guzauskas, filed a second suit against defendant (No. 76 CH 2702), seeking review of the defendant's final order and injunctional relief.

Defendant filed a motion to dismiss the second suit upon the theory that the provisions of the Administrative Review Act (Ill. Rev. Stat. 1975, ch. 110, par. 264 et seq.), applied to the proceedings and provided the exclusive method of reviewing the final order. Thereafter the first and second suits were consolidated for hearing. The motions to dismiss were denied and the trial judge then certified the matter for permissive appeal.

The issues thus placed before us are:

(1) Is the Administrative Review Act of Illinois the exclusive method by which plaintiffs may challenge the final administrative order of defendant; and

(2) Did plaintiffs, by proceeding with an administrative hearing, waive their right to challenge the initial cease and desist order so that the issues raised in plaintiffs' complaint as first filed became moot.

These proceedings by cease and desist order are authorized by article XXIV of the Illinois Insurance Code (Ill. Rev. Stat. 1975, ch. 73, pars. 1013 through 1019.2.) Two particular portions of this enactment must be noted (pars. 1013.1(4) and 1013.1(6)):

"(4) At any time prior to the commencement of a hearing as provided in this Section, the person may waive the hearing and have judicial review of the order by means of any remedy afforded by law without first exhausting administrative remedies or procedures.

(6) Any person or company subject to an order or proceeding pursuant to this Article is entitled to judicial review of the order or proceeding by means of any remedy afforded by law. Proceedings for judicial review shall be commenced within 60 days from the making and service of any order issued under this Section."

Within the same article, section 407 (Ill. Rev. Stat. 1975, ch. 73, par. 1019) is entitled "Court Review of Orders and Decisions." Subparagraph (1) provides that orders of the Director pursuant to article XXIX of the Insurance Code (Ill. Rev. Stat. 1975, ch. 73, pars. 1065.1 through 1065.18), pertaining to workmen's compensation and employers' liability rates and also article XXX 1/2 (Ill. Rev. Stat. 1975, ch. 73, pars. 1065.18-1 through 1065.18-34), pertaining to property and casualty rates other than workmen's compensation and employers' liability, shall be subject to review by the circuit court of Sangamon County or the circuit court of the county in which the principal office of the aggrieved company is located. The following section (par. 1019(1)(a)), provides that the petition for review of such orders is to be filed within 30 days from service of a copy of the Director's order. The remainder of subparagraph (1) sets out a ...


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