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This proceeding arose as a result of a contact with the Maine Bureau of Insurance made by Tammy Sutherland of Garland, Maine on November 27, 2002 regarding the pending cancellation of automobile insurance coverage issued to her by State Farm Fire & Casualty Company (hereinafter "State Farm"). An initial query from Connie Mayette of the Bureau's Property & Casualty Division to State Farm resulted in a December 3, 2002 facsimile transmission from Kelly Webster of State Farm's Ballston Spa, New York office to Ms. Mayette. That transmission included a copy of what was represented as a copy of the cancellation notice issued to Ms. Sutherland as well as proof of mailing. As a review of this information indicated that Ms. Sutherland's contact appeared to be within the time frame contemplated by 24-A M.R.S.A. §2920 for requesting a hearing pursuant to that statute, the Bureau issued a notice of hearing on December 5, 2002. The proceeding was conducted pursuant to the Maine Automobile Insurance Cancellation Control Act, 24-A M.R.S.A. §§2911-2924. A hearing in this matter was held on December 20, 2002.

A representative of State Farm did not personally appear at the hearing. In lieu of appearance, State Farm submitted the sworn affidavit of Dione Ramsdill, an Underwriting Supervisor at State Farm's Ballston Spa offices. Title 5 M.R.S.A. §9057(2) provides that "n(o) sworn written evidence shall be admitted unless the author is available for cross-examination or subject to subpoena, except for good cause shown". The Maine Bureau of Insurance practice procedure is to accept sworn affidavits of witnesses only if the affiant is available for cross-examination by adverse parties and for questioning by the hearing officer either in person or by telephone. During the hearing, an effort was made to contact Ms. Ramsdill at the telephone number provided by her at the time of submission of the affidavit. A recorded message at that number indicated she was on vacation until December 30 and provided instructions for callers desiring further assistance. Since it was Ms. Ramsdill personally who was necessary for questioning and not other State Farm employees, no further assistance was sought by the Hearing Officer and the effort to contact her terminated.1 As a result, Ms. Ramsdill's affidavit was not admitted into the Hearing Record and may not serve as a basis of decision in this proceeding.

1 Later on December 20, but subsequent to the close of the hearing, Ms. Ramsdill contacted the Hearing Officer by telephone and noted that had further assistance been requested, that State Farm employees would have called her vacation location and advised her to call the Bureau. This possibility was neither known, assumed nor anticipated by the Hearing Officer.

An initial issue in this case is whether or not a timely and appropriate notice of cancellation was delivered to Ms. Sutherland by State Farm. Ms. Sutherland testified that she had not received the notice of cancellation. She further testified that she did not learn of the November 14 cancellation until she reported an accident she had been involved in to the Peter Allen Agency on November 25. The delivery of notices of cancellation is controlled under Maine law by 24-A M.R.S.A. §3050. That statute provides, in pertinent part, as follows:

No notice of cancellation of a policy shall be effective unless received by the named insured at least 20 days prior to the effective date of cancellation, or when the cancellation is for nonpayment of premium, at least 10 days prior to the effective date of cancellation. A postal service certificate of mailing to the named insured at the insured's last known address shall be conclusive proof of receipt on the 5th calendar day after mailing.

The notice of cancellation and bulk certificate of mailing FAXED to the Bureau by Kelly Webster on December 3 indicates that the notice of cancellation was mailed on October 29 and had a cancellation date of November 14. Title 5 M.R.S.A. §9057 (2) provides that "(e)vidence shall be admitted if it is the kind of evidence upon which reasonable persons are accustomed to rely in the conduct of serious affairs." Although these documents were not admitted as documentary exhibits in the hearing, I find them to be the kind of evidence upon which reasonable persons would rely for purposes of this proceeding. Thus State Farm is entitled to the benefit of §3050 to support the finding that the Notice of Cancellation was issued on a timely basis.

The next issue for consideration is whether or not the reason for cancellation provided in the Notice of Hearing exists. The reason provided by State Farm in its Notice of Cancellation is "(w)e have not received payments required to keep the policy in force". That notice indicated a balance due of $154.52. Title 24-A M.R.S.A. §2920 provides, in pertinent part, that the "burden of proof of the reason for cancellation ... shall be upon the insurer". The only evidence that was admitted into the record consists of the testimony of Ms. Sutherland and Exhibits that she offered into the record.

Ms. Sutherland does not contest that she has historically been late in making premium payments to State Farm. Ms. Sutherland's Exhibit 3 is a State Farm Notice of Payment Due prepared on September 18, 2002. It indicates a September 13 payment of $87.552. A current installment of $68.98 adjusted by a $16.56 charge to reflect a change in the vehicle insured under the policy resulted in a $88.54 charge at that time. That notice indicates the premium is "due upon receipt". Ms. Sutherland's Exhibit 4 is a State Farm past due notice dated October 8, 2002. That notice shows the $88.54 previous balance and further includes a current installment of $68.98 plus a $3.00 service charge for a total amount due by October 22, 2002 of $150.523. The notice indicates that this total amount is due by October 22, 2002.

2 Ms. Sutherland does contest that this specific payment, which had once been viewed by State Farm as late and which had triggered a previous notice of cancellation, was in fact late. She testified that upon receiving a cancellation notice with respect to that payment, she telephoned the agent to question the matter. According to her testimony, the agent confirmed that State Farm had found her payment, credited her account and withdrawn its cancellation notice.
3 No testimony or evidence was presented as to why the $16.56 reflecting the September vehicle change does not also appear on this installment. There is also no explanation for the $4.00 difference between the $150.52 shown on this notice and the $154.52 shown on the notice of cancellation.

The Notice also contains after a "READ BEFORE PAYING" heading the following statement in bold print:

"All or part of your last month's bill is past due. Paying premiums monthly is a service we provide to help you budget for your insurance. We will be unable to continue this service if we do not receive your full payment each month by the date due."

Ms. Sutherland's Exhibit 1 is a letter November 2, 2002 from Shelby Dodd of the State Farm Payment Plan to Ms. Sutherland. That letter indicates that State Farm had received a payment of $88.54 from Ms. Sutherland that it was returning to her.4 The reason provided is "(i)t is our policy to discontinue an account if cancellation notices for nonpayment of premium are sent three times in any twelve-month period. Our records indicate that cancellation notices were sent to you three times in the last twelve months. Therefore we must return your payment." Ms. Dodd's letter then continued by advising Ms. Sutherland to contact her State Farm agent for reinstatement of her policy. A check for the $88.54 was enclosed with that letter.

4 It is unclear why State Farm returned premium which represented coverage for a prior policy period.

It is reasonable to conclude from this evidence that sometime between October 8, 2002 and November 2, 2002, Ms. Sutherland tendered $88.54 to State Farm as premium payment on that policy. Ms. Sutherland testified that she did not know when she made the $88.54 payment5 to State Farm and no evidence was presented to clarify whether this payment was before or after the October 22, 2002 due date specified in Exhibit 4; however, even if the payment was made before October 22, it is less than the amount billed and due State Farm.

5 Ms. Sutherland testified that this payment was made through the use of a money order.

If the evidence in this case were limited to the $150.52 invoice and the failure to pay it in full, this office would undoubtedly find that the cancellation was justified. The additional matter is raised, however, as to whether or not a combination of the November 2 letter from Ms. Dodd, the return of her $88.54 and her conversations with "Megan" of the Peter Allen Agency in Bangor served to mislead Ms. Sutherland as to State Farm's intent and are sufficient to allow Ms. Sutherland to avoid the cancellation.

Ms. Sutherland testified that she had been working with "Megan" of the Peter Allen Agency in Bangor regarding her insurance matters for nearly ten years. Upon receiving the November 2 letter from Ms. Dodd, she contacted the agent as suggested in that letter.6 The exact date of this contact was not established at the hearing, but Ms. Sutherland believes it was very shortly after her receipt of the November 2 letter. She testified that Megan told her that State Farm was not really trying to cancel her, but rather was of the position that the monthly payment plan was no longer available to her in light of her frequent late payments. She would have to move to a semi-annual payment plan with premium payments of approximately $400 with such a payment due on December 22. Ms. Sutherland responded that she did not have $400 and would have to shop around to see if she could find other coverage. She testified that she was frustrated that she only owed $68, but State Farm wanted $4007. She testified that Megan responded to the effect that was fine but she shouldn't take too long to do that or she would be cancelled. She concluded from these comments and Ms. Dodd's letter that State Farm's concerns were "all about the payment plan". She further testified that at the time she interpreted Megan's warning about not taking too long to refer to December 22.8

6 As noted above, Ms. Sutherland denies receiving the cancellation notice. She questions why a cancellation notice would have been issued at or about the same time as the November 2 letter suggesting contact with the State Farm agent to seek reinstatement of coverage.
7 There is no evidence on the record to suggest that Ms. Sutherland ever tended the $68 to State Farm. It is speculative as to whether or not this failure to tender is due to the return of the $88.54 and her understanding of State Farm's request for $400. It is also speculative as to whether State Farm would have accepted the $68 and reinstated coverage in early November had it been tendered.
8 With the benefit of "20/20 hindsight", it appears likely that Megan was referring to November 14, not December 22.

Ms. Sutherland testified that when she reported the November 25 accident that Megan informed her that she was not covered due to the cancellation of coverage on November 14. It is noted that it is shortly after this communication that Ms. Sutherland contacted the Maine Bureau of Insurance for assistance.

All of Ms. Sutherland's comments regarding her conversations with Megan are uncontroverted on the record. Title 24-A M.R.S.A. §2422 (2) provides, in pertinent part, that "(t)he authorized agent of an insurer shall be regarded as in the place of the insurer in all matters regarding insurance."

If the record in this case had been limited to the $150.52 invoice of October 8, the admission that it was not tendered in full by the October 22 due date, the cancellation notice and the proof of mailing to establish the statutory conclusion of receipt of the notice, my ruling in this case would clearly be in favor of State Farm. The combination of the November 2 letter, the return of the $88.54 premium and Ms. Sutherland's testimony as to her conversations with the agent serve to establish adequate grounds for this office to believe that State Farm's actions in this matter in their entirety served to confuse and mislead Ms. Sutherland as to the status of her coverage. In light of that finding, the proposed cancellation of her coverage is not allowed.

ORDER

The intended cancellation is not approved. State Farm Fire & Casualty Company is hereby directed to continue Policy #0193-0567-28 in force. Ms. Sutherland is responsible for premium for any period for which coverage is provided.

NOTICE OF APPEAL RIGHTS

This Decision and Order is a final agency action of the Superintendent of Insurance within the meaning of the Maine Administrative Procedure Act. It may be appealed to the Superior Court in the manner provided in 24-A M.R.S.A. §236 and M.R. Civ. P. 80C. Any party to the hearing may initiate an appeal within thirty days after receiving this notice. Any aggrieved non-party whose interests are substantially and directly affected by this Decision and Order may initiate an appeal on or before 40 days after the date appearing below.

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