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In RE:

This proceeding arose upon a request for hearing made by Glenn Ingalls to contest the pending cancellation of automobile insurance coverage provided by Concord General Mutual Insurance Company. On March 18, 2003, the insurer mailed a notice of cancellation effective April 18, 2003 on policy number B888965, citing “material misrepresentation, presentation of the claim dated 12/26/02” as the grounds for cancellation. Pursuant to 24-A M.R.S.A. § 2908, Concord General Mutual Insurance Company provided the insured with proper notice and the insured's hearing request was timely.

A hearing in this matter was held on May 1, 2003 with Connie Mayette sitting as designated hearing officer, pursuant to 24-A M.R.S.A. §§ 210 and 2908. The purpose of the hearing was limited to establishing the existence of the proof or evidence given by the insurer to support its reason for policy cancellation. Staff representing Concord General Mutual Insurance Company submitted a sworn statement in lieu of appearance at the hearing, and also participated by telephone. Glenn Ingalls appeared at the hearing, and was represented by Attorney Patrick Mellor. Robert LaBonte, the employee of the insured who was present at the time of the accident, also attended and testified.

FINDINGS OF FACT

The following facts have been proven by a preponderance of evidence submitted:

1. Concord has insured the subject vehicle since July 2002. Although covered by a personal automobile policy, the vehicle is registered with a commercial plate, and is used commercially for snowplowing.
2. On December 26, 2002, an accident occurred in which two other vehicles hit head-on, in front of a driveway Mr. Ingalls had just finished plowing. The other two drivers reported in their 48-hour accident reports that Mr. Ingalls’ vehicle backed out of the driveway and blocked the path of one of the vehicles. Mr. Ingalls and his employee reported he was parked on the side of the road parallel to traffic, out of the travel lane and not moving.
3. The police report describes the plow truck as backing out of the driveway, and blocking the lane of the oncoming vehicle which was coming around a sharp curve in the road.

ANALYSIS AND CONCLUSION OF LAW

Although the Notice of Hearing indicated that the Maine Automobile Cancellation Control Act was applicable, the scope of that section applies to policies insuring vehicles of the following types only:

“A. Motor vehicles of the private passenger or station wagon type which are not used as public conveyances nor rented to others;
“B. Any other 4-wheel motor vehicles with a load capacity of 1,500 pounds or less which are not used in the business or professions of the insured.”

As the vehicle insured on this policy is registered and used commercially, i.e. in the business or profession of the insured, the governing statute is 24-A M.R.S.A. § 2908.

24-A M.R.S.A. § 2908(2)(B) permits cancellation pursuant to material misrepresentation, specifically “fraud or material misrepresentation made by or with the knowledge of the named insured in obtaining the policy, continuing the policy or in presenting a claim under the policy.”

James Gardner, Personal Lines Underwriter for Concord, stated in his affidavit that the accident report obtained from the Falmouth Police Department clearly contradicts the policyholder’s description of the accident as he reported it to the agent. Mr. Gardner submitted a copy of the loss notice dated January 7, 2003, which stated the insured’s vehicle was parked parallel to the road, and the insured was writing in his notebook about the last plow account while his spotter was describing it to him. He also submitted a copy of the police report, as well as the 48-hour reports filled out by the claimant drivers, all of which stated the insured vehicle was backing out of the driveway and blocking the travel lane of the approaching vehicle. There was no sworn testimony from the police officer or the other two drivers.

Sandra McPeek, a Concord claims adjuster, also submitted an affidavit. She recounted her investigation of the loss in concert with Special Investigator Peter McCarthy of Concord. Ms. McPeek also responded via telephone to cross-examination by Attorney Mellor. She stated she accompanied Mr. McCarthy to the scene and concurred with his observations that it would be difficult to park where the insured claimed he was parked, due to snow banks, a curb and a telephone pole. She also had spoken with the police officer and both of the other drivers.

Ms. McPeek and Mr. Ingalls both identified one of the claimants as a Federal judge. This claimant was operating the vehicle that was hit head-on by the vehicle that swerved to avoid the allegedly backing plow truck. Although Ms. McPeek referred to recorded statements taken from the other drivers, transcripts of those statements were not submitted as evidence. Ms. McPeek testified that both drivers also indicated in their statements to her that the spotter was operating the vehicle at the time of the accident. As the only documentary evidence from those drivers makes no mention of the driver, that aspect of the alleged misrepresentation will not be considered. The police report was filled out two days after the accident, after the officer had interviewed both Mr. Ingalls and his employee, as well as the other two drivers. The police report lists Mr. Ingalls as the driver.

According to Ms. McPeek’s statement, both the responding officer and one of the other drivers had been by the spot prior to the accident and had seen Mr. Ingalls operating the plow truck, with his spotter in the road watching for traffic.

Mr. Ingalls testified that his standard procedure after plowing an account is to record how the job went and note things to be aware of the next time, such as the location of the rock wall, etc. He stated he had been parked reviewing the job for about five or six minutes when he heard the accident. He stated the top of this driveway had sufficient space to turn around in front of the three-car garage and the extension for the basketball hoop, and that no one would choose to back out of that driveway because of visibility problems with the road curve. He further testified that he had plowed parallel to the rock wall at the side of the road, pushing the snowbank back away from the end of the driveway. He said he was parked in that area, off the road, when the vehicle driven by a youthful operator came around the corner and slid on the snow-covered road.

Mr. Mellor, Mr. Ingalls attorney, pointed out that Concord investigated the scene in late February, and that the snowbank conditions on that date were not the same as on the date of the accident. Mr. Ingalls testified that there had been another big storm in January, and that he did not plow this account again. He stated that another plower may have done the banks differently than he did. Mr. Mellor submitted a video of the driveway and road to show the accident location and how Mr. Ingalls had parked. As the video was taken on April 30 when there was no snow, it also did not depict the conditions as they were at the time of the accident.

Considerable testimony and argument focused on conflicting descriptions of the accident. The issue before the Bureau comes down to whether Concord has demonstrated by a preponderance of the evidence that the insured in fact misrepresented the circumstances of the accident, and if so, whether that constitutes material misrepresentation within the context of the statute.

Four people were present at the time the accident occurred. Two of them, Mr. Ingalls and Mr. Labonte, appeared before us and testified that Mr. Ingalls’ vehicle was parked off the road. The 48-hour reports filed with the Department of Motor Vehicles by Mr. Carter and Ms. Connally state that Mr. Ingalls’ truck was backing out across the travel lane. Ms. MacPeek testified as to what she was told by the police officer and the other two drivers, and explained the officer’s reasoning as she understood it for making his conclusion on the police report, but these people did not provide testimony, nor were they available for questioning. The sworn testimony given by Mr. Ingalls and Mr. LaBonte contradicted the hearsay statements presented and relied upon by Concord.

According to the Maine Motor Vehicle Code, accident reports made by an investigating officer and 48-hour reports made by operators are for the purpose of statistical analysis and accident prevention, and may not be admitted in evidence in any trial arising out of the accident. (29-A M.R.S.A. § 2251(7). While this administrative hearing is not a trial, and 5 M.R.S.A. §9057(1) states that agencies need not observe the rules of evidence observed by the courts, the case presented by Concord is largely based on hearsay, the reliability of which the hearing officer is entitled to evaluate.

Concord’s strongest evidence was its adjuster’s observation of the accident scene, of which she stated it would have been difficult to impossible for the vehicle to have been parked on the side of the road due to snow, a curb and a telephone pole. No photo of the area was provided, however, and Mr. Ingalls argued that there had been another big snow storm the first week in January, and that he never plowed this driveway again. The company inspected the location on February 20, 2003, eight weeks after the accident. As there were subsequent storms, and a different plow contractor who may have plowed the banks differently, there is no way of determining if the conditions existing February 20 were the same as they were on December 26 when the accident occurred.

The Bureau does routinely accept police accident reports as evidence, but in this case we are being asked to accept the officer’s conclusion as to how the accident occurred, rather than just as evidence that an accident did occur. The officer did not witness the accident himself, nor did he provide testimony himself as to how he reached his conclusion. While Concord is entitled by the policy contract to settle any claim or suit as they deem appropriate, the evidence on the record does not support a finding that material misrepresentation has occurred.

The Superintendent of Insurance has jurisdiction over this matter pursuant to 24-A M.R.S.A. § 2920. Concord General Mutual Insurance Company bears the burden of proof for establishing that the statutory grounds for policy cancellation exist. Based on the evidence presented at the hearing, the Superintendent hereby concludes that Concord General Mutual Insurance Company has not established adequate grounds for policy cancellation.

ORDER AND NOTICE OF APPEAL RIGHT

The intended termination is hereby disapproved. Concord General Mutual Insurance Company is directed to continue coverage under policy #B888965 without lapse. Coverage shall continue unless and until a subsequent valid notice of cancellation or nonrenewal is effected in accordance with applicable law.

This Decision and Order is a final agency action within the meaning of the Maine Administrative Procedure Act. It is appealable 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 30 days after receipt of this notice. Any nonparty whose interests are substantially and directly affected may initiate an appeal within 40 days of the effective date of this Decision and Order.

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