American Transit Insurance Company v. Corcoran, 74 N.Y.2d 977 (1989)

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A regulatory agency cannot impose cumulative daily penalties for a single instance of failing to file required information unless explicitly authorized by statute; the penalty should correspond to the singular act of non-compliance.

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Summary

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American Transit Insurance Company failed to file required commercial property and casualty insurance data with the New York Superintendent of Insurance, leading to a determination of willful violation and an initial penalty of $8,850. The Court of Appeals agreed that substantial evidence supported the finding of a willful violation but held that the penalty was excessive. The court clarified that the Insurance Law did not authorize the imposition of daily penalties for the continuing failure to file, and the maximum penalty should be $500 for the single offense of failing to file the required forms.

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Facts

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American Transit Insurance Company was required to submit data for the Superintendent of Insurance’s annual commercial property and casualty insurance report under Insurance Law § 334 and regulation 131 (11 NYCRR part 162). The initial deadline for filing Form 131-A with data from 1981-1986 was August 7, 1987. American did not file until March 28, 1988. The Superintendent notified American via letters in October and December 1987 about the accumulating daily penalties for the failure to file.

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Procedural History

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The Superintendent of Insurance determined that American Transit Insurance Company willfully violated Insurance Law § 334 and regulation 131 and assessed an aggregate penalty of $8,850. The Insurance Department’s Hearing Officer initially deemed the penalty, calculated daily, as