ANAWAN INSURANCE AGENCY, INC., & another [Note 1] vs. DIVISION OF INSURANCE.

BOTSFORD, J. This case arises out of an administrative enforcement

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action brought by the Division of Insurance (division) against Anawan Insurance Agency, Inc., and Stephen G. Michaels, an officer and director of Anawan (collectively, Anawan), charging Anawan with paying commissions to an unlicensed broker in violation of G. L. c. 175, § 177, and G. L. c. 176D, § 2. The appeal, which is before us on further appellate review, raises three principal issues: (1) whether the statute of limitations set out in G. L. c. 260, § 5, or G. L. c. 260, § 5A, governs enforcement actions brought by the division under G. L. c. 175, § 177; (2) whether the discovery rule applies to the appropriate limitations statute; and (3) whether the division is authorized to levy sanctions against Anawan under G. L. c. 176D, § 2, under G. L. c. 175, § 177, or under both statutes.

After a hearing, the division's presiding officer (hearing officer) concluded that the four-year statute of limitations in G. L. c. 260, § 5A, governed an enforcement action brought under G. L. c. 175, § 177; applied the discovery rule to find that statute's limitations period tolled for a period of time; and, while finding that Anawan had committed violations of both G. L. c. 175, § 77, and G. L. c. 176D, § 2, assessed fines only for the c. 176D, § 2, violations under G. L. c. 176D, § 7. The Commissioner of Insurance (commissioner) affirmed the hearing officer's decision, and a judge in the Superior Court, acting on Anawan's appeal under G. L. c. 30A, § 14, also affirmed the division's decision. [Note 2] In deciding Anawan's appeal from the Superior Court judgment, however, the Appeals Court concluded that while G. L. c. 260, § 5A, was the controlling statute of limitations, the discovery rule did not apply and the division was barred from assessing fines for improper insurance transactions occurring earlier than four years before the administrative enforcement action was commenced; that court also decided that fines could only be assessed against Anawan under G. L. c. 175, § 177, and not G. L. c. 176D, § 7. Anawan Ins. Agency,

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Inc. v. Division of Ins., 76 Mass. App. Ct. 447, 451-455 (2010) (Anawan). Accordingly, the court vacated the Superior Court judgment and directed that the matter be remanded to the commissioner for further action consistent with the court's decision. Id. at 455. We granted the division's application for further appellate review, and for the reasons that follow, affirm the judgment of the Superior Court. [Note 3]

1. Background. The Appeals Court sets out the undisputed facts of this case, taken from the hearing officer's decision and the exhibits that were admitted in the administrative proceeding. See Anawan, supra at 448-449. We summarize those facts here. The division received two anonymous letters in 1999 stating, among other allegations, that Anawan, in addition to its principal place of business in the West Roxbury section of Boston, had improperly begun operating out of a second location at 76 Shirley Avenue in Revere; one of the letters alleged that the name of the agency operating from that address was "Handel Ins." The division assigned an investigator to investigate the facts alleged in the anonymous letters. The investigation took a very long time, for reasons not explained in the record. During its course, the investigator learned that Kuntthy Prum was doing business as Handel Insurance Agency at 76 Shirley Avenue in Revere, that Prum had been licensed as an insurance broker from May 27, 1994, for three years (i.e., until May, 1997), but had not renewed his license thereafter. On June 1, 2004, the investigator sent a letter notifying Anawan that it had been the subject of a complaint received by the division, and requesting information. The letter asked specifically whether Anawan had ever employed Prum and if so, the dates of his employment and the insurance carrier or carriers with which Prum had placed insurance policies. On June 23, 2004, Anawan, through Michaels, responded, informing the division that Prum had brokered insurance business through Anawan from January 7, 1997, through December 31, 2001, and listing all the commissions

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paid to Prum. On October 25, 2004, the division commenced its enforcement action. Specifically, the division issued an order to show cause alleging that Anawan had violated both G. L. c. 175, § 177, by paying commissions to Prum at a time when he was not licensed to transact insurance business in the Commonwealth, as well as G. L. c. 176D, § 2, by engaging in unfair or deceptive acts or practices in the business of insurance. [Note 4] The division sought imposition of a fine or civil penalty against Anawan for every separate violation of these two statutes.

Anawan filed a response to the division's order to show cause in November, 2004. After the denial of Anawan's two separate motions for summary decision, an evidentiary hearing was held on March 28, 2006, before a hearing officer of the division. The hearing officer issued his decision with "compendious findings" (Anawan, supra at 449) in May, 2007.

The hearing officer ruled that Anawan had violated both G. L. c. 175, § 177, and G. L. c. 176D, § 2, in failing "to ascertain whether Prum had renewed his license before soliciting business from, accepting applications from and paying compensation to Prum after his license expired on May 27, 1997." [Note 5] Applying the four-year statute of limitations set out in G. L. c. 260, § 5A, the hearing officer determined that the division had proved (1) 278 violations of both G. L. c. 175, § 177, and G. L. c. 176D, § 2, occurring within four years of the filing of the order to show cause on October 25, 2004 -- that is, between October 25, 2000, and October 25, 2004; and (2) by application of the discovery rule, twenty-two violations occurring before November of 2000. [Note 6] The hearing officer assessed a fine under

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G. L. c. 176D, § 2, of one hundred dollars for each of the 300 (278 plus twenty-two) violations of that statute that he found proved, for a total of $30,000. He did not assess any separate penalty for the parallel 300 violations of G. L. c. 175, § 177.

2. Discussion. We review in this case the division's decision under G. L. c. 30A, § 14, and in doing so, we are called on to interpret a number of statutes that bear on the validity of that decision. The court reviews "questions of statutory interpretation de novo," Commerce Ins. Co. v. Commissioner of Ins., 447 Mass. 478, 481 (2006), giving "substantial deference to a reasonable interpretation of a statute by the administrative agency charged with its administration [and] enforcement." Id. We may set aside or modify the division's decision if we determine "that the substantial rights of any party may have been prejudiced because," among other reasons, the decision is based on an error of law or is arbitrary, capricious, or an abuse of discretion. G. L. c. 30A, § 14 (7). Attorney Gen. v. Commissioner of Ins., 450 Mass. 311, 318 (2008).

a. Statute of limitations. General Laws c. 175, § 177, prohibits an insurance company, among others, from paying an individual "who is not then duly licensed as an insurance agent of the company for which he assumes to act or as an insurance broker." [Note 7] The first question of statutory interpretation posed is, what statute of limitations governs actions brought under § 177? Anawan contends that the appropriate statute is G. L. c. 260, § 5. That statute imposes a two-year limitation period with respect to actions for penalties brought by the Commonwealth (which encompasses the division), but expressly states that it does not apply to "any action set forth in [G. L.

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c. 260, § 5A]." [Note 8] Section 5A of G. L. c. 260, in turn, applies to "[a]ctions arising on account of violations of any law intended for the protection of consumers, including but not limited to the following: . . . [G. L. c. 176D]." Section 5A does not expressly mention actions for violations of G. L. c. 175, § 177. Given the absence of express reference, Anawan's argument, which is very brief, appears to be that the statute of limitations in G. L. c. 265, § 5, and only in that statute, applies to actions for fines or penalties; and that because the division's enforcement action was for fines, G. L. c. 260, § 5, must define the permissible limitations period. Like the Superior Court judge and the Appeals Court, we agree with the division that G. L. c. 260, § 5A, is the applicable statute of limitations for actions brought under G. L. c. 175, § 177. [Note 9]

"The essential nature of the right asserted determines the appropriate statute of limitations." Micera v. Neworld Bank, 412 Mass. 728, 731 (1992). [Note 10] See Nantucket v. Beinecke,

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379 Mass. 345, 347-349 (1979). The essential nature of the right under G. L. c. 175, § 177, reflects a legislative intent to protect consumers from unlicensed practitioners in the field of insurance. See Commonwealth v. Roswell, 173 Mass. 119, 121 (1899) ("It is within the proper exercise of the police power of the Commonwealth to require that persons acting as insurance brokers or insurance agents shall be licensed, in order that the business may be in the hands of trustworthy persons"). See also Deluty v. Commissioner of Ins., 7 Mass. App. Ct. 88, 91 (1979) ("Trustworthiness and competence are thus requirements for the issuance of a broker's license [whether or not they are exhaustive]"). Given this consumer-protective intent or purpose, G. L. c. 175, § 177, clearly has "characteristics that are common to consumer protection statutes." Micera v. Neworld Bank, supra at 732. And as was true in that case, we conclude here that § 5A's four-year statute of limitations applies to actions under G. L. c. 175, § 177. [Note 11]

b. Discovery rule. We turn to the issue whether the discovery rule applies to G. L. c. 260, § 5A; as the division points out, that statute provides a four-year limitation period to begin "after the cause of action accrues," but is silent on when the accrual clock begins to run. The discovery rule tolls a statutorily mandated limitations period until the cause of action is discovered or reasonably should have been discovered by the plaintiff. See, e.g., Friedman v. Jablonski, 371 Mass. 482, 484-485, 487 (1976); Hendrickson v. Sears, 365 Mass. 83, 91 (1974). As previously mentioned, the hearing officer determined that the discovery rule did apply, and on the evidence presented, ruled that the statute of limitations period did not begin to run until well after October 25, 2000, so that when the division initiated this proceeding on October 25, 2004, it was entitled to impose penalties for violations of c. 175, § 177, occurring more than four years before that date. The Appeals Court, however, concluded that the discovery rule did not apply. It reasoned that

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G. L. c. 175, § 177, was a statute imposing penalties for its violation, that therefore a cause of action under its terms "accrued" at the time of violation, and that nothing in the language of c. 260, § 5A, suggested that tolling the limitations period in such a case would be necessary. Anawan, 76 Mass. App. Ct. at 451-452. [Note 12]

In reaching this conclusion, the Appeals Court cited and relied on Federal cases construing statutes of limitations solely applicable to actions for enforcement of civil fines or penalties. See Anawan, supra at 451-452, citing 3M Co. v. Browner, 17 F.3d 1453, 1455, 1460-1463 (D.C. Cir. 1994) (construing 28 U.S.C. § 2462, which establishes statute of limitations applicable to action or proceeding "for the enforcement of any civil fine, penalty, or forfeiture, pecuniary or otherwise"; court rejected Environmental Protection Agency's argument that discovery rule should apply to toll running of statute's limitations period until its "discovery" of company's violations of Toxic Substances Control Act, 15 U.S.C. §§ 2601-2629, concluding that limitations period began to run when company committed violations); and Unexcelled Chem. Corp. v. United States, 345 U.S. 59, 65 (1953) (construing statute of limitations in Portal-to-Portal Act, 29 U.S.C. § 255: "It is [the] breach of duty [by regulated entity], not its discovery, that normally is controlling"). But the limitations statutes at issue in these cases pertained exclusively to actions brought to recover civil fines, penalties, or forfeitures. In that respect, they are more like the statute of limitations set out in G. L. c. 260, § 5, which similarly applies only to "[a]ctions for penalties or forfeitures under penal statutes." As discussed, however, c. 260, § 5, explicitly disclaims any intent to reach actions governed by G. L. c. 260, § 5A, and by its terms, § 5A covers not only actions for fines or penalties brought by a government entity, but also actions for

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"damages . . . or other relief and brought by any person" (emphasis added). This court has previously concluded that the discovery rule applies to § 5A's limitations period in the context of an action brought by a private "person" under G. L. c. 93A. See Lambert v. Fleet Nat'l Bank, 449 Mass. 119, 126 (2007). See also Albrecht v. Clifford, 436 Mass. 706, 714-715 (2002). Where G. L. c. 260, § 5A, draws no distinctions based on (1) the specific nature of the consumer protection claim being brought [Note 13]; (2) who is bringing the consumer protection claim or case; or (3) the nature of the relief being sought (e.g., whether civil penalties, monetary damages, or restitution), and consistent with our interpretation of this statute in the cases just cited, we read § 5A to permit application of the discovery rule in an action brought by the division to enforce G. L. c. 175, § 177, just as it applies to causes of action brought by private individuals under G. L. c. 93A. [Note 14]

c. Damages. As mentioned earlier, the division's hearing officer found Anawan to have committed multiple violations of both G. L. c. 175, § 177, and G. L. c. 176D, § 2, [Note 15] but assessed fines only for the violations of c. 176D, § 2, and did so as provided under G. L. c. 176D, § 7. [Note 16] The Superior Court affirmed

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this determination, but the Appeals Court concluded instead that the division could only impose a penalty on Anawan under c. 175, § 177, [Note 17] and not under c. 176D, §§ 2 and 7. In that court's view, c. 176D, § 7, is "a statute of general application," while c. 175, § 177, is "a self-contained statute, prescribing specific remedies for its violation." Anawan, 76 Mass. App. Ct. at 454, quoting Reiter Oldsmobile, Inc. v. General Motors Corp., 378 Mass. 707, 711 (1979). Accordingly, the court ruled, the penalty imposed on Anawan must be confined to the specific one prescribed by c. 175, § 177, alone. Anawan, supra at 454-455. We disagree.

General Laws c. 176D, § 2, precludes trade practices connected to the business of insurance that are unfair or deceptive; G. L. c. 176D, § 7, provides the penalties for violations of c. 176D. See notes 15 and 16, supra. As the Appeals Court stated, G. L. c. 176D as a whole, including c. 176D, § 7, is a statute that applies generally "to all unfair practices in the insurance industry." Anawan, supra at 454. But that being said, G. L. c. 176D, § 12, provides that "[t]he powers vested in the commissioner by this chapter, shall be additional to any other powers to enforce any penalties, fines or forfeitures authorized by law with respect to the methods, acts, and practices hereby declared to be unfair or deceptive" (emphasis added). In light of the unambiguous language of c. 176D, § 12, we think it clear that in a case such as this one, where violations have been found of both a specific statute such as c. 175, § 177, regulating one aspect of the insurance industry, and the more general c. 176D, the commissioner, acting through the division, permissibly may impose separate penalties under both statutes. [Note 18] Contrast Reiter Oldsmobile, Inc. v. General Motors Corp.,

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supra (penalty can be assessed only under G. L. c. 93B, where that statute was enacted after G. L. c. 93A, and imposes penalties specifically for one industry, in contrast to general applicability of c. 93A). [Note 19]

3. Conclusion. The judgment of the Superior Court is affirmed.

So ordered.