Department of Insurance v. Dade County Consumer Advocate’s Office

In 1983 Florida enacted anti-rebate statutes that prohibited insurance agents from paying customers back a portion of the agent’s commission. In effect, the anti-rebate statutes prevented agents from charging customers lower commissions than those set by the insurers. The Dade County Consumer Advocate’s Office (the consumer advocate) (plaintiff) sued the Florida Department of Insurance (the department) (defendant), asserting the statutes prevented price competition, limited consumers’ bargaining power, and essentially deprived consumers of property without due process, in violation of the Florida Constitution. The trial judge upheld the statutes and granted the department summary judgment. The appellate court reversed, declaring the anti-rebate statutes unconstitutional because they did not serve any legitimate state interest. The department appealed to the Florida Supreme Court. On appeal, the department argued that the anti-rebate statutes reasonably advanced the state’s interest in protecting consumers by ensuring uniform rates across actuarial groups, prevented large rebate offers from deceiving consumers into thinking they were paying less, kept agents from artificially inflating commissions to offer larger rebates, and avoided increased administrative costs from customers changing insurers every year to take advantage of rebate offers.