“Usable Form” Means Usable to the Commissioner: Agency-Specified Record Formats and Maximum Fines Upheld Under Montana Insurance Code

Case: Victory Insurance Co. v. State Auditor, 2026 MT 100 (Mont. May 12, 2026)

Court: Supreme Court of Montana

Posture: Judicial review of final agency decision; agency summary judgment and administrative penalties affirmed by District Court and Supreme Court.

1. Introduction

This decision arises from an enforcement action by the Montana Commissioner of Securities and Insurance (Montana State Auditor) against Victory Insurance Company (“Victory”), a Montana insurer that served as a managing general agent for Clear Spring Property and Casualty Company’s workers’ compensation policies in Montana. After Clear Spring terminated its relationship with Victory, Clear Spring informed the Commissioner that Victory refused to turn over managing general agent data. The Commissioner then issued demands for records and initiated administrative proceedings alleging multiple violations of the Montana Insurance Code—most notably, the obligation that a managing general agent provide the Commissioner access to its books and records “in a form usable to the commissioner” under § 33-2-1602(4), MCA.

Two issues reached the Supreme Court: (1) whether summary judgment was properly affirmed on the ground Victory failed to provide records in a “usable” form (and/or failed to fulfill the records request at all); and (2) whether the Commissioner acted arbitrarily and capriciously by imposing the maximum fine permitted by the Insurance Code—$25,000 per violation.

2. Summary of the Opinion

The Court affirmed across the board. It held:

  • Records “usable to the commissioner” are not judged by a purely objective “capable of being used” standard. The statutory phrasing requires a form fit for the Commissioner’s use, and the Commissioner may specify a usable format (here, .csv), subject to reasonableness and the “native format” qualifier in the demand.
  • The District Court did not exceed its authority by affirming summary judgment on an alternative theory (failure to fulfill the records request) because both theories were raised, argued, and supported within the administrative record.
  • The $25,000-per-violation fine was authorized and not arbitrary or capricious. Although § 33-2-1605(1)(a), MCA, provides a $5,000 fine for managing general agent violations, § 33-2-1605(3), MCA, allows “any other penalty” elsewhere in the Code, including § 33-1-317, MCA, which authorizes fines up to $25,000 for Code violations. The record supported the maximum fine based on willful obstruction and misrepresentations.

3. Analysis

A. Precedents Cited

The Opinion is anchored in established administrative-law review standards, summary-judgment doctrine, statutory interpretation, and deference to record-based agency factfinding. Each cited decision plays a distinct role:

  • Victory Ins. Co. v. Downing, 2023 MT 139, 413 Mont. 80, 532 P.3d 850
    Used as procedural and factual backdrop: the Court references the earlier dispute to situate the administrative enforcement action and clarify that the present appeal concerns later agency adjudication and penalties, not the earlier extraordinary-writ posture.
  • Blaine Cnty. v. Stricker, 2017 MT 80, ¶ 16, 387 Mont. 202, 394 P.3d 159
    Cited for the governing framework under the Montana Administrative Procedure Act (MAPA). The Court relies on it to emphasize that judicial review is constrained by MAPA standards and the administrative record.
  • Jackson v. Costco Wholesale Corp., 2018 MT 262, ¶ 14, 393 Mont. 191, 429 P.3d 641
    Supplies the standard of review for agency and district court summary-judgment rulings (de novo) and helps frame how M. R. Civ. P. 56 is applied in this administrative context.
  • Missoula Elec. Coop. v. Jon Cruson, Inc., 2016 MT 267, ¶ 15, 385 Mont. 200, 383 P.3d 210
    Reinforces the de novo approach to summary judgment and the application of Rule 56 principles.
  • Farhnow v. E-5 Oilfield Servs., 2025 MT 220, ¶ 8, 424 Mont. 229, 577 P.3d 1107
    Provides the burden-shifting rule: once the movant establishes no genuine dispute of material fact, the opponent must present “material and substantial evidence,” not speculation or conclusory assertions.
  • Planned Parenthood of Mont. v. State, 2025 MT 120, ¶ 10, 422 Mont. 241, 570 P.3d 51
    Invoked for the principle that courts draw reasonable inferences in favor of the non-moving party—important because the Court nonetheless concluded Victory’s responses did not create a genuine factual dispute.
  • Mont. Soc'y of Anesthesiologists v. Mont. Bd. of Nursing, 2007 MT 290, ¶ 43, 339 Mont. 472, 171 P.3d 704
    Cited for the baseline proposition that the Commissioner may exercise powers conferred by Title 33 and enforce the Insurance Code—supporting the legitimacy of the Commissioner’s investigatory demand.
  • House v. U.S. Bank N.A., 2021 MT 45, ¶ 14, 403 Mont. 287, 481 P.3d 820
    Central to the Court’s rejection of Victory’s “we complied” narrative. The Court uses House to hold that denial, speculation, and subjective interpretations of an otherwise clear record do not defeat summary judgment.
  • Mont. Sports Shooting Ass'n v. State, 2008 MT 190, ¶ 11, 344 Mont. 1, 185 P.3d 1003
    Supplies a key interpretive method: read statutory language in context, as a whole, and avoid isolating terms—used to rebut Victory’s attempt to treat “usable” as a free-floating, objective term detached from “to the commissioner.”
  • City of Missoula v. Fox, 2019 MT 250, ¶ 18, 397 Mont. 388, 450 P.3d 898
    Cited for purposive interpretation: construing a statute to give effect to its purpose. That purpose here is meaningful regulatory access to records for oversight and consumer protection.
  • Crismore v. Mont. Bd. of Outfitters, 2005 MT 109, ¶ 20, 327 Mont. 71, 111 P.3d 681
    Sets the restraint principle on reviewing agency penalties: courts do not disturb sanctions unless arbitrary/capricious, abusive, or clearly unwarranted.
  • Bitterrooters for Planning, Inc. v. Mont. Dep't of Envtl. Quality, 2017 MT 222, ¶ 16, 388 Mont. 453, 401 P.3d 712
    Provides the definition of arbitrary/capricious decision-making: failure to consider relevant factors or reliance on clearly erroneous judgment. The Court uses this to validate the fine based on the agency’s articulated factors (obstruction, facial illegality of contract terms, misrepresentation).
  • DeBuff v. Mont. Dep't of Nat. Res. & Conservation, 2021 MT 68, ¶ 41, 403 Mont. 403, 482 P.3d 1183 (quoting Cmty. Ass'n for N. Shore Conservation, Inc. v. Flathead Cnty., 2019 MT 147, ¶ 28, 396 Mont. 194, 445 P.3d 1195)
    Supplies the “random, unreasonable, or seemingly unmotivated” articulation. The Court uses it to conclude that maximum fines were motivated and record-supported.

B. Legal Reasoning

1) The District Court could affirm summary judgment on an alternative theory within the administrative record

Victory argued the District Court was constrained to the Hearing Examiner’s rationale (format usability) and could not affirm on the alternate ground (nonproduction). The Court rejected this on a record-and-issues basis:

  • The Commissioner moved for summary judgment on both theories: (a) Victory refused to provide access to records; or (b) at minimum, Victory refused to provide them in a usable format.
  • The parties litigated both theories before the Hearing Examiner; the record contained evidence and findings addressing both.
  • MAPA confines judicial review to the administrative record (§ 2-4-704(1), MCA), but it does not compel a reviewing court to adopt only the agency’s preferred rationale where the record supports the affirmed result.

On the merits of nonproduction, the Court treated Victory’s PDF “proof of transfer” and sample FTP links as not providing the demanded “direct access to the files requested,” and concluded Victory’s denials did not create a genuine issue of material fact under House.

2) “In a form usable to the commissioner” permits the Commissioner to specify a usable form (within reason)

The core statutory interpretation issue was whether “usable” in § 33-2-1602(4), MCA, means merely “capable of being used” (Victory’s objective standard) or “fit for the Commissioner’s use” (the agency’s view). The Court’s reasoning proceeds from textual structure and context:

  • The statute uses two different phrases: records usable by the insurer and usable to the commissioner. The Court treated this as purposeful legislative differentiation, undermining a one-size-fits-all objective test.
  • The Court refused to “insert” a requirement that the Commissioner prove it was incapable of using the PDFs, invoking § 1-2-101, MCA (do not insert what was omitted).
  • The Commissioner’s demand was not absolute: it requested .csv “unless its native format is not conducive to a .csv file.” That qualifier mattered to the Court’s fairness analysis: Victory did not identify its native format or explain why conversion was not feasible, even though metadata suggested the PDFs originated from Excel-type sources.

Importantly, the Court did not hold that managing general agents must always keep records in .csv; it held that they must provide access in a form usable to the Commissioner, and where the Commissioner reasonably specifies a usable form (with allowances for native format), the regulated entity must either comply or substantiate why it cannot.

3) Maximum fines were authorized by statute and supported by non-random, reasoned findings

Victory challenged the $25,000-per-violation fine on two tracks: lack of statutory authority and arbitrariness.

Statutory authority: The Court read the penalty provisions together:

  • § 33-2-1605(1)(a), MCA: authorizes a $5,000 fine per violation for managing general agent violations;
  • § 33-2-1605(3), MCA: preserves authority to “impose any other penalty” elsewhere in the Insurance Code;
  • § 33-1-317, MCA: allows fines “not to exceed” $25,000 for a person found to have violated a provision of the Code.

Read together, the Court held the Commissioner may impose up to $25,000 for § 33-2-1602 violations, and refused to read an implied $5,000 cap into the statutory scheme (§ 1-2-101, MCA).

Arbitrary/capricious review: Applying § 2-4-704(2)(a)(vi), MCA, and cases like Crismore, Bitterrooters for Planning, Inc., and DeBuff, the Court upheld the maximum fine because the agency:

  • Identified relevant aggravating factors (facially illegal contract omissions; willful obstruction; misrepresentations about document production);
  • Supported those factors with record evidence, including metadata suggesting PDFs were generated from spreadsheets and not scanned physical documents; and
  • Made a decision that was neither “random” nor “seemingly unmotivated.”

C. Impact

This Opinion meaningfully strengthens Montana insurance regulators’ ability to obtain functional electronic records and to sanction obstruction:

  • Agency control over “usable form” demands: Regulated entities should expect that the Commissioner may specify formats (e.g., .csv) when seeking data-heavy records. A response that provides “view only” samples, derivative PDFs, or proof of transfer to third parties is unlikely to satisfy § 33-2-1602(4) where the demand is for access to the underlying records.
  • Compliance requires explanation, not just refusal: The “native format not conducive” escape valve is practical—but the burden effectively shifts to the regulated entity to identify the native format and explain why conversion/production as requested is infeasible.
  • Penalty exposure increases beyond the MGA-specific fine: By approving reliance on § 33-2-1605(3) plus § 33-1-317, the Court signals that “default” fine provisions do not necessarily cap exposure where the Code preserves broader penalty authority.
  • Litigation posture and credibility matter: The Court’s acceptance of maximum fines rested heavily on findings of willful frustration and misrepresentation. Future respondents who contest format demands should build a clear technical record (systems, native formats, burdens, feasibility) rather than relying on conclusory assurances.

4. Complex Concepts Simplified

  • Managing General Agent (MGA): An entity that performs key insurer functions (often underwriting/administration) under contract. Montana regulates MGAs tightly due to consumer-protection and solvency concerns.
  • “In a form usable to the commissioner”: Not merely “readable” in some abstract sense. It means practical, functional usability for the regulator’s purposes (review, analysis, enforcement). A dataset locked into PDFs may be “readable” but not operationally usable for audit/examination.
  • Summary judgment (Rule 56): A case can be decided without trial when there is no genuine dispute about material facts and the law entitles one side to win. Here, the key facts (no .csv production; no direct access to underlying data; continued nonproduction after repeated requests) were undisputed.
  • Administrative record limitation: Courts reviewing agencies generally cannot re-try the case with new evidence; they review the agency record and determine whether the agency applied the correct law and whether its action was arbitrary/capricious.
  • Arbitrary and capricious: A high bar for challengers. A penalty is usually upheld if the agency considered relevant factors and articulated a rational basis supported by the record—even if the court might have chosen a different penalty.

5. Conclusion

Victory Insurance Co. v. State Auditor establishes a practical enforcement rule for Montana insurance regulation: when § 33-2-1602(4), MCA, requires access to records “in a form usable to the commissioner,” the Commissioner may specify a usable production format (such as .csv) and a regulated MGA must either comply or credibly explain why its native records cannot be produced that way. The Court also confirms that the Commissioner may impose maximum penalties under the broader fine authority in § 33-1-317, MCA, via § 33-2-1605(3), MCA, and that significant fines will be sustained when the record shows willful obstruction and lack of candor. In combination, the case incentivizes timely, technically transparent cooperation with regulatory data demands and strengthens the Commissioner’s hand in examinations and investigations.