RATTIGAN, Acting P. J. I respectfully dissent. I agree with all of the conclusions expressed in the text of the majority opinion down to and including its footnote No. 5, but not thereafter. Specifically, I do not agree that the operation of former Education Code sections 22136 and 24102, on and after July 1, 1972, had an invalid “retroactive effect” upon respondent Industrial Indemnity Company’s contractual obligation to Hazel Bole as it stood at that time. I am not persuaded, moreover, that the case presents any issues of statutory retroactivity or constitutionality.
At all times since Ms. Bole’s disability commenced on December 12, 1971, Industrial has been contractually obligated to make disability benefit payments to her (1) which are scheduled in its insurance policy up to a maximum of $1,000 per month but (2) which the policy’s so-called “integration clause” reduces by the amounts of specified parallel benefits “paid or payable” to her, including “any Disability or income benefits provided by or through . . . [her] . employer.”1 The last-quoted provision operates to reduce Industrial’s payments to Ms. Bole by the offsetting amounts she is receiving from STRS.
However, the offsetting amounts of the various parallel benefits identified in the “integration clause” are subject to sporadic change by [100]their nature. The amounts in one category may be changed upon the commencement or termination of the benefits which underlie them. The amounts in another category may be changed by periodic legislative enactment because the amounts themselves are fixed by statute.2
In either case, the offsetting amounts of the parallel benefits may fluctuate upward or downward. (See my fn. 2, ante.) Industrial’s “integration clause” therefore operates to reduce its payments to Ms. Bole, by the amounts of her STRS benefits, whatever those amounts might be from time to time while Industrial’s coverage obligates it to make payments to her under its policy. If and when there is a change in those amounts during the period of Industrial’s coverage, the change is current as of its effective date. It is not “retroactive” to the commencement of the coverage on a previous date. The 1972 statutes effected such a change, but currently as of their operative date (July 1, 1972) and not beforehand. They did not operate “retroactively” to the date (Sept. 12, 1971) upon which the Industrial’s coverage of Ms. Bole commenced, and the change they brought about did not reduce its payments to her until they took effect on July 1, 1972.
Industrial assessed the prospect of such changes (upward or downward, and by legislative enactment or otherwise) when it exercised its “underwriting judgment” (the majority’s term) in issuing the policy and scheduling the premiums. From its experience, it undoubtedly anticipated statutory changes which were likely to operate its “integration clause” in its [101]favor. (See my fn. 2, ante.) It obviously did not anticipate the enactment of the 1972 statutes which have had the opposite effect. This reflects no more than a miscalculation of its “underwriting judgment.” The risk of such miscalculation is a reality of the commercial insurance marketplace. An insurer may not avoid it by claiming a vested right in the stability of a pertinent condition which is subject to legislative change. That no such right exists is made clear in decisions disallowing constitutional protection to persons who have contracted, or otherwise acted, upon the misplaced assumption that a given enactment would remain in effect. (See, e.g., HFH, Ltd. v. Superior Court (1975) 15 Cal.3d 508, 511-512, 515-516 [125 Cal.Rptr. 365, 542 P.2d 237] and cases cited.)
The amounts of the benefits “payable” to Ms. Bole by STRS may not constitutionally be reduced by statute because she now has a vested right in them. STRS must now reduce the amounts “paid” to her, by the amounts Industrial must pay her under the policy, because the new statutes have required such reduction since they took effect on July 1, 1972. The amounts to be paid her under Industrial’s policy must be correspondingly higher, commencing currently on that date and not retroactively, because the policy both contemplates and requires this and neither the Constitution nor any statute precludes it. Industrial’s contractual obligation to Ms. Bole remains the same, subject to its contracted ceiling of $1,000 per month. Only the cost of its performance has changed, and Industrial bargained for the change when it issued the policy.
I perceive no constitutional problem, none involving statutory retroactivity, and no alternative to holding Industrial to the burden of its bargain. The judgment before us has the effect of shifting that burden to the State Teachers’ Retirement Fund, to the teachers who finance its obligations in part, and to the taxpayers who fund the rest. I would reverse it.
A petition for a rehearing was denied November 30, 1978. Rattigan, J., was of the opinion that the petition should be granted. Appellants’ petition for a hearing by the Supreme Court was denied December 27, 1978. Manuel, J., was of the opinion that the petition should be granted.
As the majority opinion indicates, the “integration clause” provides that the benefits payable to Ms. Bole “will be reduced by any amounts paid or payable under the disability or retirement provisiohs of the Social Security Act (including any payments for eligible dependents) [.] any Workmen’s Compensation Law or any Occupational Disease Act or Law, any State Compulsory Disability Benefit Law; [or] any Disability retirement or income benefits provided by or through . . . [her]. . . employer.” This language is called an “integration” clause because it appears under the caption “Integration” in Industrial’s policy. In my opinion, the caption is an euphemism for which “offsets,” or “Reductions In Benefits,” would be more accurate substitutes.
One example in the first category would be disability benefits “paid or payable under” California’s “Workmen’s Compensation Law” (see my fn. 1, ante) to a recipient of benefits under Industrial’s policy. Another would be certain “amounts paid or payable” to that recipient “under the disability . . . provisions of the Social Security Act.” (See ibid.) Industrial’s integration clause would reduce its payments to the recipient when he or she became entitled to the offsetting benefits and while they lasted. Their cessation would eliminate the offsetting reduction and increase Indstrial’s payments accordingly.
The second category would include the amounts of various benefits “paid or payable under” California’s “Workmen’s Compensation Law,” which the Legislature has increased from time to time over the years. (See, e.g.. Historical Note, 44A West’s Ann. Lab. Code (1971 ed.) § 4453, pp.- 651-652.) It would also include the amounts of weekly benefits “paid or payable under” its “State Compulsory Benefit Law,” which the Legislature has similarly increased at intervals. (See, e.g., Historical Note, 65 West’s Ann. Unemp. Ins. Code (1972 ed.) § 2655, pp. 577-578.) Other examples in this category include statutory increases in the amounts of benefits “paid or payable under the disability . . . provisions of the Social Security Act,” which have frequently been enacted by the Congress or effected upon its authority.
The cessation of the parallel benefits in the first category is hypothetical and unlikely, but not inconceivable. As is shown in the historical sources cited above, statutory increases in the second category have been commonplace.