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Monday, November 20, 1995

Quackenbush Vows Action Against No-Shows;


Insurance Commissioner Chuck Quackenbush is threatening to bring contempt actions against insurance executives who snub his summons to meetings Tuesday and Wednesday on the companies' Proposition 103 rebates.
Quackenbush subpoenaed the officials to the meetings--intentionally scheduled to disrupt their Thanksgiving holidays--in an effort to strong-arm the companies into settling their long-disputed rebate liabilities under the 1988 insurance rate-cutting initiative.
The purpose of the meetings, to be held at the Insurance Department's San Francisco offices, is simply to set dates for later administrative hearings for the 53 insurers that have not yet resolved their rebate cases. But Quackenbush specified that the conferences be attended by executives, "not note-takers."
However, lawyers representing a number of the insurers have notified the Insurance Department that top officers will not attend.

"The commissioner doesn't have the authority to subpoena people outside California," said James Woods, a San Francisco lawyer representing 15 of the companies. "Trying to yank people across the country on Thanksgiving Eve--it's just not the American way," he said.

Nevertheless, Woods said his clients would send representatives who would be empowered to negotiate on the companies' behalf if Insurance Department officials make legitimate settlement offers.

Other lawyers accused the department of being the source of delay.

"Our clients have been negotiating for months and months," said David Hauge, a Los Angeles lawyer representing six insurers. "In some cases, the department hasn't gotten back to us on our latest offer."

When he took office last January, Quackenbush promised to have all remaining Proposition 103 rebates into the hands of policyholders by July 1. He has settled two-thirds of the cases that faced him at that time, but the remainder have proved more stubborn to resolve than he expected.

The 1988 insurance rollback initiative requires property insurers to rebate "excess" premiums generated during 1989. The initiative was finally upheld by California's highest court in 1994, and since then state officials have been trying to enforce it.

Quackenbush aides have said they hope that the awkward timing of the scheduling conferences--dubbed the "turkey shoot" by some wags--might prompt the companies to negotiate more energetically.

"Just as noncompliance with Proposition 103 has its consequences, so too will ignoring a legally executed subpoena," Quackenbush said last week in threatening contempt actions against the no-shows.

Quackenbush "is trying to spin this as him taking on the big, bad insurance companies, but we've sent him data that he hasn't even replied to," said San Francisco lawyer Gary Fontana. Fontana added that one of his legal associates--and not company executives--will represent his six insurer clients at the conferences.

The largest of the remaining holdouts are State Farm Mutual Automobile Insurance Co. and Farmers Insurance Group, California's first- and third-largest property-casualty carriers.


Copyright (c) 1995 Times Mirror Company


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