Petition marks third try to change decision
DOWNTOWN LA — A Santa Monica-based consumer rights group has stepped up efforts to stop auto insurance companies in their tracks, alleging they overcharge motorists tens of millions of dollars for coverage.
The Foundation for Taxpayer and Consumer Rights filed a response on Monday in the California Court of Appeals against Safeco Insurance Company, which recently asked judges to throw out a lawsuit against the auto insurer.
The lawsuit, filed in 2002, is still being hashed out in Superior Court. In it, the FTCR wants Safeco and other auto insurance companies to refund tens of millions of dollars to those who were charged extra for being first-time policy holders. The Foundation’s lawsuit also charges Safeco with failing to disclose its practices to the insurance commissioner, an additional violation of the law.
Lawsuits involving possible surcharge violations are also pending against other insurers, most of which occurred during the tenure of Chuck Quackenbush, former head of the CDI, who resigned his post in 2000 amid reports that he abused his office to favor insurance companies in exchange for kickbacks.
Safeco, meanwhile, has asked the court of appeals to rule that consumers, such as those the FTCR is representing in its case, can’t sue the insurance company regarding rate schemes.
Safeco maintains in its petition that rates are approved by the California Department of Insurance under Proposition 103. Authorized by the consumer and taxpayers union, Proposition 103 is a voter-approved ballot measure which went into effect in November of 1988, requiring the CDI to approve rates for auto and other types of insurance. As such, the insurance companies cannot be responsible for the rates the CDI administratively approves.
Safeco’s petition, however, marks the third time in as many years auto insurance companies have asked the court of appeals to judicially repeal a provision of Proposition 103, which allows “any person” to take an insurance company directly to court to challenge violations of its reforms, said Harvey Rosenfield, an attorney who authored the ballot measure and is working on the case.
“The insurance companies are asking for a license to steal,” Rosenfield said. “If they can’t be sued for ripping people off, nothing will stop them from doing it.”
Representatives from Safeco did not comment. In its petition, Safeco states that if insurance companies were to follow the “restrictive statutory language” of Proposition 103, insurers would not only have to file their rates with the CDI, but also with the courts, to ensure they are doing so within legal means and successfully be able to thwart lawsuits from customers.
Safeco’s petition states, “this was never envisioned by Proposition 103, and it makes little sense.”
The FTCR contends that Safeco is distorting how the law would be enforced.
Last year, two judicial panels from the court of appeals issued separate decisions upholding the Proposition 103 authority and rejecting the arguments made by Mercury Insurance and State Farm. By using their legal powers to petition, Safeco and other insurance companies are trying to get yet another judicial panel to come to a different decision, Rosenfield said.
“The voters made clear that consumers could sue insurance companies to force them to obey Proposition 103’s reforms, and to refund illegal surcharges when they break the law,” Rosenfield said. “They are trying to win in court what they lost at the ballot box and in the very same court just last year.
“These endless legal challenges waste taxpayers’ money and undermine public confidence in the integrity of the legal system.”
Originally published in the Santa Monica Daily Press print edition on August 9, 2005. Read the original PDF.