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home / insurance / in the media

Los Angeles Times
May 15, 2000

QUACKENBUSH'S QUAGMIRE

Times Editorial
AMID STILL MORE EVIDENCE OF DERELICTION, IT'S CLEARER THAT THE STATE INSURANCE COMMISSIONER HAS BUT ONE REASONABLE CHOICE: RESIGNATION.
      
Insurance Commissioner Chuck Quackenbush doesn't seem to understand that his election to state regulatory office carried serious obligations such as responsibility and accountability--not to mention caring for the public trust. For the past month, The Times' Virginia Ellis has detailed ways in which Quackenbush and his aides betrayed that trust and danced along the edge of the law in dealing with disputed claims arising from the 1994 Northridge earthquake.

Consider responsibility. Quackenbush's only defense is that he didn't know what his deputies were doing in his name. That's no defense. If he were a capable executive, he would have been aware of what was happening in his office and seen that it was wrong. These were major policy decisions involving possible fines against insurance companies that might have run to more than $ 1 billion. Instead, the firms were allowed to "voluntarily" contribute $ 12.8 million to private foundations established by Quackenbush himself, an action of questionable legality.

By professing ignorance, Quackenbush tacitly admits he was not in responsible control of his department. That in itself suggests he is not qualified to retain his office.

And it gets worse. Ellis reported Friday that Quackenbush and his aides funneled nearly $ 2 million in insurance company settlement funds directly to political consultants and others to pay for public service commercials that featured the insurance commissioner. This is the public's money being spent with utterly no state control, going for ads that in effect would elevate Quackenbush's political stock.

An attorney in Quackenbush's office wrote in an internal e-mail, "We have a need not to receive the funds directly, but to have the company hold the money and pay it out to three parties at our discretion." Why is that? To deceive? State investigators will have to find out.

As for accountability, if a public official and his aides make mistakes, it's the duty of the officeholder to acknowledge it publicly and tell the people what remedies are being pursued. But Quackenbush lamely insists his office did nothing wrong and that he remains the defender of policyholder interests. The only mistake, he insists, was to give the foundations too much discretion in distributing money to charities.

Even his fellow Republicans in Sacramento are privately shaking their heads at the quagmire Quackenbush has got himself into, with no apparent way out other than to resign. If Quackenbush knows what is best for him and for the people of California, that is just what he'll do.


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