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home / insurance / in the media

Oakland Tribune
May 25, 2000

by Steve Geissinger

Subpoena looms for Quackenbush

Panel rejects bill to make insurance post appointive
SACRAMENTO -- In a signal top legislative leaders intend to deal directly with claims of misconduct against Insurance Commissioner Chuck Quackenbush, a Senate committee Wednesday rejected a Bay Area legislator's plan to return the position to an appointed post.

In a separate development, another Senate panel voted to force Quackenbush to testify about how he let insurers avoid fines after the 1994 Northridge earthquake if they contributed to a nonprofit fund he set up.Mistakes acknowledged

Quackenbush has acknowledged mistakes but denies wrongdoing.

The bill by Sen. Jackie Speier, D-Hillsborough, to put before voters a measure returning the post to an appointed position was rejected by the Senate Constitutional Amendments Committee on a 2-3 vote.

Speier argued that the bill would resolve the conflict posed by receiving campaign contributions from companies the commissioner regulates.

But Senate President Pro Tem John Burton, a San Francisco Democrat, joined two south-state Republicans in voting against the constitutional amendment.

Burton said afterward he sees no compelling need to again make the insurance commissioner a gubernatorial appointee.

Of the two elected insurance commissioners so far, Burton said, "one did a good job and the other didn't." A Democrat, John Garamendi, preceded Quackenbush, a Republican, in the post that was made an elected position by voters in 1988.

In other instances of alleged wrongdoing by elected state officials no one has proposed making their jobs appointed, Burton added.

Vote wins approval

Consumer groups, which criticized the bill as a bid to sidestep the controversy surrounding Quackenbush, hailed the vote.

"While Quackenbush's conduct is a blemish on our democracy, making the post appointed would only have made it worse," said Douglas Heller of the Foundation for Taxpayer and Consumer Rights.

The Senate Rules Committee on Wednesday ordered a subpoena for Quackenbush, who a day earlier refused to answer questions from the Senate Insurance Committee and walked out of a hearing, declaring himself the victim of a "political ambush."

Quackenbush made a sweeping request Wednesday for thousands of documents related to lawmakers' widening probe of settlements he reached with insurers.

He also asked the California Highway Patrol, responsible for security at state buildings, to investigate the unauthorized release of confidential surveys of insurance companies, called market conduct exams.

The actions by the Republican Quackenbush showed him mounting a more aggressive defense against Democrat-controlled investigations of his office.

Document demand

Quackenbush's privately hired legal team requested documents under California's Public Records Act. It demands e-mails, handwritten notes, photographs, letters, reports and other material from the heads of the Senate and Assembly insurance committees, their top consultants, and various staffers, including members of a Democratic investigative unit that has looked at Quackenbush in the past.

The insurance panel is investigating Quackenbush's decision to let insurers avoid up to $3 billion in potential fines for mishandled 1994 quake-related claims by donating about $12 million to a nonprofit fund.

Quackenbush said the nonprofit fund was created for consumer assistance and seismic research. But he has acknowledged that none of the money has been spent for either purpose so far.

Critics say much of the fund's spending, including public service TV ads featuring Quackenbush, has benefited him politically.

The subpoena marks the first time in recent memory that a statewide officer has been compelled to appear before a legislative committee.

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