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Associated Press
Aug 22, 2000

by John Howard

Commissioner's Appointee Sails Through Confirmation Hearing

(08-22) 16:17 PDT SACRAMENTO (AP) -- Insurance commissioner appointee Harry Low, winning backing from key lawmakers Tuesday, promised to avoid the ``innovative'' use of insurer settlements that led to his precedessor's downfall.

The Assembly special committee on Low's confirmation swiftly recommended his appointment to succeed scandal-plagued Chuck Quackenbush. The full Assembly may consider his confirmation as early as Thursday.

Low, a Democrat and former presiding justice of the state appeals court in San Francisco, was appointed by Gov. Gray Davis to serve the two remaining years of Quackenbush's term.

During his first confirmation proceeding, Low shied away from taking positions on critical insurance-related issues -- such as bad-faith lawsuits, earthquake coverage and confidentiality rules -- despite lawmakers' persistent questioning.

Instead, Low said in general terms that he wishes to restore Insurance Department morale, review Northridge earthquake claims, examine the agency's use of outside consultants and lawyers, and eliminate potential conflicts of interest.

In his most definitive comments, Low criticized the use of private foundations to spend insurers' settlements with the department -- a clear reference to Quackenbush, who was threatened with impeachment for his creation and use of such funds.

``If you are going to make settlements with a body you are regulating, then I think it should always be public money rather than a private foundation. I certainly will avoid any kind of 'innovative' or 'new' kind of settlement structure,'' Low said.

Asked whether he had any ties to the insurance or financial industries that could interfere with his work as commissioner, Low said he knew of none.

Low noted that he resigned as a director of Union Bank of California and as a director of the 15,000-member Chinese Hospital Health Plan.
Low, 69, shed light on a key period of his professional life: the years since his 1993 retirement as a state appeals judge, during which he served as a private mediator, arbitrator and judge for JAMS, the Judicial Arbitration and Mediation Service.

During that period, Low said he handled about 150 cases a year, and ``probably 10 to 15 percent of them were probably insurance-related.''
He did not provide details, and said he has severed his connection to JAMS, a private-mediation entity.

Doug Heller of the Santa Monica-based Foundation for Taxpayer and Consumer Rights urged Low to describe the JAMS cases in which he participated, providing at least a summary of issues, plaintiffs and defendants.

That would show Low can be ``an advocate for, and responsible to, the consumers of this state,'' he said.

Heller also asked Low to promise to act independently of Davis.
``Because of Gray Davis' prodigious fund-raising from the insurance industry -- $1.1 million in 1999 alone -- Justice Low should guarantee that all personnel and policy decisions will be independent of the governor's office,'' Heller said.

Low did not address Heller's comments specifically, but said state law is designed to protect consumers and ``it is my intention to administer that law forcefully.''

Low needs approval from both houses to start his job. In the Senate, the Rules Committee was to consider his appointment Wednesday.

Pending his confirmation, the department is being run by Clark Kelso, 40, a professor at the McGeorge School of Law in Sacramento.

Quackenbush, a Republican, left office July 10 under threat of impeachment, following the disclosure that millions of dollars in insurance settlement funds were spent on political purposes.
State and federal investigators are investigating. Quackenbush has denied any wrongdoing.

Among other things, investigators are examining Quackenbush's creation last year of the California Research and Assistance Fund, bankrolled with $12.45 million from insurers who had been threatened with up to $3 billion in fines for mishandling Northridge earthquake claims.
The money was supposed to go for consumer assistance and quake research, but none did. Instead, at least $6 million was spent on TV ads featuring Quackenbush and other spending unrelated to the fund's purpose.

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