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Alameda Times-Star (Alameda, CA)
Jan 24, 2004
by Robert Gammon, STAFF WRITER
Judge nixes Perata's insurance law;
Measure aimed at fining drivers who allowed policies to lapseA judge has thrown out a car-insurance law written by state Sen. Don Perata, D-Oakland, that consumer and civil rights groups said unfairly targeted low-income drivers.
Opponents also argued Perata's bill violated the insurance-reform initiative, Proposition 103. Perata's bill, SB 841, would have allowed insurance companies to levy surcharges against motorists whose insurance lapsed or who were buying car insurance for the first time.
Critics of SB 841 called it pay-to-play politics because Mercury Insurance, the law's primary backer, pumped at least $185,000 into Perata's campaign fund and measures he strongly supported.
Los Angeles County Superior Court Judge Dzintra Janavs last week agreed with the consumer groups that SB 841, signed into law by former Gov. Gray Davis on Aug. 2, 2003, directly contravened Proposition 103. That measure specifically prohibits insurers from penalizing uninsured motorists trying to buy insurance.
Mercury was levying surcharges of up to $500 against insurance buyers who let their insurance lapse or were first-time buyers, consumer advocates said.
"Don Perata betrayed his constituents and the voters of California," Harvey Rosenfield, author of Proposition 103 passed by state voters in 1988, said Friday. "He portrays himself as a progressive legislator who represents disenfranchised folks in Oakland, but lo and behold, here he is representing corporations and special interests he needs to achieve higher office."
Perata, who wants to become president of the Senate next year, did not return a phone call seeking comment Friday. Judge Janavs also said both houses of the Legislature, which approved SB 841 last summer, overstepped their authority to amend Proposition 103. The judgement invalidating Perata's bill is to become final in early February.
The office of State Attorney General Bill Lockyer, which defended SB 841 in court, argued the law would have boosted competition within the insurance industry and lowered rates for insured drivers.
"We contend it furthers Proposition 103's purposes," said Deputy Attorney General Stephen Lew. "It would allow a lot of Californians to save money."
The revenues generated by the surcharges would have permitted insurance companies to use discount rates to compete for insured drivers, the government argued.
But consumer and civil rights advocates said the effect of the law would have been to force low-income drivers -- who are more likely to go without insurance for a time -- to finance rate cuts for middle- and upper-income motorists.
"People who are uninsured typically aren't trying to just stick it to the system -- they're uninsured because they're poor," said Doug Heller of the liberal Foundation of Taxpayer and Consumer Rights.
Also, there's no evidence drivers who let their insurance lapse are more likely to get in an accident than those who are steadily insured, Heller noted.
Nevertheless, Lew said the state Attorney General's Office would probably appeal the judge's ruling.
Along with the Foundation for Taxpayer and Consumer Rights, the lawsuit to overturn Perata's bill was brought by Consumers Union, Public Advocates, Southern Christian Leadership Conference and National Council of La Raza.
The court also rejected a related allegation by Mercury that consumer and civil rights advocates are attempting to prevent the insurance company from exercising its First Amendment right to make campaign contributions.
In 2002, Mercury gave Perata $35,000 and donated $150,000 to Yes on 45 and Citizen's Right to Petition, two committees set up to amend the state's term limits law -- an initiative Perata backed vigorously.
Mercury also donated $175,000 last year to the Gov. Davis campaign against the recall and a total of $895,000 to politicians and campaigns throughout California.
In addition, Mercury gave $75,000 to a new statewide committee based in Oakland known as Community Leaders for Neighborhood Preservation. The committee was set up last summer by local developer Phil Tagami, an ally of Perata.
Tagami said his committee "raises money to support Democrats around the state" and Mercury's large donation had nothing to do with SB 841 or Perata. Mercury, he said, made the donation because "they like what we're doing."
Campaign finance records show Tagami's committee, which raised $135,000 last year, has had only four donors so far -- Mercury, Zenith Insurance, PG&E and Ameriquest Mortgage.
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