Commissioner Ricardo Lara
California Insurance Commissioner Ricardo Lara is under fire. At issue is a matter before the department that are pending and the other has to do with decisions made by an administrative judge that have been compromised by Lara.
First up is the sale of Applied Underwriters — a Berkshire Hathaway company — to its president Steve Menzies. He wants to move the company’s headquarters to the Cayman Islands. To sell the firm, the California Department of Insurance must approve.
It is a meeting that Lara had with Menzies that jump started the issue and leads to the heart of the controversy.
It involves a work comp case involving Menzies company Applied Underwriters. Two companies say they are going to file suit to overturn decisions by Lara and say his decision was swayed by the contributions to his 2020 campaign.
That takes us to Consumer Watchdog. The group alleges the commissioner took campaign contributions from people connected to Applied Underwriters and Independence Holding Company. The consumer organization has asked the California Department of Insurance for public records relating to Lara’s meetings with those representatives.
The commissioner has since agreed to return the close to $54,000.
A writ of administrative mandamus — an appeal to a court to review and reverse the decision of an administrative agency — has been filed by Oceanside Laundry and RDB Builders. They participated in the EquityComp workers’ compensation program — a three-year reinsurance-based, loss-sensitive work comp program — offered up by Applied.
It included a reinsurance participation agreement (RPA).
The California Department of Insurance declared them illegal because there are no rate filings for them. Lara originally agreed with the judge’s decision that the RPAs are illegal. Later — and where the controversy began — he decided to required the companies to pay the rates of a standard policy instead of the higher rates of the EquityComp program.
The change of mind — the companies allege — came after the Menzies meeting and after the controversial campaign donations.
The two companies claim they were lied to by Applied and say they overpaid when a standard workers’ compensation policy would have cost less and done the job. The companies want refunds.
Their attorney Larry Lichtenegger said if Lara’s decision — which forces them to pay for a standard policy or whatever Applied says is owed them — is left in place then his clients will be out hundreds of thousands of dollars they shouldn’t have to pay. He also contends it is not proper — and maybe even legal — for a commissioner to do other than what a judge says should be done with its decision.
Applied adamantly contends this shouldn’t be a problem and that it didn’t benefit from Lara’s decision. In fact, Applied’s lawyer says a writ will be filed on the issue. What the writ will be he wouldn’t say.
Lichtenegger’s writ for RDB Builders says, “Petitioners allege that on or about April 17, 2019, the Commissioner received campaign contributions totaling $53,000 from associates of Respondents intended to influence his decisions in matters effecting Respondents ongoing litigation before the Commissioner.”
The California Department of Insurance has no comment and says it can’t comment on ongoing litigation. It did say — though — that it is reviewing the sale of Applied to Menzies.
Source link: Insurance Journal