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Quackenbush Is Urged to Resign

Insurance: Quake victims and activists make demand outside damaged complex. Embattled commissioner says foes have lied about him.

May 05, 2000|MARTHA L. WILLMAN and KAREN ROBINSON-JACOBS | TIMES STAFF WRITERS

Saying he has corrupted the state insurance department, a group of irate Northridge earthquake victims, consumer advocates and lawyers Thursday called for the immediate resignation of California Insurance Commissioner Chuck Quackenbush.

Responding at an afternoon news conference in downtown Los Angeles, Quackenbush asserted that his detractors have "continually lied" about his department's record and said he is proud of his work.

The call for Quackenbush's resignation was made outside the Devonshire Village condominium complex where quake-damaged roofs are still covered with blue tarpaulins six years after the 1994 earthquake. The buildings have not been repaired, along with thousands of other structures, because victims have been unable to settle claims against insurance companies.

Rick Bennett, president of the homeowners association at the complex, accused Quackenbush of violating promises to advocate for consumers.

"I voted for you," Bennett said, saying that he was directing his words at Quackenbush, who was not present. "I believed in your words and I believed in your promises, but you violated both. . . . I ask that you resign immediately so that we can get help from other sources in government."

Bennett said Farmers Insurance Group has offered to pay $931,000 for repairs that private appraisers estimate will cost more than $5.5 million. A Farmers attorney declined comment, citing pending litigation.

Others at the news conference said that if Quackenbush does not resign, they will call on the Legislature to impeach him. An impeachment movement for misconduct in office can be initiated by a resolution of the Assembly and imposed by a two-thirds vote of the Senate. No elected state official has ever been impeached in California, said Bion Gregory, state legislative counsel.

The Legislature, Atty. Gen. Bill Lockyer and the Fair Political Practices Commission all are probing Quackenbush's activities.

Bennett and others blamed Quackenbush for siding with insurance companies instead of homeowners. The Department of Insurance allowed insurance companies to avoid fines for mishandling claims by making donations to foundations set up by Quackenbush. The foundations, sometimes operating out of Quackenbush's office, gave money to charitable groups, many of which were connected to the commissioner's political associates, documents obtained by The Times have shown.

"When greed takes the place of public safety and personal self-dealing overcomes public protection, then serious changes need to be made," said George Kehrer, executive director of a consumer group that helps disaster victims nationwide. Kehrer flew in for the news conference from North Carolina, where his organization, Community Assisting Recovery (CARe), is working with hurricane victims.

The conference was called by the Santa Monica-based Foundation for Taxpayer and Consumer Rights, led by Harvey Rosenfield, who wrote the 1988 ballot initiative that changed the state insurance commissioner's job from an appointed to an elected one.

Rosenfield accused Quackenbush, who was elected in 1994, of allowing insurance companies to escape massive fines that had been recommended by state investigators in return for donations to the foundations.

Quackenbush, reading a prepared statement Thursday afternoon, contended that the morning's news conference was orchestrated by "professional critics and trial lawyers" and that only one alleged earthquake victim was in attendance. A reporter at the event counted about two dozen homeowners present.

The commissioner said his department has sparked a "firestorm of market competition," overseen $1.5 billion in rate decreases in the past five years and helped mediate agreements between more than 700 earthquake victims and their insurance companies. He also said he has enforced $56 million in sanctions against insurance firms since taking office. Included in that amount is the $12.8 million collected from insurers for the foundations, according to Department of Insurance records.

Quackenbush said the charitable foundations were more "consumer beneficial than the traditional route of assessing fines and penalties."

He acknowledged mistakes in the way that the foundation program was implemented. "We would have liked to have a little more control of that money," he said, but added that he expected recommendations for improvements from a blue-ribbon commission now being formed.

Quackenbush also criticized Rosenfield, accusing him of "lining his pockets" with a $100,000 a year salary from his own foundation.

Rosenfield, who says he earns about $200,000 a year from two nonprofit groups, said Quackenbush "is trying to save himself by attacking me." Quackenbush's state salary is $132,000 a year.

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