YOU ARE HERE: LAT HomeCollections

California and the West | CAPITOL JOURNAL

Quackenbush Aftermath Shows the System Works

September 14, 2000|GEORGE SKELTON

SACRAMENTO — Watching the mop-up of the Chuck Quackenbush mess is a reminder that the system usually works. It often must be kick-started. But the checks and balances created by the nation's founders ultimately will correct a government's crooked, corrupt course.

A probing reporter. A news story. Public outrage. Political reaction. Legislative and legal action. Bad guys routed.


* It was only 5 1/2 months ago that Times reporter Virginia Ellis wrote her first of many stories detailing Insurance Commissioner Quackenbush's abuse of power--his taking advantage of Northridge earthquake victims to enrich himself politically.

* Since then, the Legislature has investigated. The state attorney general and the FBI still are digging. Lawmakers recently passed major reform bills that will prevent future commissioners from following down Quackenbush's twisted path. The measures are on Gov. Gray Davis' desk and by all indications he'll sign them.

* Quackenbush has been chased from office--indeed, clear out of California. The governor appointed his replacement, an apolitical former judge who was swiftly confirmed by the Legislature. The new commissioner, Harry Low of San Francisco, will take office Monday and has promised to immediately check into the suspect handling of Northridge damage claims.

Much scrubbing still is needed to clean up this mess, but there's scouring material on the way.


If these new bills had been law, Quackenbush never could have stumbled into the abyss.

For example:

* A bill by Sen. Martha Escutia (D-Whittier) would require the Insurance Department to post on the Internet its conclusions after investigating a company's claims handling. Such internal probes after the Northridge quake found serious fault with some insurers. But Quackenbush never made the information public. Policyholders and lawmakers were kept in the dark until a department whistle blower leaked the reports.

Because of the public's information vacuum, Quackenbush was able to cut secret deals with insurance companies. They were allowed to make relatively small tax-deductible donations to his self-serving foundations rather than paying stiff fines into the state treasury.

* Bills by Assemblyman Jack Scott (D-Altadena) and Sen. Jackie Speier (D-Hillsborough)--the heads of the Legislature's two insurance committees--would give lawmakers the power to control the spending of money generated from settlements with insurers. A commissioner no longer could create a nonprofit foundation on his own. And disaster victims would have to be considered first in appropriating the money.

Insurers paid Quackenbush's foundations $12.8 million, ostensibly to help consumers and quake victims. But none of the money ever was spent for that. Instead, it went to such mind-boggling causes as a football camp attended by Quackenbush's two sons ($263,000).

* A measure by Sen. Liz Figueroa (D-Fremont) would bar a commissioner from using settlement money for self-serving TV ads. Quackenbush spent $3 million promoting himself on television.

* A bill by Senate leader John Burton (D-San Francisco) would extend for an additional year the time limit for filing a Northridge damage claim.

The Assembly emphatically rejected a Speier bill that would have restricted campaign donations by an insurer to an insurance commissioner. Critics complained this would have created huge loopholes; plus, it was bad precedent to limit one industry's participation in the political process. But Speier says she may sponsor a 2002 ballot initiative.


The best reform would be to remove the insurance commissioner from political campaigning altogether and allow the governor to fill the post. That's how it was until 12 years ago when voters made this an elective office. Polls show they still like it that way and no politician--especially Davis--is about to fight a losing cause.

Meanwhile, Davis also is no dummy. The governor realizes that when Quackenbush disgraced himself, he not only destroyed his own career and blemished fellow Republicans, he gave all of Sacramento a black eye.

So in choosing a replacement, the governor looked for an apolitical, respected career public servant who would vigorously enforce the law and could restore the voters' confidence in state regulating. Davis quickly turned to an old acquaintance: Harry Low, 69, a retired appellate judge who recently has been a private arbitrator.

Low says he'll take no campaign money from anyone. But he may--possibly--consider running for the office in two years.

The next best reform just might be to elect an appointed commissioner.

Los Angeles Times Articles