State Insurance Commissioner Sued, Accused Of Withholding Requested Records

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Lawsuit also accuses Ricardo Lara’s office of creating records for public release that excluded key information


February 19, 2020

The Los Angeles advocacy group Consumer Watchdog sued state Insurance Commissioner Ricardo Lara and his Department of Insurance saying they did not fully comply with public records requests.

The nonprofit group, which was responsible for the 1988 ballot initiative that created the elected commissioner position, says in a lawsuit Tuesday that Lara withheld records related to meetings with insurers that have business before the state agency.

The 22-page legal complaint also claims the state agency omitted records sought under the California Public Records Act — and generated alternative documents instead.

The nonprofit had requested Lara’s calendars and his communications with insurance companies since he took office.

“Consumer Watchdog has been informed by whistleblowers that the Department of Insurance created a new version of the original calendar entries to avoid disclosing certain meetings and meeting ‘notes’ containing details of Lara’s interactions with insurance company officials,” the nonprofit said.

The lawsuit was filed in Los Angeles Superior Court. It included more than 550 pages of exhibits — emails, meeting summaries and other records previously released by the Department of Insurance that the plaintiff contends are incomplete.

Lara, a former state senator from Bell Gardens who was elected to statewide office in November 2018, did notrespond to a request for comment on the allegation or the lawsuit.

He was the subject of a July report by The San Diego Union-Tribune that disclosed tens of thousands of dollars in political contributions Lara had accepted from donors with ties to insurers even though he promised he would not take such donations.

Within hours of the report’s publication, Lara called the donations a mistake, credited the Union-Tribune for bringing them to his attention and promised to repay the funds.

Lara eventually returned just over $80,000 in contributions to his 2022 campaign.

But subsequent reporting showed that Lara collected at least $270,000 in political donations from people with interests before the department.

He or his agency also intervened at least four times in cases to benefit one particular insurer, a workers’ compensation provider called Applied Underwriters. The company was also up for sale at the time — and required the department’s approval to close.

By September, Lara issued a public apology and announced he was suspending his campaign fundraising.

The following month, the Department of Insurance rejected the sale of Applied Underwriters, meaning its California subsidiary, the California Insurance Co., was not permitted to sell insurance in the Golden State.

“The competence, experience and integrity of the persons who would control California Insurance Co. after the change of control is not in the best interest of its policyholders or the public,” the department said at the time.

The transaction sought to return full control of Applied Underwriters to Steven Menzies, a San Francisco Bay area businessman who met with Lara numerous times in 2019 as the commissioner’s office was considering the sale.

Records obtained by the Union-Tribune showed Lara meeting with Menzies at least twice. The commissioner also met repeatedly with Eric Serna, a former New Mexico insurance superintendent.

Serna agreed to retire as New Mexico’s top insurance regulator in 2006 as part of a settlement, closing an investigation into $129,000 in donations from a bank he regulated to a charity he co-founded. He now works as an insurance industry lobbyist.

A spokesman for Lara repeatedly declined to comment on why the commissioner was meeting with Menzies and Serna at a time his office was reviewing the proposed sale.

Consumer Watchdog said the private discussions were improper.

“Menzies also stands to gain if Commissioner Lara ultimately approves his purchase of Applied Underwriters,” the group said.

The nonprofit is still waiting for additional records from insurance regulators.

“The summary calendar created by the Department of Insurance contained entries consisting of unnatural phrases including ‘No responsive calendar entries’ instead of redactions, and daily calendar entries indicating that the records were sanitized,” the group said.

The lawsuit, which cites numerous Union-Tribune published reports in its footnotes, asks a judge to order the department to immediately produce all non-exempted and non-privileged records, pursuant to prior California Public Records Act requests.

Consumer Watchdog was founded in 1985 by consumer attorney Harvey Rosenfield as an effort to counter-balance what its founders saw as the growing influence of insurance companies and other special interests.

Three years later, the organization sponsored a ballot initiative to make the California insurance commissioner an elected position — an effort to make the state’s top insurance regulator answerable to voters.

Since then, elected commissioners largely avoided taking any campaign money from companies they regulate or executives working for those companies.

The Department of Insurance regulates more than $310 billion worth of insurance policies written in California each year, everything from homeowner and renter plans to life and workers’ compensation insurance.

Jeff McDonald

Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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