Opening Brief Filed in Public Records Lawsuit Against Insurance Commissioner Lara & Agency Over Pay-to-Play Records

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Los Angeles, CA — Consumer Watchdog filed its Opening Brief in a California Public Records Act (“CPRA”) lawsuit against Insurance Commissioner Ricardo Lara and the Department of Insurance.  The CPRA suit alleges that Lara and the Department of Insurance failed to search for and produce records related to a pay-to-play scandal involving insurance companies with business pending before the agency.

The trial will be held September 2, 2022.  Download the brief here.
As explained in the Opening Brief, though Commissioner Lara had previously pledged not to accept insurance company contributions, in 2019 individuals linked to workers’ compensation insurer Applied Underwriters and another company, IHC, contributed $53,400 to Lara’s 2022 re-election campaign fund.  Some of the contributions were made in the name of relatives of insurance company executives, apparently to hide their true source. Shortly after, Applied’s president, Steven Menzies, requested that Commissioner Lara intervene in proceedings at the Department involving Applied.  Lara did so, overriding Administrative Law Judge orders in at least four proceedings.  Menzies also stood to gain if Commissioner Lara approved his purchase of Applied’s subsidiary, California Insurance Company (“CIC”). 
In the wake of statewide news reports Commissioner Lara apologized and promised “transparency.” 
Consumer Watchdog then filed two CPRA requests with the Department seeking communications and meeting records involving 13 named individuals and any other individuals “employed by or representing” the insurance companies involved in the scandal.
Several records the Department ultimately produced suggest that Menzies and others improperly discussed the sale of CIC with Commissioner Lara and Department staff simultaneous to campaign fundraising. The Department refused to produce other records and failed to provide an adequate explanation for withholding them.
Without recourse, Consumer Watchdog filed a public records lawsuit asking the court to require the Department to search for and produce all responsive records.  
Following the filing of the lawsuit, discovery responses from the Department demonstrated that the Department failed to search for, perhaps intentionally so, records related to at least four individuals that the Department knew were “employed by or representing” Applied and IHC.

These individuals include a former New Mexico insurance regulator who left office following a different pay-to-play scandal, an insurance executive involved in the sale of CIC, and two former California legislators-turned lobbyists, Rusty Areias and Fabian Nunez.
As noted in the Opening Brief, 
“During discovery, Respondents admitted that they had done nothing to determine who was ‘employed by or representing’ Applied or the other companies, or to search for records responsive to the second half of the CPRA Requests. After this litigation was filed, Petitioner uncovered evidence that Respondents were aware of other individuals who represented the companies, but still failed, perhaps intentionally, to include their names as search terms in order to identify other responsive documents. As a result, the universe of responsive documents remains unknown…. Respondents have a duty under the CPRA to establish search protocols and adopt search terms adequate to identify responsive records. Respondents violated this duty. . . . An agency fails to conduct an adequate search when it fails to pursue leads in response to a records request that, if followed, could reasonably lead to further responsive records.”
The lawsuit, Consumer Watchdog v. Ricardo Lara et al. Case No. 20STCP00664, is being litigated in Los Angeles Superior Court.  Consumer Watchdog is represented by attorneys for the group and Kelly Aviles, esq.

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Jerry Flanagan
Jerry Flanagan
Jerry Flanagan is Consumer Watchdog's Litigation Director. Flanagan leads Consumer Watchdog’s litigation efforts in the areas of health insurance coverage and access to treatments. He has over 20 years experience working in public interest and health care policy, legislation and litigation.

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