By Timothy Darragh, BESTWIRE

February 19, 2020

http://news.ambest.com/newscontent.aspx?altsrc=108&refnum=223495

A consumer group has sued the California Department of Insurance and Commissioner Ricardo Lara, saying they failed to comply with a state records request seeking documentation of Lara's meetings and communications with campaign contributors.

Consumer Watchdog filed the complaint in Los Angeles County Court, alleging Lara is hiding records, such as his complete official calendar, which should be in the public domain.

The lawsuit seeks to have the court compel the department to release Lara's calendar and other records relating to business between the department and Applied Underwriters and Independence Holding Co.

According to Consumer Watchdog, the records relate to $54,300 in campaign contributions Lara received from individuals linked to the two companies, after he pledged not to take contributions from companies regulated by the department.

Records show Lara's campaign has not accepted donations since he put a moratorium on fundraising after the outcry over his meetings with the companies' officials erupted (Best's News Service, Feb. 10, 2020).

Lara's office said he has been accountable to the public. "Transparency is important to Commissioner Lara and that is why his calendar of meetings with external stakeholders is public and posted on our website and the Department has responded to all requests for his records," spokesman Michael Soller said.

Documents outlining Lara's calendar since September, 2019 are posted on the website. The period before September the period in question in the lawsuit was released "in a public records request to Consumer Watchdog and several media organizations," Soller said.

According to the complaint, Lara acknowledged intervening in four cases involving Applied Underwriters after receiving contributions. Lara reversed a policy decision by his predecessor in Applied Underwriters' favor, a decision that could mean hundreds of millions of dollars for the company, it said.

Applied's president, Steve Menzies, also stands to gain if Lara approves his purchase of Applied Underwriters, which requires Lara to agree to the sale of Applied's California affiliate, California Insurance Co., it said.

Citing California's public records law, Consumer Watchdog demanded copies of records associated with Lara's dealings with Applied Underwriters and IHC. After initially balking, the department turned over records last year, it said, but they allegedly were incomplete.

The production of the records was "grossly inadequate," the lawsuit said.

"For example, instead of turning over copies of the original records, the Department of Insurance appears to have created a summary of Lara's meetings, raising significant questions about what it is withholding," it said. " Additionally, the Department of Insurance claims it is withholding other records under various claims of exemption but refuses to provide any additional information about what types or how many records it is withholding."

None of the calendar entries contain notes about what was discussed, nor were any meeting agenda records, internal memos or phone call logs provided, Consumer Watchdog said.

Based on that record, it appears that "many additional communications" between Lara and insurance company representatives have been withheld, the lawsuit said.

The $920 million sale of Applied Underwriters, including California Insurance Co., from Berkshire Hathaway to Menzies and Alan Quasha of the Quasha Group has been caught in a standoff between regulators (Best's News Service, Nov. 7, 2019). The California department has never approved the transaction, saying Applied Underwriters' application was defective, and a California county judge named the California Insurance Department the company's conservator.

However, New Mexico's insurance regulator said the Nov. 4 California court order was moot because New Mexico approved the merger of California Insurance Co. with a new company domiciled in New Mexico called California Insurance Co. II on Oct. 15. The company changed its name again that day to California Insurance Co., a New Mexico Corporation, New Mexico regulators said.

(By Timothy Darragh, associate editor, BestWeek: [email protected])