Consumer Group Wants Northridge Settlements Tossed Out

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BestDay News

SACRAMENTO (BestWire)- Settlements made between former California Insurance Commissioner Chuck Quackenbush and insurers accused of mishandling Northridge earthquake claims should be thrown out, a consumer group says.

The group also applauded federal investigators who may join the inquiry into alleged wrongdoing by Quackenbush, who officially resigned Monday.

“These settlements are not simply tainted by the scandal, they’re the soul of the scandal,” said Doug Heller, a spokesman for the Foundation for Taxpayer and Consumer Rights.

He said the foundation supports the actions of Ray Bourhis, who was appointed special master in 1991 to oversee the insurance department’s claims investigations. Bourhis has asked San Francisco Superior Court Judge John Dearman to toss out settlements between Quackenbush and insurers, according to the Los Angeles Times.

Dearman has scheduled a hearing on the request for Aug. 28. Bourhis could not be reached for comment.

Quackenbush gave notice of his resignation in June, just days before he would have had to testify before a legislative body investigating his office’s actions in monitoring insurers’ handling of claims from the 1994 Northridge earthquake. Lawmakers accused Quackenbush of letting insurers off the hook by reaching settlements with them to collect $12 million for a foundation he controlled, in lieu of potentially billions of dollars for unfair claims practices (BestWire June 28, 2000).

Nullifying the settlements “is the right thing to do,” Heller said. The state Attorney General’s office has said it’s investigating the situation, but Heller said it’s appropriate that federal officials join the inquiry.

“This is not just a California issue,” Heller said. “This is about how insurance companies deal with consumers and how regulators handle insurance companies.”

U.S. government authorities are negotiating with state officials over how the federal government might help in the investigations, the Associated Press reported Tuesday. No one from the California Attorney General’s office could be reached for comment.

Consumer Watchdog
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