Santa Monica, CA — Mercury Insurance Company’s latest attempt to escape responsibility for overcharging tens of thousands of California motorists has been rejected by the courts.
Facing hundreds of millions of dollars in fines in an administrative proceeding now being prosecuted by the California Department of Insurance, Mercury had asked the courts to throw out the Department’s case before it went to trial. Instead, the California Court of Appeal terminated Mercury’s lawsuit late Friday.
“This decision by the Court is another victory for consumers in Mercury Insurance Company’s long-standing war against Californians,” said Pam Pressley, Litigation Director for Consumer Watchdog and one of the lead attorneys in the case. The case was brought by the Department of Insurance against Mercury in 2004, charging that Mercury forced customers to pay illegal “broker fees” on top of the prices Mercury advertised. Consumer Watchdog joined the case in 2007.
Mercury could face hundreds of millions of dollars in penalties, a fine of up to $10,000 for each illegal fee it imposed on policyholders. Mercury’s lawyers used procedural maneuvers to delay the case for several years. In March 2012 the Insurance Commissioner issued a decision ordering the case against Mercury to go forward, and a hearing is now underway in Oakland where Mercury employees are being questioned by Department of Insurance and Consumer Watchdog attorneys about the illegal rating practices.
Mercury filed a lawsuit against the Insurance Commissioner seeking to derail the case. A Los Angeles Superior Court judge rejected Mercury’s lawsuit, and Mercury appealed. In Friday’s decision, the Court of Appeal concluded that Mercury is required to wait until the administrative proceeding has finished before it can dispute the results in court.
At the same time, Mercury is also trying to overturn an order that the company decrease its overall homeowners’ rates by 5%. Under voter-approved Proposition 103, insurance companies must open their books and justify their rates before they take effect, and the Insurance Commissioner has the power to order reductions when rates are excessive. This Friday, the Sacramento Superior Court will hear argument as to whether Mercury can further delay the rate decrease while the suit is pending or whether it must comply with the Commissioner’s order immediately.
“Mercury is notorious for playing every angle in its effort to avoid accountability for overcharging its customers. It has spent tens of millions of dollars over the last fifteen years on ballot initiatives, politicians, lawyers and lobbyists in its quest to get away with picking consumers’ pockets,” said Pressley. “At the end of the day, however, Mercury must face the consequences.”
Read the Court of Appeal decision here:
Read more about the administrative lawsuit against Mercury here:
Read more about Mercury’s excessive homeowners insurance rates here:
Read more about Mercury’s legal and political maneuvers here:
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