As the Daily Journal reports today:
Battle lines are being drawn between consumer activists and the California Department of Insurance on one side and the insurance industry on the other concerning a state appellate court decision whose opponents say immunizes insurers for using illegal underwriting criteria to determine rates.
On Friday, the Insurance Department in a four-page letter urged the state Supreme Court to depublish a unanimous October decision authored by 2nd District Court of Appeal Justice H. Walter Croskey. The lower court ruled that a class of consumers who alleged they were charged higher insurance rates because of the company's use of underwriting criteria must seek recourse with the Insurance Department rather than sue the insurer in court.
MacKay v. Superior Court, B220469 (Read the full story [.pdf])
This case, in which a 21st Century Insurance policyholder challenged an illlegal underwriting practice by the company, is a huge case for consumer rights in California. If the Court of Appeal opinion stands, insurance companies will claim that no matter how egregiously they violate the law, they can't be sued as long as the company can claim someone at the Department of Insurance (DOI) approved the practice. (In fact, they will argue that illegal practices stuck in thousand-page regulatory filings and unnoticed by regulators are also immune from suit). The ruling flies in the face of insurance reform Proposition 103, which gives consumers and citizens an absolute right to take insurance companies to court when they cheat, unfairly discriminate or otherwise break the law.
Last week, the Daily Journal published a two-part op-ed by Consumer Watchdog founder Harvey Rosenfield. Read part 1 and part 2.
In addition to Insurance Commissioner Poizner, Consumer Watchdog and more than a dozen civil rights, consumer protection and public interest groups sent letters to the Supreme Court urging depublication of the MacKay opinion. Consumer Watchdog also asked the Supreme Court to review the decision because there are several other opinions that have held the exact opposite of the Court of Appeal in the MacKay case.
