State Attorney General Jerry Brown won national attention for his move this week to investigate document-shredding involving Sarah Palin’s scheduled speech at California State University Stanislaus. But the Democratic gubernatorial candidate’s silence on allegations involving a California insurance giant that is also a generous political donor has raised questions about whether election-year politics may be in play.

The office of state Insurance Commissioner Steve Poizner, a Republican running for governor, has taken the lead in pursuing investigations into the practices of Mercury Insurance Group, which state investigators allege has engaged in illegal practices for years while ignoring state warnings to stop.  

Poizner’s office issued a report this week alleging violations including discrimination and overcharging by Mercury, which insures 1 in 10 California drivers. Mercury could face millions in fines if it doesn’t correct the problems within days, officials said.

Mercury spokesman Coby King has disputed the report, saying that the firm "takes very seriously our responsibilities to consumers" and "strictly adheres to the rules set forth by the department of insurance and current law."

Brown and Poizner’s dramatically different responses to Mercury’s trouble comes just weeks before the June 8 gubernatorial primary election.

Big political donor


Mercury General is one of the state’s most deep-pocketed political donors, putting up $5.25 million to date into the campaign for Proposition 17 on the June ballot. Mercury backs the measure, saying it would lower rates for Californians, but consumer groups say the measure would dramatically raise surcharges for many consumers.

Over the past decade, the company has donated almost $900,000 to state political parties, with the California Democratic Party receiving more than two-thirds of that money. In addition, Mercury has donated $13,000 to Brown’s 2010 campaign – but none to Poizner’s campaign.

Consumer advocates say that while Poizner’s office has the power to demand fines from Mercury, the state attorney general has traditionally been the chief enforcer of California’s main consumer protection law – and has the power to obtain refunds for California consumers who may have been overcharged by the firm.

But Brown’s office said his department has no current plans to pursue Mercury unless asked to do so.

Spokeswoman Christine Gasparac said "the violations outlined in the report are the primary jurisdiction of the insurance commissioner," adding "if the commissioner were to seek our assistance in a judicial enforcement action, we would represent the commissioner in taking appropriate action."

‘Blatant evidence’

Darrel Ng, spokesman for the state insurance commissioner’s office, told The Chronicle that the two offices are independent and Brown needs "no referral and no request" to pursue the case.

Consumer advocate Harvey Rosenfield, founder of Consumer Watchdog, agreed.

"I don’t know why the attorney general would have to wait to be asked, when there is blatant evidence of law-breaking by Mercury," he said.

Poizner’s gubernatorial campaign spokeswoman, Bettina Inclan, said the case underscores how "Jerry Brown is more interested in chasing celebrity cases than dealing with issues impacting everyday Californians."

Sterling Campbell, spokesman for Brown’s gubernatorial campaign, said Thursday that Brown’s actions were not motivated by politics, saying that "the campaign doesn’t have anything to do with how the attorney general administers his office."

Poizner’s timing

But Mercury spokesman King – a member of the state Democratic Party Central Committee and the party’s executive board – charged on radio station KCRW’s "Which Way L.A.?" this week that Poizner may have been "looking for a media home run" in his handling of the case.

King called the timing of the insurance commissioner’s investigation "highly suspicious" given that the state insurance commissioner "is locked in a tough primary battle against former eBay CEO Meg Whitman … and the polls are showing he’s not doing too well."

But Ng told KCRW that "it would have been irresponsible" for Poizner to delay action on Mercury’s alleged abuses – especially given that the firm is directly involved in the Prop. 17 campaign. For Mercury, "the easiest way for them to avoid this is was to not break the law in the first place," he said.