Right to Sue Insurance Firms Target of Referendum Drive

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Sacramento Bee

A coalition of insurance companies and other groups announced Tuesday that it will seek a March 2000 statewide ballot referendum to overturn newly signed legislation involving lawsuits against insurers.

The coalition, called Consumers Against Fraud and Higher Insurance Costs and said to include at least several major auto insurance firms, filed the proposed referendum with the state attorney general’s office.

The group wants to overturn legislation, signed last week by Gov. Gray Davis, that is intended to give accident victims the right to sue insurance companies for “bad faith” handling of claims.

Consumer advocates and trial lawyer groups said the legislation signed by the governor is aimed at protecting consumers from insurance companies that deny, delay or “low-ball” those making legitimate accident claims. But opponents, including some major insurance and business interests, predicted the bills would cause auto premiums to soar and simply line the pockets of personal injury lawyers.

A referendum allows voters to decide whether a specific bill passed by the Legislature should be allowed to become law. The coalition seeking the new referendum must still collect about 420,000 signatures to actually qualify the measure for the 2000 ballot, according to the secretary of state’s office.

Supporters of the proposed referendum predicted that voters will approve it and dump the “bad faith” legislation signed by Davis.

“Once voters become aware that personal injury lawyers are behind this (legislation), and that it will lead to an increase in insurance fraud and an explosion of frivolous lawsuits, I am confident that they will soundly defeat it at the ballot box,” said Kirk West, a former president of the state Chamber of Commerce and a co-chairman of the campaign supporting the referendum.

But Doug Heller of the Foundation for Taxpayer and Consumer Rights called the move toward a referendum a blatant insurance industry attempt to overthrow needed consumer protections.

“The insurance industry is trying to hide behind business groups because they know the public would never go for this referendum if it was brought to them by the insurers themselves,” Heller said.

Consumer Watchdog
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