Court Bows Out of Fight Over Health Insurance Law

All 10 justices of a state appeals court abruptly disqualified themselves Friday from hearing a case that could allow voters in March to possibly overturn a new law requiring employers to purchase health insurance coverage for uninsured workers.

In a remarkable action, the justices of the 3rd District Court of Appeal said their impartiality in handling the issue could be open to challenge because a legal brief in the case had been signed by one of their former colleagues, who resigned last month to return to private practice.

Citing a judicial canon of ethics, the Sacramento-based court called the issue a “very close question,” but said it came down on the side of caution because to do otherwise would raise the possibility that the court could not reasonably act impartially.

In a letter signed by Presiding Judge Arthur Scotland, the 10-member court asked the California Supreme Court to take the case and send it to another court of appeal for a decision. It urged “immediate action” because ballots and voter materials must meet printing deadlines for the March 4 election.

The appellate court’s action delighted Steve Thompson, executive officer of the California Medical Assn., which sponsored the health insurance bill by Senate President Pro Tem John L. Burton (D-San Francisco), and fought to keep off the ballot an employer-backed referendum that would overturn the law.

Thompson said the inclusion of the name of newly retired Justice Daniel M. Kolkey on a court brief in the case was intended “simply to influence” his former colleagues into returning a favorable ruling.

A spokeswoman for the California Chamber of Commerce, one of the defendants and a leading opponent of the bill in the Legislature, refused to discuss Kolkey’s signature or his role in preparing the appeal. Kolkey was a legal affairs secretary to former Gov. Pete Wilson, who appointed him to the appellate court.

The chamber, the California Restaurant Assn. and other major employers collected more than 620,000 signatures to put the referendum before voters March 4.

But a Superior Court judge in Sacramento struck it from the ballot, ruling last week that the title and summary of the measure was “inaccurate and misleading,” and that other features of the petition also were flawed.

The new law, considered a pioneering effort that was closely watched by other states, eventually would extend health-care coverage to some 1 million uninsured workers. It would be phased in starting in 2006, and require employers to purchase insurance directly or pay into a statewide purchasing pool.

Former Gov. Gray Davis signed the labor-backed legislation last summer over the protests of major employer organizations, which said they cannot afford it given the recovering economy. To provide the coverage, they warned that existing health benefits would be cut back or eliminated.

Thompson forecast that it would now be “impossible” to get the ballots and voter pamphlets printed in time to meet election law requirements, even if employers finally won.

A spokeswoman for Secretary of State Kevin Shelley said he had just learned of the court’s action, and could not say what effect it may have on the printing of ballots and voter guides.

Sara Lee, a spokeswoman for the California Chamber of Commerce, refused to discuss Kolkey’s role in preparing the brief, but said the chamber is “eager” to get the case before any other court and is “confident we will prevail.”