In the Other’s Camp : Prop. 51 Backers, Foes Plan New Legal Reforms

Insurance industry and big business representatives vowed Wednesday to intensify efforts for sweeping new legal reforms in the wake of their victory with Proposition 51, the “deep pockets” initiative.

But leaders of the opposing California Trial Lawyers Assn. began laying plans to press for reform of insurance company practices instead--possibly in another initiative campaign.

Insurance lobbyist George Tye said in Sacramento that the electorate Tuesday had given the Legislature a mandate for change, possibly including restrictions on lawyer contingency fees, caps on pain and suffering damages and penalties for frivolous lawsuits. He said a decision on which of these to push for will be made soon.

Fred Heistand, lobbyist for the Assn. of California Tort Reform, a coalition of local governments, insurance companies, medical professions and businesses, said his group had met Wednesday to discuss what to do next. He said a general decision had been reached to press legislative candidates all over the state to endorse a specific list of tort reforms that his group will draw up. If they don’t endorse the list, they will be opposed, both financially and in voter mailings in their districts, he said.

In the meantime, as the quarrel between the insurance industry and its allies and part of the legal profession showed signs of intensifying, legislative leaders who had blocked tort reform in the past vowed that nothing further would be done against the plaintiffs’ lawyers without action to change insurance company practices as well.

Proposition 51, adopted by a crushing 62% of the voters Tuesday, limits liability for non-economic damages such as pain and suffering to a defendant’s degree of blame in lawsuits with more than one defendant. The reform may cut into lawyers’ fees.

Elihu Harris (D-Oakland), chairman of the Assembly Judiciary Committee, a traditional burying ground for tort reform proposals, said, “I don’t think you’re going to get (more) tort reform without insurance reform.” He said that if tort reform proponents are dissatisfied with that, they can go back to the initiative process.

Both Harris and Assembly Speaker Willie Brown, who has long sided with the attorneys who spent nearly $5 million in a vain attempt to beat back Proposition 51, said they thought the electorate was confused by the advertising campaigns for and against the initiative when it voted Tuesday.

Speculation on Rates

Brown remarked that the voters seemed to have believed they would reap some quick benefit, in terms of lower insurance premiums, as a result of passing the initiative. “What is going to be interesting one year from today is all those people who voted for 51 are going to be asking why their insurance rates are not lowered,” he remarked.

Gov. George Deukmejian, meanwhile, said his Administration may propose several pieces of further legislation, but he insisted that “we’re going to be approaching it in a balanced, comprehensive way.

Resolving the insurance crisis, the governor said, “requires some changes in the tort system, in the judicial system,” but it also “requires some changes in the way in which insurance companies do business.”

What seemed clear from Tuesday’s election results is that the voting public is deeply concerned with the insurance-legal issues, and, apparently, quite irate. Some political professionals suggested that had another initiative--this directed at the insurance companies--been on the ballot this time, it would have passed by just as crushing a majority.

Measure Heavily Voted

Review of the results showed that nearly 400,000 more votes had been cast for or against Proposition 51 than for either all the gubernatorial candidates or all U.S. Senate candidates in all the various party primaries combined. It is almost unheard of that more votes would be cast for an issue appearing near the bottom of the ballot than for the big-name races at the top of the ballot. But in this election, approximately 4,543,000 votes were cast in the Proposition 51 contest, compared to about 4,185,000 in the gubernatorial races and 4,150,000 in the U.S. Senate contests.

Wednesday, it appeared that the California Trial Lawyers Assn., from whose members almost all the financing of the anti-51 campaign came, were under the most strain.

Trial lawyers president Peter Hinton said, “Obviously, we’re terribly disappointed with the result. . . .” He blamed it partially on a low voter turnout that, proportionately, was heavily Republican, with 42.3% of registered Republicans going to the polls and only 34.6% of the Democrats.

Hinton said that the “white, wealthy, conservative voters” who made up a substantial part of Tuesday’s electorate were the least likely group of Californians to listen to the victims’ rights arguments that the anti-51 campaign was making.

“I’m not sure that the morning after is the time for me to articulate a well-thought-out plan (for the future),” Hinton said. “I don’t really have a game plan that I can articulate.”

Insurance Initiative

But he said that a new initiative, this one directed at mandating more insurance company financial accountability and rate regulation, is under consideration in his organization, and Browne Greene, the trial lawyers president-elect, added:

“I think the situation is that this state is ripe for a victims bill of rights or a consumers bill of rights, an initiative requiring the insurance industry to open its books, force them to justify their rates. We may well get directly involved.”

Other plaintiffs’ attorneys, speaking at an election night gathering, had said they thought it essential that the trial attorneys look for new allies and try to break out of what they said they perceive is a real political isolation.

One target in a drive for new allies may be the medical profession. The California Medical Assn. alone gave more than $2.2 million to the pro-51 campaign. Yet some of the attorneys said they would hope that if an anti-insurance company initiative were written, the medical groups might cross over and join them in sponsoring it.

Indeed, some feelings are being expressed that the effect of the passage of Proposition 51 may be more pressure on the companies than on the trial attorneys.

A leading California spokesman for the insurance industry, John McCann of the Insurance Information Institute’s San Francisco office, said Wednesday he thinks the Legislature may soon adopt a bill by state Sen. Alan Robbins (D-Van Nuys) mandating a 5% rollback in liability insurance premiums.

Pressure on Firms

“I would expect those kinds of proposals to be introduced and passed,” McCann said. “They (the Legislature) might expect more than is there. . . . There will also be pressure on the companies (who recently have ceased selling certain kinds of policies) to return to the (liability) marketplace.”

McCann, however, said he expects some companies, in the wake of the passage of 51, to voluntarily return to the marketplace. And within hours of the time he spoke, the Fireman’s Fund company said in a statement issued in Northern California that it will soon begin underwriting new liability policies for cities and counties that recently were left without coverage as various companies dropped out of the liability field.

PROPOSITION 51 MONEY

Nearly $10.4 million in campaign funds has been reported raised by supporters and opponents of Proposition 51, the “deep pockets” initiative that voters approved in Tuesday’s election. Here are the top 10 contributors to each campaign as of Wednesday:

Taxpayers for Fair Responsibility

(Yes on 51)

California Medical Assn. $2,203,431 American Insurance Assn. 245,063 State Farm Mutual Auto Insurance 200,000 Norcal Mutual Insurance Co. 160,000 Southern California 120,000 Physicians Insurance Exchange California Hospital Assn. 88,933 Pharmaceutical Manufacturers’ 79,500 Assn. PAC Mutual Protection Trust 60,000 Allstate Insurance Co. 59,940 Total $3,516,867 of $5,522,338

Citizens Against Proposition 51

(No on 51)

Law firm--Greene, O’Reilly, Broillet $215,932 (Los Angeles) Law firm--Rose, Klein & Marias 200,000 (Santa Ana) Law firm--James Boccardo 161,850 (San Jose) Law firm--Bostwick & Tehin (S.F.) 100,000 Law firm--Cartwright, Sucherman 100,000 & Slobodin (San Francisco) Law firm--Magana, Cathcart, 100,000 McCarthy & Pierry (Los Angeles) Law firm--Silver, McWilliams, 100,000 Stolpman (Los Angeles) Herbert Franke (Fresno) 100,000 Roosevelt Warmsley (Compton) 80,000 Law firm--Melvin Belli (S.Francisco) 60,000 Total $1,217,782 of $4,842,136

PROPOSITION 51 VOTE BY COUNTY

County Yes No Alameda 121,307 103,225 Alpine 351 65 Amador 5,737 1,918 Butte 30,815 9,450 Calaveras 6,362 2,083 Colusa 3,556 818 Contra Costa 103,831 49,347 Del Norte 4,009 1,364 El Dorado 18,094 5,225 Fresno 55,290 30,532 Glenn 5,058 1,323 Humboldt 20,097 8,741 Imperial 9,478 4,243 Inyo 3,607 1,387 Kern 48,959 30,269 Kings 8,046 4,012 Lake 8,711 3,476 Lassen 4,165 1,544 Los Angeles 607,009 573,036 Madera 8,814 3,870 Marin 40,914 14,743 Mariposa 3,683 1,124 Mendocino 10,660 5,402 Merced 12,440 6,021 Modoc 2,556 756 Mono 1,918 503 Monterey 34,272 14,244 Napa 19,424 7,882 Nevada 16,876 3,871 Orange 247,889 124,627 Placer 24,088 9,034 Plumas 4,144 1,279 Riverside 83,116 56,277 Sacramento 128,055 74,448 San Benito 4,159 2,246 San Bernardino 90,850 60,708 San Diego 251,979 132,365 San Francisco 65,926 60,002 San Joaquin 43,576 19,422 San Luis Obispo 28,426 12,521 San Mateo 86,264 43,048 Santa Barbara 46,758 18,795 Santa Clara 151,172 78,774 Santa Cruz 34,327 16,252 Shasta 21,273 7,662 Sierra 1,144 344 Siskiyou 9,344 2,619 Solano 31,257 15,874 Sonoma 58,775 20,282 Stanislaus 30,843 11,163 Sutter 9,201 2,501 Tehama 8,799 3,456 Trinity 3,547 1,322 Tulare 29,183 12,236 Tuolumne 8,860 3,222 Ventura 71,918 32,374 Yolo 22,455 8,792 Yuba 6,316 2,836