Insurers, Lawyers Prepare for a New Round of Conflict

With a new Legislature about to convene in Sacramento on Monday, the insurers and the trial lawyers--who have been sharply at odds in recent years over proposed changes in laws affecting the insurance and civil justice systems--are going at one another once again.

In the last few days, the California Trial Lawyers Assn. (CTLA) has accused the insurance industry of pressing for “Machiavellian and discriminatory legislation” that would require those seeking to buy life and health insurance to take AIDS antibodies tests.

This, said the association’s incoming president, Brown Greene Jr., means that the industry “has once again shown its contempt for the American public.”

Meanwhile, the Assn. of California Insurance Companies, a leading lobby for the industry, has suggested that the trial lawyers organization is aiding formation of a group of accident victims and others, known as Access to Justice, as a possible front for the lawyers in legislative lobbying.

“The plaintiffs’ bar has a vested interest in maintaining and expanding the ability of claimants to maximize litigation,” said George W. Tye, executive manager of the insurance association. “The cost of insurance, the cost of our tort liability system and the fair treatment of defendants are not the concern of the plaintiff’s bar.”

The exchanges appear to signal that the lawyer-insurer fight, which was marked this year by the clash over Proposition 51, the “deep-pockets” initiative, may intensify in the months ahead.

Expressing concern about this, Atty. Gen. John Van de Kamp, who held a closed meeting with insurance and legal experts recently to examine possible changes in insurance law, said he sees a need for someone such as himself to become “an honest broker” between the two sides.

Van de Kamp, in an interview, said he fears that if the Legislature cannot come up with some reasonable compromises in 1987 that will make insurance more available and affordable to consumers, the state may face at least two divisive initiative campaigns in the 1988 elections.

“One would be lawyer-bashing and another insurance-bashing,” the attorney general said. “The danger in both kinds of measures is you tend to go to extremes.”

Van de Kamp said it would be far better for the Legislature to act, and he said he is working to come up with compromises. That was the subject of the more than eight hours of discussions with experts he had invited from all sides, he said.

Assembly Speaker Willie Brown (D-San Francisco) has said that 1987 may be a crucial time for legislative action in the insurance field. Debates are expected over auto, liability and health insurance. In the past, however, the power of the insurance and legal lobbies has canceled each other out, and the Legislature has been paralyzed.

The trial lawyers’ blast at the insurers over acquired immune deficiency syndrome came a week after the president of the Assn. of California Life Insurance Companies, Lewis Keller, said that the insurers were considering the introduction of legislation that would allow them to require AIDS antibodies tests for millions of Californians seeking to buy health and life policies.

Keller said those who tested positive for the antibodies would, in most cases, be deemed uninsurable and refused policies. He suggested that otherwise, if the AIDS epidemic continues to spread as health authorities project, the solvency of some life and health insurers could be endangered by claims costs.

Greene of the trial lawyers organization said in a written statement that talk of such legislation reminds him of “numerous incidences where the industry has abandoned whole segments of the insurance market,” with the aim being “to artificially create a crisis of unavailability.”

“Tragically, we’ve already seen this happen too often, starting with the industry’s withdrawal from the day-care markets, its withdrawal from public entities and its wholesale abandonment of cities and counties, all in the name of industry power and greed,” Greene said.

Assemblyman Art Agnos (D-San Francisco) has already promised a “colossal fight” to maintain the ban he had authored on insurers using AIDS antibodies tests. The trial lawyers association said it “will oppose any efforts by the insurance industry or others to discriminate against any group or entity by introducing such legislation.”

Keller replied that no final decision will be made on introducing the legislation until January or February.

“It will be an emotional issue, and we want to be sure we’re doing the right thing,” he said.

Concept Defended

But he defended the concept, saying, “This series of (antibodies) tests is in place and being used very successfully with very few complaints in nearly every state in the union.”

At about the same time Greene was firing away at the insurers, the insurers were releasing copies they had obtained of a Nov. 6 California Trial Lawyers Assn. letter to its attorney members suggesting that they fund membership fees for clients desiring to join Access to Justice.

The Access to Justice Foundation was recently founded by Harvey Rosenfield, a coordinator of the anti-Proposition 51 campaign and a former associate of consumer advocate Ralph Nader. Rosenfield has said his group will try to organize a statewide coalition in support of insurance reform and in defense of victims’ rights. He recently coordinated testimony by several accident victims at hearings chaired by Brown.

The California Trial Lawyers Assn. letter to its members said: “For those clients who desire to join but do not have the resources to do so, many lawyers have found it appropriate to make a loan or gift of the membership fee. We urge you to consider this option.”

It said the membership fee would be $15 for the first two years.

Question Raised

Insurance lobbyist Tye said that to him, “this certainly raises the question, ‘Is Access to Justice a front group for the CTLA?’ ”

Tye said the California Trial Lawyers Assn.’s financial support of Access to Justice raises the possibility that it will dominate the organization, while the public believes that the group is representing consumers.

Rosenfield sharply disputed Tye’s suggestions. He said his organization “hopes to represent a third force--the citizens--as independent consumer advocates.”

“That’s why I set up Access to Justice,” he said. “This should not be a matter of lawyers versus insurers. I think it should be victims and consumers versus the special interests.”

Rosenfield acknowledged soliciting contributions from the trial lawyers, but said that in the future, he may also solicit contributions from insurers.

“We have to find allies wherever we can get them,” he said.

Greene said of Access to Justice: “They’re not a front group for the CTLA. They’re an independent organization. We hope they will be a viable voice for the consumer.”

Greene said the trial lawyers organization had decided to urge funding some victims’ membership fees because “it’s the only possible way for such an organization to get started.”