Hahn Seeks U.S. Probe of Legal, Insurance Lobbies

Charging that the state’s insurance and legal lobbies are “in a major conspiracy to obstruct the citizens’ basic right to vote,” Los Angeles County Supervisor Kenneth Hahn on Thursday asked the U.S. Justice Department to investigate the lobbies under federal racketeering laws.

Hahn, in messages to U.S. Atty. Gen. Edwin Meese II and the U.S. attorneys in Sacramento and Los Angeles, said he objects to the signing of contracts by the Assn. of California Insurance Companies and the California Trial Lawyers Assn. forbidding the only two professional petition-circulating firms in the state from working on 1988 insurance or tort-reform-related initiatives for independent groups.

The supervisor, who supports a proposed auto insurance initiative that would do away with the territorial rating system, under which inner-city residents pay the highest rates, said U.S. Attys. Robert C. Bonner in Los Angeles and David F. Levi in Sacramento should begin a federal grand Jury investigation of the deal.

“There is no right more basic in our country than the right to vote,” the supervisor declared. “Yet, because of the devious actions of the insurance companies and trial lawyers, the people of California will be denied the opportunity to vote for important measures that could directly affect their lives.”

He contended that the federal racketeering law applies as “a broadly worded statute to allow the prosecution of individuals and organizations guilty of conspiracies and anti-trust violations that are harmful to the best interests of the people of the United States.”

An aide to Bonner said the Justice Department officials will have no comment until they study the request.

As Hahn sought a federal inquiry, officials of the two lobbies said it is quite possible that the compact the insurers and the lawyers reached last August not to field initiatives against one another may collapse.

If it does, they said, the insurance lobby will use one of the petition-circulating firms to qualify an initiative aimed at the trial lawyers, while the trial lawyers would use the other firm to qualify an initiative aimed at the insurance industry. In that case, the two petition firms, American Petition Consultants of Sacramento and Kimball Petition Management Inc. of Los Angeles, would be handling insurance and legal initiatives after all but not for independent groups.

Both the trial lawyers and the insurers rely in large part for their livelihood on income from the auto insurance business. Almost all suggested changes in the laws governing insurance or pay-outs on accidents would hurt one group or the other.

Browne Green, president of the trial lawyers, said his group will field an initiative--despite its agreement with the insurers--if it becomes convinced that an independent initiative that is against its interests is going to qualify.

On the Ballot

George Tye, an official with the insurance lobby, said the insurers too may field an initiative if they become convinced that an independent initiative against their interests will be on the ballot.

Both Green and Tye agreed the situation is, in Green’s word, “volatile.”

Meanwhile, sponsors of two proposed independent initiatives said they are convinced that there is so much public outrage over high insurance prices that it will be possible to qualify their initiatives even without the services of the big petition circulating firms.

In Orange County, political consultant Harvey Englander said he has assembled a group of backers for qualifying a third initiative through the mails. He said a series of “focus groups” of middle-class citizens have shown that there is “a middle-class crisis” on insurance and almost any initiative that promises to bring down prices could be qualified easily.

Defy Position

In another development, a member of the board of the insurance lobby--Harry Miller, the president and chief executive officer of Coastal Insurance Co., which has 110,000 auto insurance policy holders in Southern California--said he has decided to defy the lobby’s current position against initiatives and throw his support to one of the independent efforts.

Miller said he is contributing to the initiative qualification effort being sponsored by Assemblyman Richard Polanco (D-Los Angeles) that would limit recovery of non-economic damages, such as pain and suffering, in auto accidents in exchange for a cut of liability rates by 50%.

The insurance company president said he has been asked to resign from the 40-member board of the lobby, the Assn. of California Insurance Companies, so as not to connect the lobby with the Polanco initiative, but he is refusing to do so.

“Auto insurance can’t be mandatory and unaffordable at the same time,” Miller said. “If we don’t move to do something to change the system in a reasonable way to bring down our prices, we are going to be faced eventually with a Proposition 13-type initiative that will wreck the industry.”