Court Invalidates Industry’s No-Fault Car Insurance Effort

A panel of three state appeal court justices Friday invalidated a no-fault auto insurance initiative being circulated by the insurance industry. The decision was foreseen by the industry, which has already begun circulating a similar initiative stripped of the offending provisions.

In an opinion written by Justice Robert Puglia in Sacramento, the court struck down the insurers’ first no-fault initiative on grounds that it also contained campaign contribution provisions, thus violating a constitutional ban on initiatives dealing with more than one topic.

The court acted on a lawsuit brought by the California Trial Lawyers Assn., which strongly opposes the no-fault system. No-fault means that most accident victims collect damages from their own insurance companies and do not need to use lawyers to collect from others.

Just this week, a spokesman for the no-fault campaign acknowledged that the insurers had already spent about $3 million on behalf of the proposed initiative. The spokesman indicated that the industry is prepared to spend up to $20 million on the no-fault system campaign.

With that kind of money available, the industry can easily afford the paid circulators to collect the 372,178 signatures of registered voters necessary to qualify an initiative. Industry spokesmen expressed confidence Friday that the second no-fault initiative will easily be qualified in time for the November ballot. The practical deadline for submitting signatures is late May.

In his opinion, Puglia called the campaign contribution clauses in the 120-page, first no-fault initiative “potentially deceptive combinations of unrelated provisions” that could fool the voters.

The offending provision would have allowed the insurers to continue to make campaign contributions to politicians on a fairly unrestricted basis.