Reconsideration of Insurance Measure Ordered by High Court

The state Supreme Court on Thursday ordered an appeals court to reconsider its abrupt rejection of an insurance industry challenge to an insurance-reform ballot initiative backed by trial lawyers.

In a brief order, the justices directed a state Court of Appeal in Sacramento to give “expeditious consideration” to the challenge, clearing the way for the state high court itself to review the issue if it wishes before the November election.

The order was described as “very heartening” by Allen M. Katz of Los Angeles, a lawyer representing the insurance industry in the dispute.

“This is a clear indication the court believes we raised substantial and important issues in our challenge to the trial lawyers’ initiative,” Katz said. “By expediting the case the court is saying it wants enough time to look at the case again later on.”

The case arose after the appeal court in April upheld a challenge by the California Trial Lawyers Assn. to the original version of the insurers’ no-fault auto insurance initiative.

Court Rationale Told

In that decision, the appellate panel found that the initiative, by containing a provision dealing with campaign contribution limitations, violated a state constitutional requirement limiting ballot measures to a “single subject.”

The insurance industry was forced to circulate a different version of the initiative that has since qualified for the fall ballot.

The insurance industry then made a similar legal attack on the lawyer-backed initiative that sets far-ranging regulations on many types of insurance. The industry said the initiative violates the single-subject rule by removing some limits on attorney contingency fees and allowing banks to sell insurance.

This time, however, the Court of Appeal summarily rejected industry’s challenge, refusing even to hear arguments on the issue.

The industry then turned to the state Supreme Court, asking for a hearing in order to present its case against the lawyer-backed ballot measure.

In reply, the trial lawyers urged the justices to reject the challenge, saying it was a “politically motivated response” by the insurance industry to its loss in the previous case.

No Violation Claimed

The lawyers said all the provisions in their measure concerned insurance rates and practices and the compensation process for injured parties. Thus, they said, there was no violation of the single-subject rule.

The lawyers pointed out that in contrast to the earlier case, a court invalidation of the insurance reform measure at this time would prevent the initiative from going before the voters.

Attorneys said they expect the industry’s challenge to be heard by the appeal court within two weeks. Its decision--whatever the outcome--then likely would be appealed to the state Supreme Court.

Thursday’s order was signed by five of the court’s seven members: Chief Justice Malcolm M. Lucas and Justices Stanley Mosk, Edward A. Panelli, David N. Eagleson and Marcus M. Kaufman.

Attorneys representing the lawyer-backed initiative were not immediately available for comment.