Van de Kamp Asks Justices to Lift or Limit Prop. 103 Stay

Atty. Gen. John K. Van de Kamp Monday asked the state Supreme Court to either vacate or sharply narrow the terms of its stay blocking implementation of Proposition 103.

“The voters believed that they were enacting immediate insurance reform with adoption of Proposition 103,” the attorney general said in a 12-page filing.

“That expectation should not be frustrated without giving the initiative a fair chance to work. And the initiative certainly should not be blocked in its entirety on the basis of claims regarding only one aspect of its reforms (the proposed rollbacks).”

Van de Kamp’s filing, also signed by senior aides in the attorney general’s office, was meant to shape a constitutional review by the high court of the measure backed by consumer advocate Ralph Nader and approved by voters last Tuesday. The court issued its stay Thursday.

The attorney general said he agrees that the court should review the measure, but believes its stay order is unnecessary and overly broad.

Insurers’ Response

The insurers’ lead attorney in the case, Allen Katz of Los Angeles, said he would study the attorney general’s filing and submit his response to the court today.

Meanwhile, the chairman of the Proposition 103 campaign, Harvey Rosenfield, said the campaign is “broke” and has not been able to assemble a team of attorneys to represent it directly before the Supreme Court.

Rosenfield said that if $40,000 is raised immediately, it could pay such bills as its telephone bills and rent and would be able to hire its own attorneys by next week.

Before filing his arguments with the state Supreme Court, Van de Kamp said he is confident the courts will ultimately uphold Proposition 103. He also said it is time for the insurance companies to open their books and show the public their financial situation in its entirety.

Commenting on the insurer arguments that they cannot afford the 20% rollbacks from 1987 levels called for in Proposition 103, Van de Kamp said:

“The insurance companies are crying wolf right now, just as they have on so many occasions. This will force them to open their books and make their case, if they have one.”

Both in a Ventura news conference and in his court filings, the attorney general suggested that if the insurers do not feel they can afford the rollbacks, they should go before the state Insurance Department, as the initiative allows them to do, and seek relief.

He told the court, “To the extent that the petitions (by the insurers) raise issues involving questions of (financial) fact, those issues should be deferred for determination by the Department of Insurance, the administrative agency empowered to implement the principal provisions of the initiative.”

Right now, Van de Kamp asserted, the stay is written in such a broad way that it would seem to prohibit the department from even making arrangements to eventually administer the initiative.

Van de Kamp told the court that if the rollbacks are to be stayed, the amounts that would otherwise have been taken off customers’ bills in the meantime should “be set aside in a separate account, where they will be available for refund with interest when the rollback provisions of the initiative are upheld.”

The attorney general contended that “by entering a blanket stay, the court has stayed enforcement of provisions against which no constitutional challenge is presented, has enjoined provisions of law that threaten no immediate injury to anyone, and may have effectively blocked state government even from preparing to enforce the initiative once its provisions are upheld.”

He urged the court “to dissolve in its entirety” the emergency stay entered on Thursday.

“However, should the court decide to stay enforcement of the initiative measure, (we) strongly urge that the court limit the stay to the rollback/freeze provision alone,” he said.

Van de Kamp noted, for example, that the insurers’ lawyers have “not even attempted to mount a challenge” to provisions in Proposition 103 that repeal the insurance industry’s antitrust exemptions, its exemptions from the Unruh Civil Rights Act and from the Unfair Business Practices Act.

Nor have they challenged provisions allowing agents and brokers to offer discounts to consumers based on partial rebates of their commissions, nor provisions mandating future rate regulation, allowing banks to sell insurance, forcing the companies to divulge more financial information to the public or giving consumers the right to more comparative pricing information.

“Each of these provisions represents a major reform of insurance regulation in California,” Van de Kamp said. “Each expands the rights of consumers. And none is implicated in (the insurers’) attack on the initiative.”

Even should the court strike down the rollback provisions, the balance of the initiative can be “given full effect,” he said.

Contributing to this story were Times staff writers Philip Hager in San Francisco and Denise Hamilton in Ventura.