Van de Kamp Sends Insurers Warning Note on Collusion

Atty. Gen. John K. Van de Kamp said Wednesday that he has sent warning letters to every major insurance company doing business in California, saying they could be prosecuted for collusion under the anti-trust laws if he concludes that they are conspiring to force repeal of Proposition 103.

An insurance industry spokesman fired back that if Van de Kamp has evidence, he ought to “come out and prosecute somebody,” and if not, he ought to stop trying to use the insurance crisis to run for governor.

Van de Kamp, at a Los Angeles news conference, took note of recent widespread reports of withdrawals, threatened withdrawals, reversed withdrawals and other actions by the companies in the wake of the passage of the insurance initiative supported by consumer advocate Ralph Nader.

“The timing and the circumstances of these actions suggest the possibility of a concerted effort to force the courts or the Legislature to repeal Proposition 103,” he declared, acknowledging, however, that he had no solid evidence at this point. “The insurance industry has been accused of such tactics in other states that have passed sweeping insurance reforms.”

The “most notorious case,” Van de Kamp said, was in West Virginia, where the state Legislature in 1986 “repealed some of its reforms when five major companies simultaneously canceled every medical malpractice policy in the state.” The West Virginia attorney general, he said, “charged the companies with conspiring to engage in an illegal boycott.” Those charges are still pending.

David Fountain, a spokesman for the Assn. of California Insurance Companies, the industry’s leading lobbying association, responded:

“These are cheap hit lines. . . . I think he’s taking advantage of the public and the media simply because Thanksgiving eve’s a slow news day.”

Varying Reactions

Fountain said he wondered how anyone could “call the chaos, the flip-flopping and the confusion” that has marked the insurance companies’ varying reactions to Proposition 103 “collusion.”

“Some have changed positions,” he said. “Some didn’t. How can that be collusion? I think you’d be hard-pressed to find any two companies doing the same thing out there right now.”

Many companies changed their positions only after the state Supreme Court temporarily blocked implementation of Proposition 103 two days after it was passed by the voters. Before the court stay, many companies were announcing withdrawals or restrictions on sales.

Van de Kamp said he had sent his warning letters in part to let everyone know “that this office will vigorously prosecute any and all companies that attempt to boycott, coerce or intimidate the people of California.”

He added that he had also done it in part “because many insurance industry leaders may be genuinely unaware of what they can and cannot do. For many years their industry, unlike all others, has been largely exempt from state and federal anti-trust laws. Proposition 103 will change that if it is upheld by the court. Regardless of the outcome of that case, however, I wish to stress that current federal law forbids companies from conspiring to boycott, coerce or intimidate.”

In other developments:

- Nader and Proposition 103 Chairman Harvey Rosenfield appeared together at a news conference in Hartford, Conn., a leading corporate center of the insurance industry, to call for action in other states to pass new statutes controlling the industry. The Aetna Life & Casualty Co. held its own news conference in advance of Nader and Rosenfield to challenge their arguments.

- The Independent Insurance Agents and Brokers of California filed an application to join the industry’s lawsuit in the Supreme Court challenging the validity of Proposition 103. It asserts that information it has compiled indicates that consumers and insurance agents would be hurt the most by the measure. Agents alone would receive $345 million less in commissions if 103 went into effect, and millions of consumers would be shut out of the insurance market, the group contends.