Governor Asks Supreme Court to Continue Ban on Prop. 103

Gov. George Deukmejian, in a split with state Atty. Gen. John K. Van de Kamp, asked the California Supreme Court on Tuesday to leave intact its order blocking implementation of Proposition 103 while the justices review its constitutionality.

In a letter filed with the court, Deukmejian and state Insurance Commissioner Roxani Gillespie expressed no view on the legality of the sweeping insurance rate rollback initiative. But they said it would be prudent not to lift the order until the legal issues are resolved.

“Such a brief delay in implementing Proposition 103 should not be injurious to consumers,” Deukmejian and Gillespie said in a letter signed by the governor’s legal affairs secretary, Vance W. Raye.

The two officials said that if the court upholds the initiative, insurers can be ordered to refund premiums they have collected that exceed the measure’s limitations. And if necessary, insurance companies could be ordered to set aside such amounts now, they said.

The letter reflected disagreement with Van de Kamp on a key issue that has emerged in the aftermath of the legal challenge to the voter-approved measure by the insurance industry: whether to allow the initiative to go into effect while the court weighs its constitutionality.

Previously, the attorney general and the state Board of Equalization had submitted a brief urging the court to set aside its stay and allow the initiative to take effect while the insurers’ claims were heard by the high court.

Tuesday, Van de Kamp expressed disappointment with the position taken by Deukmejian and Gillespie.

“I had hoped that the governor and the insurance commissioner would join us in seeking an end to the court-ordered stay of Proposition 103, either in whole or in part,” the attorney general said. “Instead, they have suggested a stay of the entire proposition’s enforcement.

“In so doing, they have provided no support for the rollback provision, much less the many other provisions, which have not been under attack, including the removal of the insurance industry antitrust exemption, the new insurance regulatory framework and the election of the insurance commissioner.”

Meanwhile, Harvey Rosenfield, chairman of the Proposition 103 campaign, bitterly criticized Deukmejian, noting that the governor’s position parallels the one taken by insurance industry lawyers Monday when they called for continuance of the total stay of implementation of the measure.

“There’s no excuse for Proposition 103 not going into effect immediately, particularly the portions of it that haven’t even been challenged by the insurance industry,” Rosenfield said. “By asking the court to block the will of the people, however temporarily, the governor has embarked on a potentially dangerous course.

“It is deeply disturbing that he has placed his office on the side of the insurance industry against the voters. . . .”

The Republican governor’s action Tuesday was assailed by Senate President Pro Tem David A. Roberti (D-Los Angeles), who said Deukmejian should find ways “to fully and quickly implement the will of the people, rather than to thwart it.”

“The governor and the insurance industry are preventing the distribution of millions of dollars in insurance rebates due all Californians,” Roberti said.

The governor’s press secretary, Kevin Brett, said Tuesday that Deukmejian still intends to back the initiative if the court agrees to hear the case. But Brett said it would not be determined until that time whether the governor would be represented by separate counsel or would rely on Van de Kamp to defend the measure. Ordinarily, the attorney general’s office represents state officials involved in lawsuits.

The justices could decide as early as this week whether to lift the stay and whether to review industry contentions that the measure is unconstitutional.

The governor, the insurance commissioner, the attorney general and the board all are named as defendants in suits filed by the industry with the court.

In their two-page letter, Deukmejian and Gillespie agreed with Van de Kamp that the justices should decide the constitutionality of the measure now, and not wait for what could be long proceedings testing its validity in lower courts.

“Regardless of how one regards the constitutionality of Proposition 103, the importance of determining whether (it) is constitutional or not can hardly be gainsaid,” the letter said. “All Californians, including both purchasers and sellers, as well as the state itself, need to know what the rules are.”

In suits filed the morning after the Nov. 8 election, the insurance companies said that the 20% rate rollbacks from 1987 levels and cumbersome rate-adjustment procedures called for under Proposition 103 made it impossible for the initiative to be implemented without violating the due-process guarantees of the state and federal constitutions.

On Nov. 10, the court issued its across-the-board stay, preventing the initiative from taking effect while it reviewed the insurers’ challenge.

Under the initiative, supported by consumer advocate Ralph Nader, auto, casualty and property insurance rates are to be reduced 20% from November, 1987, levels and then frozen until November, 1989. Insurers could obtain rate adjustments from the state insurance commissioner only by showing that they face a “substantial threat of insolvency.”