Justices Schedule Prop. 103 Hearing on March 7; Spring Ruling Expected

The state Supreme Court said Friday that it will hear arguments March 7 on the constitutionality of Proposition 103, setting the stage for a ruling on the bitterly contested insurance measure by this spring.

Both sides welcomed the action, noting that under the court’s newly adopted time limits for deciding cases, a ruling will be issued within 90 days of argument and could come even sooner in view of the importance of the issue.

“We’re delighted that the court has set the date,” said Allen M. Katz of Los Angeles, one of the attorneys representing the insurance companies challenging the initiative.

‘Quick Resolution’

“All the parties had asked for a quick resolution of the matter, and we feel the court is acting very responsibly in giving us a prompt hearing,” Katz said.

Joseph W. Cotchett, a Burlingame lawyer representing the sponsors of the measure, said he hoped for a ruling as soon as early April. The attorney also denounced insurers who have raised rates while the validity of the initiative is still at issue. Ultimately, he said, the insurers may have to make refunds if Proposition 103 is upheld.

“It’s clear the insurance companies are trying to take advantage of the situation by lifting rates unconscionably before there is a ruling,” Cotchett said. “We will certainly argue that the court should uphold the rate rollback and make it effective back to Nov. 8, the day the people spoke on the matter.”

Under the initiative, auto and property insurance rates would be reduced 20% below their November, 1987, levels and held in place until November, 1989, unless an insurer could show a “substantial threat” of insolvency. Other provisions sharply limit policy cancellations and non-renewals by auto insurers, allow banks to sell insurance and remove the insurance industry’s exemption from state antitrust laws.

The court, when it agreed in December to review the insurers’ challenge, allowed most of the measure to go into effect. But, pending a final ruling, the justices temporarily blocked its rate rollback and reduction provisions along with another section establishing a nonprofit consumer-advocacy corporation.

In a brief announcement Friday, the court said the insurers’ challenge will be heard in its Sacramento courtroom at 2 p.m. March 7. The court is based in San Francisco but holds regular argument sessions twice a year in Sacramento and four times a year in Los Angeles.

The court said also that Justice John A. Arguelles, who is due to retire March 1, will take part in the case under special assignment by Chief Justice Malcolm M. Lucas.

Arguelles has participated in the review of briefs and other activity in the case, and his continued participation is seen as helping expedite a decision in the case.

Had Arguelles not been assigned to stay on the case, his place would have been taken by a state appellate court justice appointed by Lucas. No successor to Arguelles on the court has been named by Gov. George Deukmejian. And at this point, because of time constraints, a successor could not be confirmed by the state Judicial Appointments Commission before the March hearing.

The case raises a wide range of legal issues. But the arguments are expected to focus on the insurers’ contention that the rate rollback is confiscatory and improperly prevents them from obtaining a fair profit on policies. The companies say further that because the rollback and other key provisions are unconstitutional, the whole measure must be struck down as invalid.

Defenders of the initiative say that the rate rollback is a legitimate way of limiting spiraling premium rates and that the measure provides adequate means for insurers to remain solvent. Backers say also that if any part of the initiative is struck down, other provisions can stand independently and should be allowed to remain in effect.

Ninety minutes were allotted by the court for argument--half an hour longer than usual for non-capital cases--with each side granted 45 minutes to present its views.

Frank Rothman, a Los Angeles attorney, is expected to argue for the insurance companies at the hearing. Time allotted to backers of the initiative is to be divided among its sponsors--the Voter Revolt to Cut Insurance Rates--and two of the defendants named in the suit, state Atty. Gen. John K. Van de Kamp and the State Board of Equalization.

Deukmejian and state Insurance Commissioner Roxani M. Gillespie were also named defendants but have taken no stand on the legality of Proposition 103. Neither will participate in the March 7 argument.