State High Court Asked to Take Over Prop. 103 Suits

The sponsors of Proposition 103 asked the state Supreme Court on Tuesday to take immediate jurisdiction over 14 lawsuits and resolve a tangle of issues that threaten long delays in implementing the measure’s auto insurance reforms.

Lawyers for Voter Revolt filed a petition asking the high court to take the unusual step of direct intervention to thwart what they said is an attempt by the insurance industry to use the courts to defeat the aims of the 1988 rate-cutting initiative.

“It’s an outrage the way the judicial system is being manipulated,” said Amy R. Bach, an attorney for the Center for Public Interest Law, which represents the group. “We’re hoping the court will step in now.”

The bid by the backers of the initiative followed a similar request to the high court by Insurance Commissioner Roxani Gillespie, who last week accused insurers of filing “nuisance lawsuits” to prevent the measure from taking full effect. Unless the high court intervenes, Gillespie said, there could be a “decade of litigation” over the initiative.

Both Voter Revolt and Gillespie urged the justices to deny an industry challenge to an order by the commissioner denying insurers a 112% increase in assigned-risk car insurance rates.

The California Automobile Assigned Risk Plan, an association of companies that issue insurance to more than 1 million drivers who lack regular coverage, says the firms are losing $2 million each business day in the program.

All auto insurers are required to accept a portion of drivers who cannot obtain regular insurance coverage. Each insurer is assigned a quota based on its share of the market.

In its petition to the high court, Voter Revolt argued that countless good drivers are being “herded” into the assigned-risk program by the industry’s refusal to offer them affordable regular policies.

The organization accused insurers of doing “everything legal--and illegal” to prevent the commissioner from using her wide new powers under the initiative to regulate and review industry pricing practices.

Under the measure, insurance rates were to be reduced 20% below their November, 1987, levels, but that provision, among others, has been delayed in court.

In a wide range of cases filed throughout the state, insurers also have challenged a temporary freeze Gillespie imposed last fall on private passenger auto rates, as well as regulations she issued prohibiting the use of a driver’s age, sex or place of residence in setting policy rates.

If the justices agree to consolidate and hear the 14 cases currently pending in lower courts, it would mark the third time the landmark insurance measure has come before the state high court.

Last May, the court upheld the constitutionality of the initiative but, in an important concession to the industry, held that insurers must be allowed a “fair rate of return” on their business. Just how that rate is to be calculated has been the subject of hearings before the commissioner that began last fall and only now are nearing a conclusion.

Last month, the high court held that insurers could refuse to renew policies and withdraw from California without first finding another firm to serve their customers.

Bach, the lawyer for Voter Revolt, acknowledged that the high court--in a move to clarify the complex issues at stake--could order a state Court of Appeal to hear the cases as a prelude to high court review.