Judge’s Action Blocks Car Insurance Rebates : Prop. 103: Commissioner Roxani Gillespie is free to allow firms to increase their rates, but any refunds are probably years away.

After the latest court proceedings in the protracted legal battle over Proposition 103, Insurance Commissioner Roxani Gillespie is free to grant the state’s auto insurers a round of rate increases beginning in August, but seems to be indefinitely blocked from telling the companies to rebate any excessive premiums they collected in 1989.

Three times in the last year, Gillespie has, with considerable fanfare, declared that she was ready to order within weeks rebates for 1989 premiums in accord with Proposition 103 rollback provisions.

Her latest such pronouncement came June 13, when the commissioner said any company having a 1989 rate of return in excess of 11.2% would be subject to rebate orders beginning this month. Those could range up to the full 20% rollback called for in the initiative for that year, plus 10% interest.

The hearings to determine specific rebates by company were scheduled to begin Wednesday. But that was before Los Angeles Superior Court Judge Dzintra Janavs intervened.

Janavs last week told a lawyer for Gillespie that unless the commissioner held up these hearings voluntarily, she would order her to do so, pending a July 30 hearing in which a number of insurers are asking for an injunction against the rebate hearings. The insurers claim that they are entitled to a greater rate of return than 11.2%.

Indicating that she was leaning heavily toward issuing the injunction, Janavs said she believed that the courts should determine whether Gillespie’s standards were fair before the commissioner was allowed to implement them. Recognizing that with court appeals this could take a long time, Janavs said she believed that any rebates were years away.

At the same time, however, Janavs said Gillespie is free to begin hearings Aug. 8 on applications by companies for approval of new, higher rates for the future. For the new rates, Gillespie has set a much higher limit on annual company rates of return, saying they could range as high as 19%.

After the Janavs hearing, Gillespie dropped Proposition 103 rate rollback regulations she had promulgated last month, before they could be formally approved by the state Office of Administrative Law, an indication that she too believes that any rebate of premiums is receding into the distant future.

One effect of the Janavs rulings is likely to be a continued legal impasse over implementing key phases of Proposition 103 well beyond Gillespie’s term of office, which ends in January.

In this case, the elected commissioner scheduled to take office then, either Democrat John Garamendi or Republican Wes Bannister, conceivably could drop Gillespie’s standards altogether and set up his own.

More than a year ago, Gillespie promised to have all her rollback rebate decisions made by last Nov. 8. With protracted hearings on standards and legal challenges from insurers, she has not been able to make a decision for even a single company eight months after her deadline passed.

As Proposition 103, approved by the electorate two years ago, remains in legal limbo, the initiative’s author, Harvey Rosenfield, on Thursday formally launched his second attempt to qualify a new initiative that would establish a state-run, nonprofit auto insurance company in California to replace the private auto insurance companies.

Earlier this year, Rosenfield failed to qualify such an initiative for the November ballot, when it was in the form of a constitutional amendment requiring 595,000 petition signatures of registered voters.

Now he is trying for the June, 1992, ballot, but the initiative no longer would amend the state Constitution, only the Insurance Code. This requires obtaining 372,000 signatures.

The state-run company would be formed in 1993, but only if the private companies failed to reduce their rates in accord with Proposition 103 rollback standards, adjusted for inflation.

Rosenfield said Thursday that he has put 280 canvassers in the field for the summer and fall in an attempt to qualify the new initiative.