Insurance Rollback Hits a New Obstacle : Prop. 103: A state official rejects regulations necessary to implement rate refunds. An aide to Wilson says governor may overrule the decision.

Insurance Commissioner John Garamendi’s Proposition 103 rate rollback plan has been stalled for a second time by the state Office of Administrative Law, but Gov. Pete Wilson might overrule the agency as he did last year.

Marz Garcia, director of the Office of Administrative Law, rejected regulations that are required before Garamendi may implement an order forcing insurers to refund $2.5 billion to customers.

Wilson’s chief insurance adviser, Marjorie Berte, said Monday that Garcia’s order had been issued without Wilson being notified. She invited Garamendi to appeal the order to the governor.

If the commissioner does appeal, Wilson will “accelerate” a decision on overturning Garcia’s order, Berte said. She noted that in October the governor, reversing Garcia’s earlier order, had declared: “The public’s interest would not be served by further administrative delay in proceeding with the rollbacks.”

Garcia’s office said he was not available for comment. A Garamendi spokeswoman said the commissioner would reserve comment pending discussions with Garcia and the governor’s office.

The Proposition 103 rollbacks have been delayed for more than three years by litigation and bureaucratic maneuvering. Although the state Supreme Court in 1989 told the insurance commissioner to set regulations governing the rollbacks, Garcia’s position has been that Garamendi has no such legal authority and that the high court ought to reconsider the matter.

Garcia’s latest order was lambasted by Proposition 103 author Harvey Rosenfield, who charged that the Wilson Administration as a whole is responsible.

But Berte said: “The one thing this proves is that the Office of Administrative Law does its own thing. Our opinion is that we should get on with the rollback process.”