Legislature Asks Wilson to Unblock Rebate Path

The Legislature appealed Monday to Gov. Pete Wilson to kick away a bureaucratic barrier imposed by one of his appointees and hasten the granting of $2.5 billion in rebates to California insurance customers under Proposition 103.

The Senate overrode Republican objections to an advisory resolution adopted by the Assembly and sent it to Wilson on a 22-7 vote.

The measure by Assemblyman Byron D. Sher (D-Palo Alto) is non-binding on Wilson. But it does express what many reelection-conscious lawmakers view as a festering consumer issue with motorists and casualty insurance customers who thought they would receive the refunds long ago.

If Wilson sides with the Legislature and overturns a decision by his director of the Office of Administrative Law, Marz Garcia, it will be the second time Wilson has done so on the rebates promised by voter-approved Proposition 103 in 1988.

The insurance industry has fought granting of the refunds both in court and in the state government administrative bureaucracy. In the latest round last month, Garcia found in favor of the industry by ruling that rebate and rate-setting rules proposed by Insurance Commissioner John Garamendi treated insurers unfairly and would give Garamendi “confiscatory” powers.

But Garamendi, a Democrat and former state senator, appealed directly to Republican Wilson, who is empowered by law to overrule Garcia and order the regulations implemented so the rebates can proceed.

Garcia, a lawyer and former GOP state senator appointed by Wilson last year as his screener of state agency regulations, rejected a temporary set of emergency rebate and rate-setting rules last summer. But Wilson overturned Garcia, asserting that the public was best served by moving ahead with the rebate process. However, rebate checks were never ordered to be issued

The latest debate involved setting permanent rebate rules.

Sen. Art Torres (D-Los Angeles), newly appointed chairman of the Senate Insurance Committee, urged the Senate to approve the “nonpartisan” appeal to Wilson so that policyholders “can finally receive the insurance rebates they have been waiting for since 1988.”

But Sen. Ken Maddy of Fresno, Republican floor leader, said no one had demonstrated whether Garcia did “anything improper or wrong” in rejecting Garamendi’s rebate regulations. He criticized the measure as “nothing more than a political statement, saying you don’t agree with the result.” Maddy abstained from voting.

Senate Leader David A. Roberti (D-Los Angeles), who is running in unfamiliar territory for a vacant state Senate seat in the San Fernando Valley, also voiced support for the measure. He asserted that “no issue has caused more frustration than the delays in implementing Proposition 103.”

Meantime, Voter Revolt, the organization that sponsored Proposition 103 on the ballot, urged Wilson in a four-page letter to overrule Garcia. In a letter signed by attorney Edward P. Howard, the organization accused Garcia of “misrepresenting” the facts in his defense of his disapproval of the regulations.

Howard charged that Garcia’s defense “is not based upon law, but based upon nothing more than naked politics.” The group accused Garcia of “acting as a one-man Supreme Court,” whose legal craftsmanship tries to “dress up politics in legalese.”

A spokesman for Wilson said the governor is fully aware of the controversy and has scheduled a meeting of top aides to examine the issue.