Dismissal of Aide Blocking Insurance Rebates Asked

State Insurance Commissioner John Garamendi called on Gov. Pete Wilson on Wednesday to fire the state official who has sought to block $2 billion in Proposition 103 rebates to insured drivers and homeowners.

If Wilson fails to remove the official, Marz Garcia, director of the state Office of Administrative Law, Garamendi said, the state Senate should do so.

“This man has got to go if the people of California are going to see their law (Proposition 103) implemented,” Garamendi told the Senate Rules Committee at a confirmation hearing of Garcia.

“Not only do I ask you to vote no, I ask the governor of the state of California to remove this man from office so the rebates can go forward,” said Garamendi, a former state senator who is rated as a possible Democratic opponent of Wilson in the 1994 governor’s race.

Franz Wisner, deputy press secretary to Wilson who monitored the hearing, brushed aside Garamendi’s demand that Garcia be fired. “We suggest that Garamendi save his rhetoric for one of his campaigns,” Wisner said.

In contrast to Garamendi’s demand before the friendly forum of the Rules Committee, Garcia quietly insisted that in blocking Garamendi’s rebate program he acted properly and legally, even though on two occasions his actions were overturned by Wilson. The rebates have been stiffly opposed in court by the insurance industry, although two companies have agreed to comply.

Garcia said Garamendi’s regulations failed to pass muster as legally valid rules and invited the insurance commissioner to sue in court for a definitive ruling.

At the outset of the hearing, Senate leader David A. Roberti (D-Van Nuys) announced that a vote on the confirmation of Garcia, himself a former Republican state senator from San Mateo, would be delayed to an unspecified date. He called Garcia “highly controversial.”

On three occasions, Garcia, Wilson’s chief screener of regulations adopted by state agencies, has rejected Garamendi’s proposed regulations that establish the ground rules for insurance companies to refund $2 billion in casualty and property insurance premiums that were ordered when Proposition 103 was approved by voters in 1988.

Wilson overruled Garcia twice and ordered Garamendi’s regulations to be implemented so the rebate process could progress. But the governor served notice in February that he no longer would intervene and said the issue over the legality of the regulations should be resolved in the courts.

Garcia rejected a third set of Garamendi’s regulations on Monday, an action that threatens to delay the disputed rebates for another 18 months or so. The insurance industry has fought the rebate on grounds that the regulations are unconstitutionally “confiscatory” and deny them a fair profit.

In advance of the hearing, some Democratic members of the Senate had indicated that they did not want to reject Garcia and anger Wilson at the same time that delicate negotiations are under way with the governor to reach a settlement on the state budget.

In appearing before the committee, Garamendi appeared to be maximizing his own role in the controversy over the insurance rollback issue, at one point striding from the witness table and taking a seat at the elevated platform reserved for committee members to underscore his points.