Quackenbush, Consumer Group Trade Jabs : Insurance: The gloves are off as the new commissioner does battle over Prop. 103 issues.

The honeymoon is over between Insurance Commissioner Chuck Quackenbush and one of the state’s best-known insurance consumer groups.

The two came out swinging Wednesday, as the Proposition 103 Enforcement Project charged that Quackenbush has cost consumers $221 million through actions taken in his first 30 days in office. Quackenbush accused the group of having “gotten fat off the public trough” by intervening in Proposition 103 litigation.

The West Los Angeles-based Proposition 103 Enforcement Project is headed by Harvey Rosenfield, who led the campaign for the 1988 rate-cutting ballot initiative. In his Wednesday broadside, Rosenfield said insurance industry interests contributed $2.4 million to Quackenbush’s campaign, including $266,000 after the election.

“There is disturbing evidence that their investment is paying off,” he added. He cited recent Quackenbush decisions granting major rate increases to California’s two largest insurers, suspending regulations imposed by his predecessor, John Garamendi, and allowing 20th Century Insurance Co. to settle its Proposition 103 case on terms Rosenfield considers overly lenient to the insurer.

Last August, the state Supreme Court unanimously rejected 20th Century’s challenge to Garamendi’s Proposition 103 regulations and upheld Garamendi’s order that 20th Century pay its policyholders $120 million in premium rebates and interest. The insurer later asked the U.S. Supreme Court to review that decision, but the chances of a reversal of a 7-0 verdict from the conservative California court were seen as slim.

Quackenbush, citing a desire to put Proposition 103 litigation to rest and to spare a company badly weakened by Northridge earthquake claims further financial damage, on Jan. 27 announced a settlement under which 20th Century would pay an initial $46 million in rebates and perhaps as much as $32 million more, depending on the amount of future earthquake claims.

Rosenfield said that deal cost policyholders perhaps $74 million. He also cited a $33-million increase in homeowner policy premiums for State Farm Mutual Automobile Insurance Co. and a $62-million increase in earthquake insurance rates for customers of Allstate Insurance Co. as examples of consumer-unfriendly Quackenbush actions.

Quackenbush, for his part, questioned Rosenfield’s motives. He said Rosenfield’s Voter Revolt and the Proposition 103 Enforcement Project have collected $1.8 million in legal fees and expenses since 1990 by acting as consumer interveners in lawsuits, such as the 20th Century case.

Under Proposition 103, consumer groups or individuals are allowed to intervene in regulatory proceedings and to be reimbursed for legal fees, time and travel expenses.

Noting that the Proposition 103 Enforcement Project still has more than $500,000 in legal bills pending, Quackenbush said in his statement that he intends to “crack down on frivolous legal bills.” He added that the Oakland-based Economic Empowerment Foundation has applied for or has already been awarded fees totaling $950,000.

“An end to litigation in Proposition 103 matters is not in Harvey Rosenfield’s best interests,” Quackenbush spokesman Richard Weibe said Wednesday. He added that much of the consumer groups’ time was billed at $300 an hour.

Rosenfield said most of the money his nonprofit groups have received has gone to pay fees to outside legal firms.

“This is not where you make money in the insurance business--as a consumer advocate,” Rosenfield said. He said his organization may go to court to challenge some of Quackenbush’s actions.

Representatives of both the Proposition 103 Enforcement Project and the Economic Empowerment Foundation said Quackenbush had overstated the amounts they had collected in intervener fees. Selwyn Whitehead of the latter group described the $950,000 figure as “deeply inflated.”

Neither Quackenbush’s office nor either of the consumer groups was able to produce documentation as of late Wednesday, however.