Quackenbush Accused of Delaying Probe of Donor

Insurance Commissioner Charles Quackenbush is under fire from a consumer group for allegedly delaying an investigation into the business conduct of a political campaign contributor represented by former Gov. George Deukmejian.

A group headed by consumer activist Harvey Rosenfield plans to file a complaint today with the state’s political watchdog agency.

Rosenfield is asking the Fair Political Practices Commission to look into whether Quackenbush violated the state Political Reform Act by accepting donations from Encino-based Surety Co. of the Pacific while his agency was conducting an inquiry into the firm.

Deukmejian on Wednesday--citing his Los Angeles law firm’s policy--would only say: “It’s not appropriate for me to make any comment. As usual with these things there are two sides, and I wish I could discuss this.”

Department of Insurance officials acknowledged that some aspects of the way the Surety case is being handled are unusual, but they vigorously denied that their probe was shelved or that politics played any role in their actions.

“We don’t examine or examine companies based on campaign contributions,” said Richard Wiebe, a Quackenbush spokesman.

The agency’s review of Surety “is not on hold indefinitely. Progress is being made to conclude this examination” and if any disciplinary action is needed, it will be taken, Wiebe said.

Quackenbush’s department typically reviews companies after receiving complaints. The examinations are intended to make sure that claims are paid properly.

Citing confidentiality, department officials refused to divulge what prompted them to scrutinize Surety. The president of the company could not be reached for comment.

Chief Deputy Commissioner Ken Gibson said in an interview Wednesday that the department began its review of Surety more than a year ago and that he was contacted earlier this year by Deukmejian, who represents the company.

Gibson characterized Deukmejian as being “very alarmed” because he had heard that the department was about to publicize the findings of the examination, which are typically confidential unless fines are levied or other disciplinary action taken.

But Gibson said he sought to calm the former governor, telling him that the examination was “simply delayed” last spring while agency investigators worked to finish another, more pressing investigation.

Gibson described as “unusual” the department’s agreement to a request from Deukmejian’s client that all questions be in writing.

Rosenfield’s group, the Proposition 103 Enforcement Project, backs up its criticism by citing campaign contributions from the Encino-based company to Quackenbush and a letter sent in May to Deukmejian by Mark A. Lowder, the department’s deputy commissioner for enforcement, relating to the examination.

Reports filed with the state show that the company contributed $29,500 to Quackenbush from June 1994 to earlier this year. Only $1,500 was donated after the investigation began in 1995.

To Rosenfield, the other key document is the letter from Lowder to Deukmejian. The letter said: “Currently, as a result of a collective internal decision, we have placed the writing of the report on this examination on hold in order to address another matter.”

Lowder also told Deukmejian that his client didn’t need “to answer any further questions” from the agency regarding its inquiry.

Wiebe, the department’s spokesman, conceded that “perhaps it [the letter] could have been worded more artfully.”

Rosenfield, however, has a different view.

“They know they are facing legal liability because they are now reopening the investigation because they got caught trying to shut it down as a political favor to a campaign contributor,” Rosenfield said.

Rosenfield’s criticism comes less than two weeks after a state audit found that Quackenbush failed to report more than $327,000 in 1994 campaign contributions, much of it from the insurance industry. The audit was turned over to the FPPC.

Accusations that the department was too cozy with the insurance industry prompted activists, led by Rosenfield, to propose Proposition 103, in an attempt to overhaul the agency.

Despite a multimillion-dollar campaign against it, voters in 1988 approved the measure, which established the state insurance commissioner as an elected official.

Republican Quackenbush, who has been criticized for receiving hundreds of thousands of dollars of insurance industry campaign contributions, was chosen in 1994 as the state’s second elective insurance commissioner. He has defended his independence from the insurance industry.