Questions for Quackenbush

The list of questions the Assembly Insurance Committee needs to put to Insurance Commissioner Chuck Quackenbush at a hearing Thursday gets longer daily. But at bottom, there is only one great big question: Who does Quackenbush serve? At this point, the answer could hardly be voters or consumers.

The first specific question remains why Quackenbush allowed three firms to donate $12.8 million to foundations rather than face fines of up to $2.4 billion for the alleged mishandling of claims from the 1994 Northridge earthquake. The fines, plus penalties, were recommended by Quackenbush’s staff attorneys.

A Quackenbush spokesman insists the $2.4 billion was just a bargaining tool. Some bargain--and certainly not in favor of the policyholders of California. In truth, the commissioner’s explanations of the purity of his motives in making sweet deals with insurers boggle the mind.

The Times reported today on apparent interlocking relationships among Quackenbush, his former deputy and charities aided by the foundations. Earlier Times stories provided details on how money received by one foundation was distributed, in addition to the $4 million for public service television ads that featured Quackenbush himself and $500,000 to the Sacramento Urban League. They include $263,000 to the Skillz Athletic Foundation, a football training and scouting program that Quackenbush’s own children attended; $200,000 to the 100 Black Men, a social service organization aiding disadvantaged youth; $10,000 to the Black Film Makers Assn.; and $45,000 to a group that teaches children to use the 911 telephone system.

These may be worthy groups, but the insurance companies said the donations were not consistent with their agreement that the money would go for earthquake research and preparedness. Another $6 million set aside for earthquake victims remains unspent.

The Legislature’s duty goes beyond Quackenbush’s personal role in negotiating the deal and establishing the foundations. The Legislative Counsel has concluded that Quackenbush had no authority in the first place to set up such foundations instead of levying fines. Now--if he has not done so already--Quackenbush should ask the two foundations to freeze their remaining funds. The Legislature or some independent state authority should determine whether any valuable work is being done and, if not, dismantle the foundations and decide the appropriate disposition of the money. The shortchanged Northridge victims who have waited for six years should be first in line. Of course, they should have been first in line all along--and for a whole lot more money.