Whistle-Blower Tells Panel of Her Outrage

When the phone call finally came, Cindy Ossias was ready. Her mounting frustration over insurance company settlements had reached critical mass. It was time to talk.

So it was that Ossias, a seasoned lawyer with the state Department of Insurance, became a whistle-blower, launching investigations into California’s biggest political corruption scandal in years.

It is not a role she sought. But on Monday, during four grueling hours of testimony before the state Assembly committee investigating Insurance Commissioner Chuck Quackenbush, it is one she played with poise.

“I’m glad I did it,” Ossias, 49, said during a break in the sometimes hostile questioning. “I think it was worthwhile--no matter what happens next.”

For now, what happens next is an uncomfortable mystery for Ossias (pronounced oh-SIGH-us). Last week, the department placed her on paid administrative leave until July 21, ordering her to be available by phone except during lunch hour--a status she jokingly called “house arrest.”

After that, she’s not sure what to expect. By leaking sensitive Department of Insurance documents to the Assembly Insurance Committee, she has put her job--and possibly her license to practice law--at risk.

“I’m not in denial,” she said, acknowledging the grim possibilities. “I’m just trusting that I’ll land on my feet.”

Recommended Fines Scrapped

Documents leaked by Ossias are central to the widening scandal engulfing Quackenbush, who is under scrutiny for his settlements with major insurance companies in lieu of fines for Northridge earthquake claims violations.

The documents included audits detailing such violations by State Farm, Allstate and 20th Century and also staff-recommended fines against those companies. Quackenbush allowed the companies to contribute far smaller amounts to private foundations he created.

Testifying under immunity from criminal prosecution, Ossias said she was “appalled” when she learned that her recommended fine of about $119 million against State Farm had been scrapped in favor of the alternative settlement scheme, under which the company was assessed just $2 million--none of which went to quake victims.

“I was truly outraged and with each settlement I saw, I was more outraged,” she told the committee. Later, addressing reporters in a Capitol hallway, she added: “I knew what we could have gotten [for earthquake victims], and I felt they should know they got shortchanged.”

Despite her frustration, Ossias figured she would just ignore her angst and go on doing her job. But then came a call from Paul Donahue, a former consultant to the Assembly Insurance Committee.

“He knew I had done some earthquake work, so he asked me if I knew anything about the Northridge settlements,” Ossias recalled. Her response? “I have a lot to tell you.”

In the days that followed, Ossias told the committee, she went through “an internal struggle” as she agonized over which documents to leak. She was fearful of violating attorney-client privileges and she was concerned about jeopardizing her job.

But more than anything, she wanted the truth to come out: “I realized [Donahue] was somebody who could get these documents to the right people, get them made public,” she said outside the hearing room.

‘A True Watchdog’

A 10-year veteran of the Insurance Department, Ossias said she has become known as the “catastrophe queen” in the legal division because of her work on the Oakland Hills fire, which burned 3,000 houses in 1991, and the 1994 Northridge earthquake.

She lives with her cat, Bob, and dog, Jackie O, in San Francisco, and spends her spare time playing piano and singing in an a cappella group.

One homeowner who got to know Ossias after the Oakland Hills fire called her “a true watchdog,” noting that she encouraged residents to file complaints with the department.

“She was our point person after the fire,” said Betty Ann Bruno, who lost her home and battled State Farm for an equitable settlement for four years. “If we had complaints about insurance companies, which most of us did, she would help us in any way she could.”

Monday’s hearing was something of a bipolar experience for Ossias. The morning was positively pleasant, with Democrats on the committee asking carefully scripted, friendly questions of their star witness.

After lunch, however, it was the Republicans’ turn. Assemblyman Tom McClintock (R-Northridge), while noting that her whistle-blower actions were “in the highest tradition of public service,” lectured Ossias for possibly breaking the law by leaking confidential documents. By so doing, McClintock charged, she “undermines the moral authority of the Legislature to sit in judgment of the commissioner.”