The Quackenbush Years

1994-2000

Chuck Quackenbush, California insurance commissioner

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Born: 1954 at McChord AFB, Tacoma, Wash.

Residence: Rio Linda

Education: Bachelor of arts in American studies, University of Notre Dame

Career highlights: U.S. Army captain, co-founder of QTech, a consulting firm, elected to state Assembly in 1986, and served four terms. Elected insurance commissioner in 1994 and reelected in 1998.

Family: Married with three children.

Quote: “You can’t take money from the Aetnas and the Allstates and the USAAs. You regulate them. The conflict is difficult to explain to the voters.” *

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1994

Jan. 17: Magnitude 6.7 Northridge earthquake hits

at 4:31 a.m.; 57 people die. Most expensive disaster in California history, causing $27 billion in commercial and residential destruction.

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May: Quackenbush announces candidacy for insurance commissioner, saying he won’t accept campaign contributions from insurance industry.

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September: Quackenbush reverses himself, decides to accept campaign money from all segments of insurance industry. Before race ends, he receives $2 million in contributions from the industry he will soon regulate.

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November: Quackenbush is elected insurance commissioner, defeating Democratic candidate Art Torres by a wide margin.

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1997

Oct. 28: Department of Insurance settles with John Hancock Life Insurance for $750,000 over complaints relating to marketing of life insurance between 1979 and 1996. Money went to political consultants and media buyers for television spots aired as Quackenbush faced reelection.

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December: Ads featuring Quackenbush air over a three-week period, telling viewers that “billions of dollars” in insurance funds are available to be returned to consumers.

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1998

January--April: Department of Insurance initiates studies of three major insurance companies--20th Century, State Farm, Allstate--to determine if they properly handled Northridge earthquake claims. Department experts review thousands of claims, conclude that all three insurers demonstrated a pattern of lowballing, delaying or misleading consumers.

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Wife Chris Quackenbush, shown at left with Chuck, loses bid for state Senate. Her campaign debts, and ultimately a second mortgage on the Quackenbush home, are paid off with $250,000--largely insurance company money--from Chuck Quackenbush’s campaign funds.

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November: Quackenbush is first California insurance commissioner to be reelected. With more than half of his campaign financial support coming from the insurance industry, he easily beats Democrat Diane Martinez, who had refused campaign contributions from insurers.

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1999

March 25: California Insurance Education and Outreach Project is established. Eventually used to receive money from settlements Quackenbush negotiates with insurance companies in lieu of fines or other penalties.

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April 21: Quackenbush settles with 20th Century and State Farm for mishandling of Northridge earthquake claims, requiring that they donate money to a special foundation.

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April 21: Creation of California Research and Assistance Fund. Eventually this fund will receive $12.8 million in “voluntary contributions” from insurance companies that had first been threatened by Quackenbush staff with billions of dollars in fines. The contributions are tax deductible.

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May 13: Fireman’s Fund cuts deal with Quackenbush, paying $550,000 to a special fund and avoiding an investigation of its Northridge earthquake settlements.

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June 22: Farmers Insurance settles with Quackenbush, avoids official investigation by making a contribution to special fund.

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July 3: First payment, using insurance company settlement money, to Skillz Athletic Foundation, a football training program attended by two Quackenbush children. Payments to Skillz eventually amount to $263,000.

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July 8: Allstate settles with Quackenbush by making a $2-million payment to the California Research and Assistance Fund.

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July 23: Chief aide William Palmer resigns. Palmer was Quackenbush’s chief of staff and top legal advisor. The Sacramento lawyer was also central to the creation of the controversial “education” foundations. He resigned amid revelations that he was supplementing the $200,000 Quackenbush paid him by keeping a private law practice.

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September: Longtime political consultant David Bienstock says he warned Quackenbush about “unconscionable costs” being run up with foundation funds by Deputy Commissioner George Grays. Bienstock had suggested that Grays be fired.

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Nov. 9: $500,000 contribution is made to Sacramento Urban League by the California Research and Assistance Fund.

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2000

January: Cindy Ossias, an Insurance Department lawyer in San Francisco, leaks copies of market conduct surveys to the Assembly Insurance Committee.

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February: State attorney general opens audit of Department of Insurance special foundations to determine if they have been managed responsibly.

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March 2: Officials with five major insurance companies are subpoenaed to Sacramento, where Department of Insurance lawyers, using fake sensational newspaper stories as props, threaten the companies with billions of dollars in fines unless they agree to contribute to foundations.

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April: Quackenbush political consultant Joe Shumate uses $100,000 in foundation money to conduct a political poll testing the commissioner’s popularity against other statewide politicians.

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April 13: George Grays, senior aide to Quackenbush, resigns. Grays ran Quackenbush’s 1998 reelection campaign. Grays also directed the distribution of controversial contributions to nonprofit organizations, including the Urban League and Skillz, directly from his Department of Insurance office.

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April 21: The legislative counsel, legal advisor to the state Senate and Assembly, concludes that Quackenbush did not have the authority to create foundations to receive insurance company settlement money. The lawyers for the California Legislature found that the commissioner only had authority to fine wrongdoing companies.

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April 27: In an initial appearance before the state Assembly Insurance Committee, Quackenbush admits “mistakes were made” in handling of Northridge foundation money. But Quackenbush claims ignorance of several key decisions and defers to his staff to answer specific queries.

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May 5: Superior Court Judge John R. Lewis freezes California Research and Assistance Fund. In a 177-page complaint, state Atty. Gen. Bill Lockyer describes foundation as a “sham.”

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May 10: Saying that he has been “tried, sentenced and crucified all at the hands of the media,” Quackenbush sends letter to 15,000 state Republicans defending his performance in office. “Greetings from my garrison in Sacramento...” the letter begins.

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May 24: Claiming a “political ambush,” Quackenbush walks out of a state Senate Insurance Committee hearing after refusing to testify.

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June 7: Assemblyman Tom McClintock (R-Northridge) breaks party ranks to announce that evidence in Assembly Insurance Committee “points in the direction” of impeachment. Two days later, another prominent Republican says party support is “eroding, eroding fast.”

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June 26: Quackenbush case takes dramatic turn as senior Department of Insurance lawyer Robert Hagedorn tells lawmakers that commissioner personally ordered his staff to collect $4 million in settlements with title insurance companies for TV commercials featuring Quackenbush. One current deputy commissioner and a former deputy commissioner under Quackenbush invoke 5th Amendment to avoid self-incrimination.

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June 27: Quackenbush attorneys enter talks with state officials about his resignation.

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June 28: Quackenbush, at 12:20 p.m., resigns in letter delivered to Secretary of State Bill Jones.