Quake Victims Direct Anger at Quackenbush

At the height of homeowner rage at insurance companies over Northridge earthquake claims three years ago, state Insurance Commissioner Chuck Quackenbush paid a house call.

With reporters and TV cameras in tow, he inspected the gaping wall cracks and exposed asbestos that 20th Century Insurance Co. had refused to repair at the Woodland Hills home of Barbara Shugar. “He was so attentive to me and came across as so honest,” said Shugar, now 64, who had been chosen for the visit by state officials out of hundreds of homeowners who had complained.

“He told me he was going to take care of me,” she said. “He made me feel like I was his relative.”

Shugar, however, said Quackenbush never made good on his promise. And now, with disclosures that the Department of Insurance allowed insurance companies to contribute to foundations run by Quackenbush political associates rather than imposing massive fines for mishandling quake claims, homeowners who tangled with their insurers are seething.

Already bitter over their long-running disputes with insurance companies, the homeowners are now turning their anger on Quackenbush.

“I feel redeemed, but I am furious,” said Jae Weiss, whose Van Nuys home was severely damaged and who said she suspected from the start that the department was favoring insurance companies.

“This discovery really is not a shock at all,” said Peter Schink, president of a Brentwood homeowners association that waged a long battle with Farmers Insurance Group.

“We filed a complaint with [the department], but their response was virtually worthless,” Schink said, saying the department simply forwarded his complaint to the insurance company.

One prominent consumer group hopes the feelings of betrayal will fuel a renewed activism on the insurance front. Today, the Santa Monica-based Foundation for Taxpayer and Consumer Rights will hold a rally at a quake-damaged condominium complex in Northridge to call for Quackenbush’s impeachment and urge quake victims to join its campaign.

“Suddenly, we have this re-galvanizing tool that Quackenbush has thrown into our laps by his own missteps,” said Doug Heller, consumer advocate for the foundation, which helped pass a 1988 ballot initiative that changed the state insurance commissioner’s job from an appointed to an elected post.

“There are so many people who feel they were abused,” Heller said, “that they feel now there is reason to be back together again.”

In the year after the 1994 earthquake, nearly 450,000 claims were filed by homeowners who said they had suffered a wide range of damage to their homes, from complete devastation to shattered dishes. Most of these claims were settled without Department of Insurance intervention.

The insurance department Wednesday submitted to The Times a series of letters from homeowners--their names and addresses excised--who said they were grateful for the department’s efforts in getting their claims settled.

“Finally, I will be able to put this devastating thing behind me,” said one letter writer.

But many of those who had long-running disputes--including homeowners who feel their lives were drastically altered first by the quake and then by an inadequate response from their insurance companies--say Quackenbush’s regulatory agency should have taken a far more activist role.

“Quackenbush was more concerned about where his kids were going to camp than about fixing my house,” said Teri Diamond, referring to revelations that one of the foundations funded by insurance companies gave $263,000 to a youth football camp in Sacramento attended by two of Quackenbush’s children. In press releases, Quackenbush had said the foundation would be used to fund quake research.

Diamond said the strain of a long battle with 20th Century over damage to her Granada Hills home almost led her and her husband of two years to a divorce. “Quackenbush is supposed to be watching [the insurance companies]. If you don’t have somebody watching a $63-billion industry, we’re history,” she said.

A frequent complaint to the department concerned the insurance companies’ refusal to reopen claims when additional damage was found by homeowners more than a year after the Jan. 17, 1994, quake, according to consumer advocates.

Numerous homeowners charged that company adjusters failed to identify major structural damage on their initial--and sometimes only--visit. When the problems were discovered later, the companies cited statutes of limitations.

That’s what happened in Shugar’s case--20th Century said she waited too long to reopen her claim.

When interviewed last week, Shugar first said the department did “nothing” for her after Quackenbush’s visit. In fact, the department did issue a strongly worded eight-page letter on her behalf, written by its assistant general counsel. The letter said 20th Century could not refuse to reopen her claim based on what it said were “statutory or contractual time limitations.”

But Shugar said that the letter was not enough, and that the insurance department should have sought disciplinary action against the company.

“It was a PR thing,” she said, “something he did because he came out here to my home and made those statements. He didn’t do anything else. It was just a little baby step.”

Shugar’s suit against 20th Century was settled out of court in 1999. Her attorney, Glenn Kantor, said that while the letter helped Shugar, it was not broad enough to help many others.

“There are a thousand other people who didn’t get a letter written for them,” he said.

20th Century maintained that the company was following the law in Shugar’s and similar cases. Company spokesman Ric Hill said the insurer stands by the way it handled claims.

“Our reputation as a good insurance company is far more important than the political issues that are floating around,” Hill said.

A spokesman for Farmers Insurance Group said the disputed suits were in the small minority and should not color the public’s perception of the company. “We handled 37,000 claims and paid out almost $2 billion in damages,” said spokesman Jeffrey Beyer. “It’s no surprise that out of that many claims filed, there would be a handful that would end up in dispute.”

Homeowners complain that, instead of being their ally, the insurance department aided insurance companies by agreeing not to pursue fines against them in return for “voluntary donations” to nonprofit foundations, as The Times has reported. Quackenbush received large political contributions from some of the companies involved.

“This explains [Quackenbush’s] behavior over the last six years,” said Schink of the Brentwood homeowners association. “We still have a homeowner living on a plywood floor with no drywall.”

Sara Bacon, formerly of Granada Hills, put a good spin on her three-year battle with her insurance company, during which she attended numerous meetings of homeowner groups.

“I made a lot of good friends and I really educated myself about the home inspection process, checking with building and safety, knowing the right questions to ask,” she said.

But she does not hide her bitterness toward Quackenbush, whose department, Bacon said, responded to her pleas for help with form letters.

“I would like to see what is going to happen to Quackenbush, whether [legislators] are going to just let this wash over,” she said.

Weiss, a counselor for the Haven Hills Domestic Violence Center in the West Valley, said she believes that inaction on the part of her former insurance company--and the refusal of the insurance department to intervene--led to the foreclosure on her Van Nuys home, which suffered severe damage in the quake.

“I am so bitter and so hurt that he and his cronies did not have even the appearance of justice and fairness,” she said calmly from her prefabricated home in Canyon Country. “I would tell him that I am glad his alliance with insurance companies has finally come to light,” she said. “I would tell him he deserves everything he gets.”

One Valley Village resident felt particularly confident, at first, that the insurance department would weigh in on his homeowner association’s long-running dispute with Farmer’s Insurance. David Compton, president of the Ben & Kling Homeowners Assn., is himself an insurance agent, although he mostly handles life and health insurance and is not licensed to sell home policies.

“I understand enough of the jargon to make me dangerous,” he said.

In February 1997, Compton filed a “Request for Assistance” form with the insurance department to charge that Farmers was violating the state’s Unfair Claims Practice Regulations. Compton said he was familiar with these regulations that are supposed to govern the conduct of insurers.

“As an agent, I had to sign a statement that I have read these regulations and will comply with them,” Compton said.

He heard nothing from the insurance department until October 1997, when he got a one-page letter from a department worker stating that the agency “does not have the judicial authority” to settle claims against insurance companies.

“I was pretty ticked off,” Compton said. “Why waste six months of our lives, only to get sent a form letter to blow us off?”

Other homeowners interviewed by The Times produced similar responses from the department. But Compton said he thought he made it clear that he was not expecting the department to settle a simple dispute, but to investigate what he believed were violations of the regulations.

“If I have to follow the rules, why aren’t [home insurers] held accountable?” Compton said.

Compton said he called the department several times, asking to speak to a supervisor, but was never connected and received no calls in return.

Compton eventually got a letter from an assistant ombudsman who admitted that the agency should have returned calls. The ombudsman wrote that the claim would be reviewed for possible regulatory violations, but that any findings would be confidential unless the department took action.

The letter failed to soothe Compton. In a reply addressed to Quackenbush, Compton pointed out that the ombudsman had the name of the regulations wrong, referring to them several times as the Fair Claims Practice Regulations--the right name is Unfair. The letter from the ombudsman also came marked “Return for Postage.”

“You certainly do run a first-class operation, Mr. Commissioner,” Compton wrote.

Compton’s 35-member homeowners association is still fighting Farmers in court, and he is still angry over what he believes was the department’s stonewalling of his requests.

“My point was that this was a trend, that it didn’t just happen to us,” he said. “I was attending meetings all over the Valley and all these other groups are saying they got treated the same way by the companies.

“In other states, the insurance commissions take action,” he added. “They say to insurance companies, you have 90 days to settle these claims or we’re yanking your ticket.”

Former state Sen. Herschel Rosenthal, whose district included portions of the Valley hit hard by the earthquake, said he met unofficially with Quackenbush several times after the temblor “to ask that insurance company conduct be looked into.”

“He told me they were working on it,” Rosenthal said. “Until I read the articles, I didn’t know he had made those kind of deals. I thought it was ludicrous, I thought it was absolutely terrible.”