State insurance office again overturns a judge’s ruling to a political donor’s benefit
Records show Special Counsel
Henley signed a 47-page amended order just below Lara's name in the case filed by
According to the
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The
In an interview with KQED broadcast Thursday, Lara said he has recused himself from all decisions related to Applied Underwriters, and he said that a different ruling he overturned on
"That's the only time we did it, because we felt we wanted to make sure we were consistent with the previous ruling, which was to protect consumers and protect these injured workers," Lara told the radio station. "There was a slight variation that the law judge wanted to do which would have put in peril the coverage for injured workers, and again, companies would have been left on the hook. And so, to make sure we kept constant with previous rulings, that is why I did what I did."
Because state officials did not respond to requests about the RDR case, it's not clear whether Henley might have signed the document because Lara has decided to recuse himself -- or whether the special counsel was signing the amended order at Lara's behest.
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Attorney
"In return for their campaign contributions, he exceeded his authority under Reg. 2509.69(c) by changing the recommendations of the (administrative law judge) in order to give Applied Underwriters a bonus for their illegal conduct," Lichtenegger said.
That specific California Code of Regulations section says the insurance commissioner "may make technical or other minor changes" to an administrative law judge's decision "or a change of a similar nature that does not affect the factual or legal basis of the proposed decision."
Lichtenegger said Lara's rulings would cost his clients
"What the commissioner did was change the result," he said. "That is not a minor change."
Lara told KQED that he met with Applied Underwriters president and CEO
"It was a very casual meeting," the commissioner said. "He wanted us to see if we could, and staff could, meet with him to review the cases before him and I said 'Absolutely.' Anyone can meet with our department staff."
Lara said the conversation did not affect his decision-making in the Applied Underwriters cases. He did not say when the meeting took place.
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The California Government Code prohibits ex parte discussions.
"While the proceeding is pending there shall be no communication, direct or indirect, regarding any issue in the proceeding, to the presiding officer from an employee or representative of an agency that is a party or from an interested person outside the agency, without notice and opportunity for all parties to participate in the communication," the law says.
Government ethics experts say it may be problematic.
"The fact that a commissioner is meeting privately with a litigant can certainly raise the specter of bias in the proceedings," said
Both of the amended orders that benefited Applied Underwriters came three months after Lara accepted more than
In a follow-up story last week, the
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According to department records, Lara issued what are called non-adoption orders on
Non-adoption orders are notices that the commissioner wants a judge to reopen a case that already has a proposed decision. One of the judges in the cases declined to reopen that case, saying there was no legal basis to do so.
The 47-page amended order issued Monday said Applied Underwriters is entitled to a "guaranteed-cost" premium from
Neither
According to the amended order, the insurance commissioner imposed guaranteed-cost premiums because throwing out the policies altogether would have left the employers lacking any workers' compensation coverage for a period of time -- which is not permitted by law.
"Finding the entire arrangement void, including the policies, would leave appellants' uninsured for the period in question," the amended decision states. "That would be neither lawful, since the law requires appellants to have workers' compensation insurance, nor would it be in the best interests of the workers left without coverage for any injuries occurring during that period."
Regulators in
According to Flanagan, two stay orders Lara issued last month in the
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