Lawsuit Alleges Lack Of Transparency By Lara, CDI

The California Department of Insurance and Insurance Commissioner Ricardo Lara (see photo) are accused of failing to be fully transparent and compliant in their response to a Public Records Act request for information related to the campaign contribution scandal that surrounded the Commissioner last year.

Consumer Watchdog filed the lawsuit alleging that Lara and the Department violated California’s Public Records Act by creating and releasing a new version of the requested documents and by failing to release other pertinent records related to campaign contributions and personal meetings with individuals and officials linked to Applied Underwriters’.

Lara accepted over $54,000 in campaign contributions early last year from individuals linked to Applied Underwriters’, but not identified as such on the campaign disclosures. At the time, Lara was handling the finances for his 2022 reelection campaign and accepted the donations despite a campaign pledge not to take industry money. Lara was responsible for vetting the contributions and making the campaign filings with the California Secretary of State. After the contributions became public, Lara returned the donations and suspended his fundraising.

Decisions Changed

Before that, however, Applied Underwriters’ had numerous cases pending at the Department involving millions of dollars in disputed premiums and charges. Lara’s administration also took actions in some of the cases that went against the recommendations of the Department’s Administrative Law judges which were widely seen as favorable to Applied’s interests.

Additionally, the contributions came as Applied Underwriters CEO Steve Menzies was seeking to regain control of the company from Berkshire Hathaway – a move that would require Lara’s approval (see related story).

Consumer Watchdog alleges that the Department failed to release all requested documents related to face-to-face meetings that Lara had with Menzies and others associated with the deal. It says it learned from a whistle-blower within the Department that Lara’s actual calendars typically included notes that detailed what transpired, but none of the items released included any notes.

“Based on the records that were turned over by the Department of Insurance, it appears that many additional communications between Commissioner Lara and insurance company representatives have been withheld, which raises more questions about whether Applied Underwriters and [Independence Holding Company] were attempting to use campaign contributions to influence Commissioner Lara’s decision-making process on policy matters affecting the two companies,” the lawsuit states.

Consumers Watchdog is asking the court to force the Department to immediately release the requested materials, “including Commissioner Lara’s calendar in its native format with redactions of exempt material if appropriate.” The group is also asking the court to award its costs of the lawsuit, which the Public Records Act allows when violations are found.

Applied Underwriters was once but is no longer an affiliate of Berkshire Hathaway. Applied’s management bought it. Berkshire Hathaway bears no responsibility for any of the events which have transpired involving Applied Underwriters’ or its subsidiaries including California Insurance Company.