Insurers Counter With Initiative Lawsuit

Campaigners for the insurance industry’s proposed no-fault auto initiative have sued in state appeals court to enjoin county voter registrars from accepting petitions for a competing initiative backed by the California Trial Lawyers Assn.

The initiatives are targeted for the November ballot.

The grounds used in the insurance industry’s suit, filed late Thursday, are that the initiative being circulated for the trial lawyers by the Insurance Consumer Action Network violates a provision of the state Constitution against dealing with more than a single subject in an initiative.

These are the very grounds the trial lawyers recently used in getting the original version of the insurance industry’s no-fault initiative knocked out by the 3rd District Court of Appeal in Sacramento--the same court in which the insurers are now suing.

‘Single-Subject’ Rule

That court ruled April 15 that the insurance industry’s initiative violated the single-subject rule because it contained provisions about campaign contributions into the no-fault proposal.

No-fault restricts lawsuits and damage recoveries for pain and suffering while allowing accident victims to recover other damages from their own insurance carriers regardless of who is at fault in an accident. It would mean sharp decreases in trial lawyer income.

The insurance industry has since appealed the adverse decision to the state Supreme Court, but in the meantime has begun circulating a revised no-fault initiative that it hopes will secure enough signatures by a mid-May deadline to allow qualification for the November ballot.

The insurance industry suit comes so late that if it were to prevail in court, there would be no time for the trial lawyers to circulate another initiative. Their cause--for insurance rate regulation and auto insurance price rollbacks--presumably would then be left unrepresented on the ballot.

Charges in Lawsuit

The insurers’ lawsuit charges specifically that the trial lawyers’ initiative violates the single-subject rule by dealing with several separate subjects, such as rate regulation, limiting lawyers’ contingency fees and the involvement of banks in the insurance business.

The lawsuit also charges that the initiative fails to set out the text of statutes to be repealed as required by the California Elections Code.

Joe Remcho, lawyer for the Trial Lawyers Assn. in the exchange of lawsuits, suggested Friday afternoon that by filing suit on the single-subject grounds, the insurance industry may be cutting its own throat.

Remcho asked how the industry could argue that the Supreme Court should overturn the Court of Appeal’s decision on the insurer’s initiative and, at the same time, adopt the appellate court’s logic in asking for an injunction against the trial lawyers initiative.

Both Measures at Risk

And he said the second version of the no-fault initiative now being circulated contains provisions of its own about lawyers’ fees. So, he suggested, if the court of appeals were to invalidate the trial lawyers’ initiative, it might well turn around soon and invalidate the insurers’ latest initiative on the same grounds.

Some people on both sides have suggested that both the insurers and the trial lawyers might prefer to kill off all the proposed initiatives and stick with the status quo in insurance.

One major reason why the insurers and trial lawyers have been circulating initiatives is that they fear a third initiative drive being backed by consumer advocate Ralph Nader. It now seems doubtful that the Nader initiative will qualify for the ballot.

Chances for Deal Increase

Without that initiative on the ballot, the chances for a deal between the insurers and the trial lawyers group probably increase.

Sponsors of yet a fourth initiative, sponsored by Assemblyman Richard Polanco (D-Los Angeles) and financed an acknowledged 90% by insurance interests, said Friday they will hold off submitting a large proportion of the signatures they have obtained until they see the result of ongoing talks between the trial lawyers and the insurers on a compromise deal to avert initiatives.