Trial Set in Insurance Commissioner Lara "Pay-to-Play" Controversy

Los Angeles,CA (WorkersCompensation.com) - Consumer Watchdog filed its 834 page Opening Brief in a California Public Records Act ("CPRA") lawsuit against Insurance Commissioner Ricardo Lara and the Department of Insurance. The CPRA suit alleges that Lara and the Department of Insurance failed to search for and produce records related to a pay-to-play scandal involving insurance companies with business pending before the agency.

The trial will in this case is scheduled to be held on September 2, 2022.

As explained in the Opening Brief, though Commissioner Lara had previously pledged not to accept insurance company contributions, in 2019 individuals linked to workers’ compensation insurer Applied Underwriters and another company, IHC, contributed $53,400 to Lara’s 2022 re-election campaign fund. Some of the contributions were made in the name of relatives of insurance company executives, allegedly to hide their true source.

Shortly after, Applied’s president, Steven Menzies, requested that Commissioner Lara intervene in proceedings at the Department involving Applied. Lara did so, overriding Administrative Law Judge orders in at least four proceedings. Menzies also stood to gain if Commissioner Lara approved his purchase of Applied’s subsidiary, California Insurance Company (“CIC”).

In the wake of statewide news reports Commissioner Lara apologized and promised "transparency."

Consumer Watchdog then filed two CPRA requests with the Department seeking communications and meeting records involving 13 named individuals and any other individuals "employed by or representing" the insurance companies involved in the scandal.

Several records the Department ultimately produced suggest that Menzies and others improperly discussed the sale of CIC with Commissioner Lara and Department staff simultaneous to campaign fundraising. The Department refused to produce other records and failed to provide an adequate explanation for withholding them.

Consumer Watchdog then filed a public records lawsuit (Consumer Watchdog v. Ricardo Lara et al. Case No. 20STCP00664) asking the court to require the Department to search for and produce all responsive records.

Following the filing of the lawsuit, Consumer Watchdog says that discovery responses from the Department demonstrated that the Department failed to search for records related to at least four individuals that the Department knew were "employed by or representing" Applied and IHC.

These individuals include a former New Mexico insurance regulator who left office following a different pay-to-play scandal, an insurance executive involved in the sale of CIC, and two former California legislators-turned lobbyists, Rusty Areias and Fabian Nunez.

As noted in the Opening Brief Consumer Watchdog "also learned through discovery that Respondents not only refused to search for responsive documents, but Respondents also withheld 96 communications and redacted six others, claiming they are "absolutely protected" under section 6254, subdivision (d), and Insurance Code section 735.5. Yet they "failed to meet their burden to establish that those provisions apply to the records."

" Respondents have a duty under the CPRA to establish search protocols and adopt search terms adequate to identify responsive records. Respondents violated this duty. . . . An agency fails to conduct an adequate search when it fails to pursue leads in response to a records request that, if followed, could reasonably lead to further responsive records."

Therefore, they request "that the Court order Respondents to (1) conduct a new search for and produce responsive records of meetings and communications with 'any individuals employed by or representing' the companies, and (2) produce the 96 withheld and six redacted records in an unredacted form."

"Petitioner previously offered to settle the lawsuit if Respondents would simply conduct the required search. Respondents refused."

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