By Charles Lam
By R. Scott Moxley
By Taylor Hamby
By Matt Coker
By R. Scott Moxley
By Charles Lam
By LP Hastings
By Taylor Hamby
Photo by Ted SoquiState insurance commissioner Chuck Quackenbush let insurance companies dodge $4 billion in potential fines for alleged wrongdoing following the 1994 Northridge earthquake after the companies secretly paid $12 million to private Quackenbush-controlled groups. The public's "watchdog" also offered insurance-company executives immunity from future charges and prematurely closed several key state probes into allegations the companies defrauded thousands of quake victims.
Based on that and more, the Sacramento Bee bluntly reported on April 16 that the Republican insurance commissioner has shown "extreme favoritism" to insurance companies. The Los Angeles Times, San Diego Union Tribune and San Jose Mercury News have called on Quackenbush to resign.
But according to The Orange County Register's Sacramento reporter Daniel M. Weintraub, if Quackenbush abused power, it was in the other direction: he had perhaps been too tough on the insurance industry.
On April 27, Weintraub crafted an article that portrayed Quackenbush—whose campaigns have been funded by the insurance industry—as a tough, uncompromising consumer advocate. To complete the unlikely image, the veteran reporter claimed one "livid" State Farm official felt "blind-sided and threatened" by the insurance commissioner's office during Northridge settlement discussions.
In reality, Quackenbush was so menacing to State Farm (which, according to state records, screwed consumers in 50 percent of the cases investigated) that he penalized the company by just one-tenth of 1 percent of the potential fines. Weintraub nevertheless allowed Quackenbush this glorious comment: "We wanted to make sure they [the insurance companies] knew how serious we really were."
While reporters at other major newspapers in the state uncovered and reported the shocking extent of Quackenbush's abuse of office, Weintraub and the Register withheld many of the juiciest details. If they relied exclusively on the Register, readers would have no idea that:
*A deceitful Quackenbush helped funnel $500,000 intended for Northridge earthquake victims to the Sacramento Urban League before his 1998 election. The Reg also didn't bother to report that Quackenbush had repeatedly claimed no knowledge of or association with the insurance-industry-generated contribution, even though a videotape shows him happily accepting personal credit for the donation at an Urban League function.
*The commissioner froze a proposed enforcement action against Mercury Insurance Group days after the company contributed $50,000 to Quackenbush's political campaign.
*Quackenbush spent $263,000 of the earthquake victims' money on a donation to a sports camp attended by his two sons.
But perhaps the Register's most blatant defense of Quackenbush was a two-day attack on the insurance commissioner's chief critic: consumer advocate Harvey Rosenfield. On May 4 and 5—with the clamor over Quackenbush's conflicts of interest peaking—Weintraub broke ranks with the rest of the press corps and wildly proposed that there was nothing unusual about the commissioner's insurance-industry-funded foundations. Weintraub's first sentence said it all: "Chuck Quackenbush is not alone."
According to Weintraub, Quackenbush and Rosenfield have insurance-industry-funded private foundations and are, therefore, moral equivalents. Far from it. Rosenfield is a proven, battle-scarred consumer advocate who helped draft and achieve passage of 1988's Proposition 103. (Intended to protect citizens against powerful insurers, 103 created the office now controlled by Quackenbush—and therefore, by the industry whose excesses it was supposed to curb.) Recently, Rosenfield used the courts to force insurers to reinvestigate the quake claims of its policyholders. The results speak for themselves: Allstate is required to "pay between $50 million and $150 million under this settlement." Significantly, the money will not go to Rosenfield's organization, the Santa Monica-based Foundation for Taxpayer and Consumer Rights, but to Northridge quake policyholders.
In a follow-up story, Weintraub let a delighted Quackenbush take an error-filled whack at Rosenfield, calling him "a tin-pot dictator committed to doing only one good—to line his pockets with extra cash and at the expense of consumers," Quackenbush said.
Weintraub's stories may have felt like a hit of Ecstasy to the embattled Quackenbush, but—as Rosenfield has pointed out—the comparison defies logic. "The Orange County Register really got me thinking," he said. "Here are some other comparisons that have come to mind since then: Cameron Diaz and James Cameron—in addition to the names, both are in show business. Or spiders and chairs—both have legs."
It's not all amusing to Rosenfield, however. On May 10, he sent the Register a letter claiming that their stories contained "demonstrably false and defamatory statements" and were aimed at discrediting his work as a consumer advocate.
The paper has a long history of beating on Rosenfield. In an Aug. 20, 1989, editorial titled "Rosenfraud," the paper established its perspective on the activist. Register officials have always asserted that the editorial department's pro-corporate politics don't leak into the newsroom. But in September 1997, Weintraub's Sacramento-based partner, reporter Mark Katches, wrote a hostile, mistake-ridden profile of Rosenfield. The paper was ultimately forced to issue a whopping 57-line correction and apology.
"They [the Register] have been so outrageous. We have an obviously corrupt politician as insurance commissioner and that paper has tried to morph me into him,"said Rosenfield. "It's really pitiful."
Neither Weintraub nor Register editor Tonnie Katz would comment.