Assembly Democrats Block GOP Maneuver on No-Fault Insurance

The Assembly’s Democratic leadership succeeded Thursday in blocking floor debate on a Republican-backed measure to institute a no-fault system of auto insurance in California, further diminishing the chances of a legislative overhaul of state insurance laws this year.

With five insurance initiatives pending on the Nov. 8 ballot, a bloc of 37 Republicans and five dissident Democrats attempted to insert the no-fault proposal into an unrelated bill in hopes of opening a debate that would portray most Democrats as opposed to insurance reform.

But the effort failed in a showdown on the Assembly floor when Democratic leaders raised procedural objections and then stalled for time while an absent member could be located and brought to the Capitol to cast the deciding vote. Three Republicans joined Democrats in blocking the measure.

Democrats portrayed the no-fault effort as purely a political act meant to embarrass them in an election year. In turn, Republicans said their opponents were guilty of a raw abuse of power in trying to silence debate on the volatile issue.

“They’re attempting to run away and hide,” declared Assemblyman Ross Johnson (R-La Habra). “This is an issue of paramount importance to our constituents.”

Thursday’s action, however, is not likely to end skirmishing on the no-fault question as the Legislature moves toward its Aug. 31 adjournment.

Both sides privately concede that there is not enough support in the Legislature to enact a no-fault law. But supporters of the system believe that the posturing in the Assembly could help build support for an insurance industry-sponsored no-fault measure on the November ballot and possibly hurt some Democrats who are in tight races.

Simply stated, no-fault would scrap the current auto insurance system and substitute one in which drivers are automatically compensated for their damages up to a certain level and, in exchange, give up their right to sue except in cases of the most serious injuries or losses. Most compensations for pain and suffering would be eliminated.

Supporters of the system say that by eliminating lawyers and lawsuits from most claims, insurance rates would come down and policies would be easier to obtain.

The Assembly’s Democratic leadership has consistently opposed no-fault on grounds that it robs drivers of their right to sue and is unlikely to lead to a real rate reduction. But Republicans charge that the Democratic leaders are doing the bidding of trial lawyers, who fear a loss in business and are major contributors to Democratic races.

In addition to enacting a no-fault system, the Republican-backed measure would partially eliminate insurers’ existing exemption from California’s antitrust laws, provide for limited state review of insurance rates and require a one-time 25% reduction in rates for certain types of coverage.

Combination of Elements

As such, it appears to combine elements of several of the insurance initiatives on the November ballot.

However, none of the groups backing the initiatives has expressed support for the legislative effort, in part because there is little chance of passage. Backers of the no-fault initiative also are fully committed to going ahead with their ballot measure and have indicated that they plan to spend $43 million on the campaign.

In all, about $75 million is expected to be spent on the five competing initiatives, which are designed to, among other things, reduce insurance premiums, institute rate regulation, end the industry’s antitrust exemption and limit lawyers’ contingency fees.

Republicans decided to make their move on Thursday because four Democrats were absent from the Capitol and a majority of those present appeared ready to push ahead with no-fault. They ran into a procedural problem, however, when they tried to force their proposal into a bill dealing with an entirely different subject, a violation of legislative rules.

Once that was attempted, Democrats were able to keep the debate away from no-fault and focus on the issue of upholding house rules. The Democratic leadership was upheld in its vote on the rules by a 39-37 margin.

An angry Speaker Willie Brown (D-San Francisco) declared later that “this house survives on the basis of mutual respect for the rules and obedience to those rules.”

But Assembly Republican Leader Pat Nolan of Glendale said Thursday’s action was “in reality a naked, raw abuse of power.”

“The Legislature has been under fire for failing to deal with the important issues facing our people,” Nolan said. “Here is a classic example.”

Other Developments

In other developments Thursday in the insurance initiative fight:

- Harry O. Miller, chief executive of Coastal Insurance Co. and a major financial backer of the initiative introduced by Assemblyman Richard Polanco (D-Los Angeles), resigned from the state’s largest insurance lobby, the Assn. of California Insurance Companies, charging that he had been excluded from all of the group’s activities.

The lobbying association, along with most insurers, is supporting the no-fault initiative, one of the Polanco initiative’s competitors.

- Spokesmen for four of the five initiative campaigns said the campaigns are filing suit asking Sacramento Superior Courts to order changes in various ballot pamphlet arguments prepared for the election on grounds that they are false and misleading. Any court action must come by Aug. 15, when the ballot pamphlets are certified for printing.