Calif. insurance commissioner faces suit claiming bad faith
Applied Underwriters alleges the commissioner and Calf. DOI violated five rules under the U.S. Constitution.
Applied Underwriters and Applied Risk Services have filed a lawsuit against California Insurance Commissioner Ricardo Lara and others in the U.S. District Court for the Eastern District of California.
The complaint alleges that the California Department of Insurance (DOI) made official statements that it did not approve the sale of insurer California Insurance Company (CIC) in a transaction involving Applied.
Applied claims the DOI abused its state law authority and acted in bad faith in a manner that caused substantial harm to the Applied family of companies. The companies allege that the DOI placed CIC in conservatorship under false pretenses and has abused its authority by trying to force Applied Underwriters to relinquish its rights in connection with the DOI’s unlawful actions. The DOI took action because the company allegedly engaged in a pattern of trying to disregard California’s rules.
During the time it was in the conservatorship, CIC was fully solvent, had an “A” rating, and remained fully committed to its customers. CIC allegedly attempted many good faith efforts to resolve issues with the department.
According to a statement from Alan Quasha, the chairman of Applied, “[t]he Department, unfortunately, seems intent on wasting state resources, harming consumers, and attacking businesses that provide essential services to consumers in California and around the country.”
Quasha also stated that “the California Department of Insurance has repeatedly acknowledged California Insurance Company’s considerable capital, surplus, and deposits, and that the proposed CIC merger presents no risk to California policyholders. While there may be situations where a conservation makes sense, this is certainly not one of those. There is no justification for the Department’s ongoing campaign to harm not only CIC but also Applied Underwriters.
“The California Department of Insurance has instituted and appears set on maintaining unnecessary and unlawful conservation over a fully solvent private company, which is a wasteful use of taxpayer money and precious state resources. Instead of using its authority in good faith and to protect California consumers, the California Department of Insurance seems intent on punishing CIC and also Applied Underwriters. The law protects against this sort of abusive behavior, and Applied Underwriters now seeks to hold the California Department of Insurance accountable for its actions.”
Applied is being represented by trial lawyers from Boies Schiller Flexner LLP.
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