Quackenbush Resigns From Office, Kelso Named Chief Deputy

On July 10, Chuck Quackenbush quietly filled out his last day as Insurance Commissioner of the State of California.

Quackenbush signed his official letter of resignation on June 28 after months of allegations that he used millions of dollars from an earthquake fund established by his office to further his political career. He was scheduled to testify on June 29 before a legislative committee on those very accusations, and industry feelings were high that he would resign to avoid appearing and possibly being impeached.

In one of his final acts in office, Quackenbush announced on July 5 that Professor Clark Kelso would take over as Chief Deputy Commissioner of the California Department of Insurance (CDI) until Governor Gray Davis appoints a replacement.

Although not generally well-known in the industry, Kelso’s background as a professor of law and director of the Institute for Legislative Practice at the University of the Pacific McGeorge School of Law should serve him well in the challenging position he now faces. Kelso, 40, is also the director of the Center for Access to the Courts through Technology and has worked extensively with members of the California Senate and Assembly, as well as the Judicial and Executive Branches, in efforts to improve the California justice system.

“Clark brings a tremendous amount of experience in management as well as legal and public policy knowledge to the Department,” Quackenbush stated. “This appointment will help ease the transition and allow the Department to get back to business.”

Vinton Hawkins, general counsel for M.J. Hall & Company in Stockton, Calif., attended McGeorge and remembers Kelso as a young, well-liked professor there.

“This is a guy who was raised in academia, with both his mother [Jane Kelso, Dean of Students and lecturer in law] and his father [Charles D. Kelso, professor of law] as professors,” Hawkins said. “I have nothing but good things to say about him, he certainly has the brain power to pick up the issues…he definitely has the legal knowledge.”

Like many who heard the news of Kelso’s appointment, Hawkins was surprised but not opposed to the choice. “I heard it on the radio driving in this morning, and it blew me away. Everybody’s curious to know more about him…now he’s stepping into the limelight for sure.” Hawkins expressed doubt that Kelso has any overwhelming political ambitions, mainly due to his commitment to the University.

Which leaves the big question still hanging over the Department: who will be the appointed successor?

Gov. Davis has stated that he will name “someone of unquestioned integrity, with the ability and experience to restore credibility to this important office.” Rumors continue to circulate in the industry as to who that might be.

According to Jerry W. O’Kane, CEO of IBA West Inc., names mentioned prominently thus far include Senator Jackie Speier, chair of the Senate Insurance Committee; Assembly Member Denise Ducheny, chair of the Assembly Budget Committee; and Senator Liz Figueroa, a member of the Senate Insurance Committee and former chair of the Assembly Insurance Committee.

Within Davis’ Administration, candidates include Aileen Adams, director of the Department of Consumer Affairs; former Congresswoman Lynn Schenkatz, now the Governor’s Chief of Staff; and Maria Contreras-Sweet, Secretary of the Business, Transportation and Housing Agency. Other prospects from Washington include Congressman Gary Condit (D-Calif.) and former State Assemblyman Louis Caldera, now Army Secretary.

State Senator Pat Johnston (D-Stockton), chair of the powerful Appropriations Committee, seemed to be a front runner for a while, but that prospect may now be cooling off. “Pat Johnston is not likely to be the favorite, based on the Governor’s announcement that he would not appoint someone political and the objections voiced by consumer groups that Johnston is too moderate,” O’Kane said.

Kelso’s first action in the Department was to accept the resignations of several of the CDI’s executive staff members: Chief Deputy Commissioner Michael Kelley, Deputy Commissioner/ Chief Counsel Brian Soublet, Deputy Commissioner Jim Dong, Deputy Commissioner Steve Suchil, Deputy Commissioner Mark Lowder, and Deputy Commissioner David Langenbacher.

Meanwhile, Quackenbush’s troubles are far from over. Attorney General Bill Lockyer’s Office had no magic deals to help Quackenbush out; in fact, Lockyer will continue to investigate allegations that claims following the 1994 Northridge earthquake were not settled appropriately by insurers. Rather than pay fines, insurers were allegedly forced to donate nominal amounts to a fund that was to provide earthquake education and research. Instead, some of the money went to various unrelated programs and to television spots featuring Quackenbush himself.

“If crimes have been committed by anyone associated with these actions, my office will take action to see to it that they are prosecuted,” Lockyer said in a statement. “We will seek civil penalties and restitution where appropriate.”

The actions of former Quackenbush aide George Grays are also under the scrutiny of Lockyer’s office. Grays faces criminal allegations that he accepted sizeable kickbacks on the job, giving a football camp $263,000 in donations from the nonprofit foundation set up with Northridge settlement funds.

Topics California