Calif. Judge Reconsiders Confidentiality Breach

June 23, 2000

A California Superior Court judge decided Wednesday to reconsider arguments in the Department of Insurance’s case to protect confidential market conduct exams released last year by the Senate.

Sacramento Superior Court Judge Joe S. Gray on Wednesday ordered attorneys for the Senate to present arguments as to why a temporary restraining order requested by the state’s Department Of Insurance, the Association of California Insurance Companies (ACIC) and the National Association of Independent Insurers (NAII) should not be granted. A hearing is scheduled for June 27.

“We’re hopeful this is a sign our arguments will prevail,” said Sam Sorich, vice president and western regional manager for NAII. “We do believe the exams were improperly obtained and we think the Senate has an obligation to follow the laws it created.”

On another front, the ACIC and NAII have asked the attorney general to investigate the unauthorized release of the market conduct exams.

“Given that the insurance commissioner has publicly announced that he did not authorize disclosure of these documents, we believe they were released by someone working in the insurance department in violation of California law,” said Jeff Fuller, ACIC vice president and general counsel. “The law clearly states that market conduct exams are to remain confidential and any unauthorized disclosure constitutes a breach of official duty.”

The Senate on May 22 subpoenaed the DOI for preliminary market conduct examinations of four insurance companies. The insurance department filed a lawsuit to quash the subpoena.

ACIC and NAII intervened as plaintiffs in the suit. Sacramento Superior Court Judge Joe S. Gray heard arguments in the case on June 1, but the Senate withdrew its subpoena before the court had an opportunity to rule on the legal merits of the issue. On June 12, State Sen. Martha Escutia’s Senate Judiciary Subcommittee on Bad Faith Liability and Consumer Rights released copies of the exams.

The exams were later posted on the Senate’s web site.

On June 16, NAII and ACIC joined with the DOI in asking Judge Gray to issue a temporary restraining order to remove the reports from the Senate web site and to halt further release of confidential DOI documents by the Senate. The judge called the release improper, but refused to grant the restraining order, citing separation of powers issues.

On Wednesday, June 21, however, Judge Gray issued a notice that he is reconsidering issuing a temporary restraining order requiring the Senate committee to return all reports in their possession and identify all staff who were given copies.

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