Commissioner’s Broad Discretion In Insurance Code Enforcement Upheld
The case of Schwartz, et al, v. Poizner, No. A126217 (July 28; ordered published August 12), arises out of a settlement agreement the Insurance Commissioner reached with a number of related insurers whose claims-handling allegedly violated the Insurance Code. In the pending case, plaintiff Schwartz alleged numerous causes of action against the insurers and also petitioned for a writ of mandate against the Commissioner on behalf of a purported class who, like him, did not submit claims under the settlement agreement, but were allegedly overcharged for their policies in view of the insurers’ constricted view of their claims-handling responsibility. The trial court dismissed the petition for a writ of mandate aiming to compel the Commissioner to seek additional remedies against the insurers.
Division Three of the First Appellate District, affirming the trial court, held that the Commissioner does not have a ministerial duty to seek the additional relief and did not abuse his discretion in failing to do so.  Contrary to plaintiff’s contentions, the appellate court held, the Commissioner does not have a ministerial duty to enforce the Insurance Code’s rights of rescission as plaintiff sought. On the contrary, the Commissioner has no duty to enforce the rescission or other provisions of the Code “in any particular manner.” The Commissioner has broad discretion to decide how he will act. Alternatively, plaintiff argued, the Commissioner abused his discretion by failing to act as plaintiff sought. Here again, the appellate court held, the Commissioner’s discretion is broad and there was nothing alleged that indicated the Commissioner abused that discretion by failing to act as plaintiff wanted. It was not unreasonable for the Commissioner to conclude that modified claims procedures under the settlement would affect those who had not submitted claims under the settlement agreement on a go-forward basis and that further relief was unnecessary.
July 28, 2010
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