California Code of Regulations

California Code of Regulations Title 10, Chapter 5

Subchapter 4.9 RULES OF PRACTICE & PROCEDURES FOR RATE PROCEEDINGS

Article 13 Intervention

* §2661.1 Definitions

* §2661.2 Intervention of Right

* §2661.3 Procedure for Intervention in a Rate Hearing

* §2661.4 Procedure for Participation in a Proceeding Other Than a Rate Hearing

Article 14 Intervenor’s Fees and Expenses

* §2662.1 Purpose

* §2662.2 Request for Finding of Eligibility; Time; Contents; Effective for Two Years

* §2662.3 Request for Award

* §2662.4 Amended Request for Award

* §2662.5 Requirements for Awards

* §2662.6 Decision Awarding Compensation; Allowance of Award

* §2662.7 Time for Payment

* §2662.8 Securing Payment

————————————————————————

SUBCHAPTER 4.9

RULES OF PRACTICE & PROCEDURES FOR RATE PROCEEDINGS

Article 13. INTERVENTION

§2661.1. Definitions.

The following definitions shall apply to Articles 13 and 14 of this subchapter. (a) “Advocacy Fees” means costs, incurred or billed, by a party for the services of an advocate in the proceeding. An advocate need not be a attorney. Advocacy fees shall not exceed market rates as defined in this section.

(b) “Compensation” means payment for all or part of advocacy fees, witness fees, and other expenses of participation and intervention in any rate hearing or proceeding other than a rate hearing.

(c) “Market Rate” means with respect to advocacy and witness fees, the prevailing rate for comparable services in the private sector in the Los Angeles and San Francisco Bay Areas at the time of the Commissioner’s decision awarding compensation for attorney advocates, non-attorney advocates, or experts with similar experience, skill and ability. Billing rates shall not exceed the market rate.

(d) “Other Expenses” means reasonable, actual out-of-pocket costs of an intervenor. Out-of-pocket costs include but are not limited to expenses such as travel costs, transcript charges, postage charges, overnight delivery charges, telephone charges and copying expenses. Out-of-pocket costs also includes the costs incurred in preparing a request or amended request for award, defined in sections 2662.3 and 2662.4. The intervenor has the burden of substantiating any costs incurred, including providing supporting documentation as requested by the Public Advisor.

(e) “Proceeding” includes those proceedings set forth in Insurance Code Section 1861.10(a).

(f) “Proceeding Other Than a Rate Hearing” means any proceeding, including those described in subdivision (e) above, conducted pursuant to Chapter 9 of Part 2 of Division 1 of the Insurance Code which is not a rate hearing as defined in this section.

(g) “Public Advisor” means that official of the Department of Insurance who monitors and assists participation by members of the public in the Department of Insurance‘s proceedings. The Public Advisor shall not represent any member of the public and shall not advocate any substantive position on behalf of the public on any issues before the Commissioner.

(h) “Rate Hearing” means any proceeding conducted pursuant to Insurance Code Sections 1861.01 and 1861.05.

(i) “Represents the Interests of Consumers” means that the intervenor is a person who represents the interests of individual insurance consumer[s] or the intervenor is a group organized for the purpose of consumer protection as demonstrated by, but is not limited to, a history of representing consumers in administrative, legislative or judicial proceedings

A party which represents, in whole or in part, any entity regulated by the Commissioner shall not be eligible for compensation. However, nothing in this subsection shall be construed to prohibit any person from intervening or participating if that person is not seeking compensation.

(j) “Substantial Contribution” means that the intervenor substantially contributed, as a whole, to a decision, order, regulation, or other action of the Commissioner by presenting relevant issues, evidence, or arguments which were separate and distinct from those emphasized by the Department of Insurance staff or any other party, such that the intervenor’s participation resulted in more relevant, credible, and non-frivolous information being available for the Commissioner to make his or her decision than would have been available to a Commissioner had the intervenor not participated.

(k) “Witness Fees” means recorded or billed costs for a witness, together with associated expenses. Costs and expenses for a witness shall not exceed market rate as defined in this section.

Note: Authority cited: Section 1861.10, Insurance Code; and CalFarm Insurance Company, et al. v. George Deukmejian, et al., 48 Cal.3d 805, 824 (1989), 20th Century Insurance Company v. John Garamendi, 8 Cal.4th 216, 281, 32 Cal. Rptr. 2d 807, 847 (1994). Reference: Sections 1861.10(a) and 1861.10(b), Insurance Code; and CalFarm Insurance Company, et al. v. George Deukmejian, et al., 48 Cal.3d 805 (1989), 20th Century Insurance Company et al. v. John Garamendi 8 Cal. 4th 216, 32 Cal. Rptr. 2d 807 (1994).

§2661.2. Intervention of Right.

Any person shall be permitted to intervene in any proceeding on any rate application or in any proceeding subject to Chapter 9 of Part 2 of Division 1 of the California Insurance Code if the issues to be raised by the intervenor are relevant to the issues of the proceeding. A person desiring to intervene or participate in any proceeding shall use the forms set forth in sections 2623.1 through 2623.9 of this subchapter, which shall be verified. Note: Authority cited: Section 1861.10, Insurance Code; and CalFarm Insurance Company, et al. v. George Deukmejian, et al., 48 Cal.3d 805, 824 (1989), 20th Century Insurance Company v. John Garamendi, 8 Cal.4th 216, 281, 32 Cal. Rptr. 2d 807, 847 (1994). Reference: Sections 1861.10(a) and 1861.10(b), Insurance Code; and CalFarm Insurance Company, et al. v. George Deukmejian, et al., 48 Cal.3d 805 (1989), 20th Century Insurance Company et al. v. John Garamendi 8 Cal. 4th 216, 32 Cal. Rptr. 2d 807 (1994).

§2661.3. Procedure for Intervention in a Rate Hearing.

(a) A person desiring to intervene and become a party to a rate hearing shall file a petition to intervene which shall be drafted in compliance with sections 2652.1-2652.4 of this subchapter.

(b) The Petition shall cite the law authorizing the proposed intervention and shall contain the petitioner’s interest in the proceeding, the specific issues to be raised and the positions to be taken on each issue to the extent then known, and the name, address, and telephone number of the petitioner. The verified petition shall include a statement that the intervenor or advocate will be able to attend and participate in the proceeding without delaying the proceeding or any other proceedings before the Commissioner.

(c) The Petition shall also state whether the petitioner intends to seek compensation in the proceeding, and, if so, contain an itemized estimated budget for the participation in the proceeding, which shall set forth the following:

(1) separate listings of the rates for each attorney advocate or non-attorney advocate, including:

(A) the names of each attorney advocate or non-attorney advocate,

(B) the rates to be claimed for each attorney advocate or non-attorney advocate,

(c) a description of the work to be performed by each attorney advocate or non-attorney advocate, an estimate of the time to be spent to perform that work and the rates, fees and costs associated with that work; and,

(2) separate listings of the rates for each witness, including:

(A) the names of each witness and their areas of expertise,

(B) the rates to be claimed for each witness,

(C) a description of the work to be performed by each witness, an estimate of the time to be spent to perform that work and the rates, fees and costs associated with that work. Rates contained in the estimated budget shall not exceed market rates. Submission of the budget shall not guarantee the payment of the dollar amounts set forth in the budget. The lack of objection to any item in the budget shall not imply approval of the budget.

(d) An amended budget shall be submitted as soon as possible when the intervenor learns that the total estimated budget amount increases by $10,000 or more.

(e) A Petition to Intervene shall be filed with the Administrative Law Bureau, and shall be considered an “additional pleading” within the meaning of Government Code Section 11507.6. A copy of the Petition to Intervene shall be served on the Public Advisor and all of the parties to the proceeding. A Petition to Participate shall be submitted to the contact person for the proceeding, and served on the Public Advisor.

(f) Within ten (10) days after filing of the Petition to Intervene, any other party may file a response to the Petition to Intervene. Any party claiming that the petitioner does not represent the interests of consumers shall so state in the response, which shall include any supporting documentation. The petitioner may reply to any allegation in the response and may reply to the allegation that it does not represent the interests of consumers within eight (8) days of filing of the response.

(g) The administrative law judge shall rule on the Petition to Intervene within 20 days of its filing with the Administrative Law Bureau.

(h) No person whose petition has been granted shall be permitted to reopen matters decided before the petition is granted without a showing of good cause. Note: Authority cited: Section 1861.10, Insurance Code; and CalFarm Insurance Company, et al. v. George Deukmejian, et al., 48 Cal.3d 805, 824 (1989), 20th Century Insurance Company v. John Garamendi, 8 Cal.4th 216, 281, 32 Cal. Rptr. 2d 807, 847 (1994). Reference: Sections 1861.10(a) and 1861.10(b), Insurance Code; and CalFarm Insurance Company, et al. v. George Deukmejian, et al., 48 Cal.3d 805 (1989), 20th Century Insurance Company et al. v. John Garamendi 8 Cal. 4th 216, 32 Cal. Rptr. 2d 807 (1994).

————————————————————————

§2661.4. Procedure for Participation in a Proceeding Other Than a Rate Hearing.

(a) A person desiring to participate in a proceeding other than a rate hearing shall file a petition to participate which shall be drafted in compliance with sections 2652.1-2652.4 and 2661.3(b) through (e) of this subchapter. The petition to participate shall be provided to the contact person for the proceeding.

(b) A ruling on a Petition to Participate shall be made within 15 days of its submission to the contact person for the proceeding.

(c) person whose petition has been granted shall be permitted to reopen matters decided before the petition is granted without a showing of good cause.

(d) Nothing in this section shall be construed to prohibit any person from providing relevant comments in a proceeding other than a rate hearing if that person is not seeking compensation.

Note: Authority cited: Section 1861.10, Insurance Code; and CalFarm Insurance Company, et al. v. George Deukmejian, et al., 48 Cal.3d 805, 824 (1989), 20th Century Insurance Company v. John Garamendi, 8 Cal.4th 216, 281, 32 Cal. Rptr. 2d 807, 847 (1994). Reference: Sections 1861.10(a) and 1861.10(b), Insurance Code; and CalFarm Insurance Company, et al. v. George Deukmejian, etal., 48 Cal.3d 805 (1989), 20th Century Insurance Company et al. v. John Garamendi 8 Cal. 4th 216, 32 Cal. Rptr. 2d 807 (1994).

————————————————————————

Article 14. INTERVENOR’S AND PARTICIPANT’S FEES AND EXPENSES

§2662.1. PURPOSE.

The purpose of this Article is to establish procedures for awarding advocacy fees, witness fees andother expenses to intervenors and participants in proceedings, including proceedings other than rate hearings, before the Insurance Commissioner in accordance with Section 1861.10(b) of the Insurance Code. The definitions set forth in section 2661.1 apply to Article 14 of this subchapter. Note: Authority cited: Section 1861.10, Insurance Code; and CalFarm Insurance Company, et al. v. George Deukmejian, et al., 48 Cal.3d 805, 824 (1989), 20th Century Insurance Company v. John Garamendi, 8 Cal.4th 216, 281, 32 Cal. Rptr. 2d 807, 847 (1994). Reference: Sections 1861.10(a) and 1861.10(b), Insurance Code; and CalFarm Insurance Company, et al. v. George Deukmejian, et al., 48 Cal.3d 805 (1989), 20th Century Insurance Company et al. v. John Garamendi 8 Cal. 4th 216, 32 Cal. Rptr. 2d 807 (1994).

————————————————————————

§2662.2. Request for Finding of Eligibility; Time; Contents; Effective for Two Years.

(a) A person or group representing the interests of consumers may submit to the Public Advisor a request for finding of eligibility to seek compensation. The request shall be verified and may be verified by the intervenor’s attorney and shall be submitted, at any time, in conjunction with an ongoing proceeding in which the individual or organization seeks to intervene. The request shall comply with sections 2652.1-2652.4 of this subchapter and shall include:

(1) a showing by the intervenor or participant that it represents the interests of consumers, including a description of the previous work of the intervenor or participant; and,

(2) in the case of groups representing the interests of consumers, the request shall include the following as exhibits:

(A) a copy of the group’s articles of incorporation, by- laws, or (for groups not organized as corporations) other organizational documents,

(B) if the group has members, the approximate number of current members,

(C) composition of the group’s current Board of Directors – including the name and business address of each director and/or the name and business address of the principals of the group if it is not a corporation,

(D) newsletter circulation, if any, along with a representative sample of newsletters and/or any other publications issued by the intervenor in California during the previous twelve (12) months,

(E) any annual or year-end report for the prior year,

(F) a statement as to whether or not the group has been granted non-profit status under Internal Revenue Code Section 501(c) and

(G) in order to allow a determination whether the group actually does represent the interests of consumers, a listing, by general category, of the group’s funding sources for the prior twenty-four (24) months and the approximate total percentage of the group’s annual budget from each funding category. Each foundation, corporate, business, or government grant shall be separately listed by name of foundation, corporation, business, or government agency and amount of grant. For each individual who contributed at least five percent of the group’s annual budget, the name of the individual and the total amount of the annual contribution shall be separately listed. The Public Advisor may require additional information regarding the request at any time, but not more than twice during any one calendar year from a given intervenor or participant.

(b) Within 10 days of receipt of a request for finding of eligibility to seek compensation, the Public Advisor shall review the request for completeness. If the request includes all of the information required by subdivision (a) above, it is complete. If the Public Advisor determines that the request is not complete because it does not include all of the information required by subdivision (a), notice stating the grounds for incompleteness will be given to the person or group who submitted the request within the 10 day period and the request will be rejected.

(c) The Commissioner shall rule on the request for a finding of eligibility to seek compensation in writing not later than 15 days from the receipt of a complete request.

(d) A Finding of Eligibility to Seek Compensation shall be valid in any proceeding in which the intervenor’s participation commences within two years of the Finding of Eligibility so long as the intervenor (or participant) still meets the requirements of subsection (a). A Finding of Eligibility to Seek Compensation in no way ensures compensation.

(e) Nothing in the Finding of Eligibility shall prohibit or limit any person or group from making any presentation or advocating any position which is otherwise admissible.

Note: Authority cited: Section 1861.10, Insurance Code; and CalFarm Insurance Company, et al. v. George Deukmejian, et al., 48 Cal.3d 805, 824 (1989), 20th Century Insurance Company v. John Garamendi, 8 Cal.4th 216, 281, 32 Cal. Rptr. 2d 807, 847 (1994). Reference: Sections 1861.10(a) and 1861.10(b), Insurance Code; Sections 446 and 2015, Code of Civil Procedure; and CalFarm Insurance Company, et al. v. George Deukmejian, et al., 48 Cal.3d 805 (1989), 20th Century Insurance Company et al. v. John Garamendi 8 Cal. 4th 216, 32 Cal. Rptr. 2d 807 (1994).

————————————————————————

§2662.3. Request for Award.

(a) An intervenor or participant whose Petition to Intervene or Participate has been granted and who has been found eligible to seek compensation may submit to the Public Advisor, within 30 days after the service of the order, decision, regulation or other action of the Commissioner in the proceeding for which intervention was sought, or at the requesting intervenor’s or participant’s option, within 30 days after the conclusion of the entire proceeding, a request for an award of compensation. An intervenor or participant requesting that any award ordered be made payable to a specific person or entity, other than the intervenor or participant, that represented or advocated on behalf of the intervenor or participant during the proceeding shall include verified authorization to that effect in the request.

(b) The request shall be verified and shall be in compliance with sections 2652.1-2652.4 of this subchapter and shall include, at a minimum:

(1) a detailed description of services and expenditures;

(2) legible time and/or billing records, created as soon as possible after the work was performed, which show the date and the exact amount of time spent on each specific task and

(3) a description of the intervenor’s substantial contribution citing to the record, including documents such as: transcripts, proposed decisions of the Administrative Law Judge and orders demonstrating that a substantial contribution was made.

The phrase “exact amount of time spent” as used in this subdivision refers either to five (5) minute or tenth (10th) of an hour increments.

(c) The phrase “each specific task,” as used in this subdivision refers to activities including, but is not limited to: (A) telephone calls or meetings/conferences, identifying the parties participating in the telephone call, meeting or conference and the subject matter discussed; (B) legal pleadings or research, identifying the pleading or research and the subject matter; (C) letters, correspondence or memoranda, identifying the parties and the subject matter; and, (D) attendance at hearings, specifying when the hearing occurred, subject matter of the hearing and the names of witnesses who appeared at the hearing, if any.

Nothing in this subsection shall require disclosure of privileged information.

(d) Within 15 days after service of the request, any other party may submit a response to the request. The response shall be submitted to the Public Advisor and a copy shall also be provided to all parties to the proceeding. The intervenor or participant may reply to any such response within 15 days after service of the response. The reply shall be submitted to the Public Advisor and a copy shall also be provided to all parties to the proceeding.

(e) The Public Advisor shall require an audit and/or may inspect the books and records of the intervenor or participant to the extent necessary to verify the basis for the award. The Public Advisor shall maintain the confidentiality of the intervenor’s books and records to the extent allowed by law.

(f) Any party questioning the market rate or reasonableness of any amount set forth in the request shall, at the time of questioning the market rate or reasonableness of that amount,file a statement setting forth the fees, rates, and costs it expects to expend in the proceeding.

Note: Authority cited: Section 1861.10, Insurance Code; and CalFarm Insurance Company, et al. v. George Deukmejian, et al., 48 Cal.3d 805, 824 (1989), 20th Century Insurance Company v. John Garamendi, 8 Cal.4th 216, 281, 32 Cal. Rptr. 2d 807, 847 (1994). Reference: Sections 1861.10(a) and 1861.10(b), Insurance Code; and CalFarm Insurance Company, et al. v. George Deukmejian, et al., 48 Cal.3d 805 (1989), 20th Century Insurance Company et al. v. John Garamendi 8 Cal. 4th 216, 32 Cal. Rptr. 2d 807 (1994).

————————————————————————

§2662.4. Amended Request for Award.

An intervenor or participant may submit amended requests for an award whenever it incurs additional fees or costs subsequent to the submission of a previous request for award. Any amended request shall meet the requirements of Section 2662.3 of this subchapter. Responses to an amended request, if any, shall meet the requirements of section 2662.3.

Note: Authority cited: Section 1861.10, Insurance Code; and CalFarm Insurance Company, et al. v. George Deukmejian, et al., 48 Cal.3d 805, 824 (1989), 20th Century Insurance Company v. John Garamendi, 8 Cal.4th 216, 281, 32 Cal. Rptr. 807, 847 (1994). Reference: Sections 1861.10(a) and 1861.10(b), Insurance Code; and CalFarm Insurance Company, et al. v. George Deukmejian, et al., 48 Cal.3d 805 (1989), 20th Century Insurance Company et al. v. John Garamendi 8 Cal. 4th 216, 32 Cal. Rptr. 2d 807 (1994).

————————————————————————

§2662.5. Requirements for Awards.

(a) Subject to subdivision (b) herein, advocacy fees, witness fees, and other expenses of participation in a proceeding shall be awarded to any intervenor or participant who complies with section 2662.3 and satisfies both of the following requirements:

(1) The intervenor or participant’s presentation makes a substantial contribution as evidenced by specific citations to the intervenor’s direct testimony, cross-examination, legal arguments, briefs, motions, discovery, or any other appropriate evidence; and,

(2) The intervenor or participant represents the interests of consumers.

(b) To the extent the substantial contribution claimed by an intervenor or participant duplicates the substantial contribution of another party to the proceeding and was not authorized in the ruling on the Petition to Intervene or Participate, the intervenor’s or participant’s compensation may be reduced. Participation by the Department of Insurance staff does not preclude an award of compensation, so long as the intervenor or participant’s substantial contribution to the proceeding does not merely duplicate the participation by the Department of Insurance‘s staff. In assessing whether there was duplication, the Commissioner will consider whether or not the intervenor or participant presented relevant issues, evidence, or arguments which were separate and distinct from those presented by any party or the Department of Insurance staff.

Note: Authority cited: Section 1861.10, Insurance Code; and CalFarm Insurance Company, et al. v. George Deukmejian, et al., 48 Cal.3d 805, 824 (1989), 20th Century Insurance Company v. John Garamendi, 8 Cal.4th 216, 281, 32 Cal. Rptr. 2d 807, 847 (1994). Reference: Sections 1861.10(a) and 1861.10(b), Insurance Code; and CalFarm Insurance Company, et al. v. George Deukmejian, et al., 48 Cal.3d 805 (1989), 20th Century Insurance Company et al. v. John Garamendi 8 Cal. 4th 216, 32 Cal. Rptr. 2d 807 (1994).

————————————————————————

§2662.6. Decision Awarding Compensation; Allowance of Award.

(a) In a written decision, the Commissioner shall determine whether or not the intervenor or participant has made a substantial contribution. The decision shall be issued within 90 days of receipt of all information required by Section 2662.3.

(b) If the Commissioner determines that the intervenor or participant has made a substantial contribution, the Commissioner shall set forth this substantial contribution and shall set forth the amount of compensation to be paid. The compensation awarded shall equal the market rate of the services provided.

(c) The Commissioner’s decision shall be served on all parties to the proceeding.

(d) Any award paid by an applicant pursuant to this Article shall be allowed by the Insurance Commissioner as an expense for the purpose of establishing rates of the applicant by way of a dollar-for-dollar adjustment to rates approved by the Insurance Commissioner immediately on the determination of the amount of the award, so that the amount of the award shall be fully recovered within two years from the date of the award.

Note: Authority cited: Section 1861.10, Insurance Code; and CalFarm Insurance Company, et al. v. George Deukmejian, et al., 48 Cal.3d 805, 824 (1989), 20th Century Insurance Company v. John Garamendi, 8 Cal.4th 216, 281, 32 Cal. Rptr. 2d 807, 847 (1994). Reference: Sections 1861.10(a) and 1861.10(b), Insurance Code; and CalFarm Insurance Company, et al. v. George Deukmejian, et al., 48 Cal.3d 805 (1989), 20th Century Insurance Company et al. v. John Garamendi 8 Cal. 4th 216, 32 Cal. Rptr. 2d 807 (1994).

————————————————————————

§2662.7. Time for Payment.

(a) Any award payable by an applicant shall be paid within 30 days of the decision awarding compensation. If an insurance company fails to pay an award within 30 days, the insurance company shall also pay interest on the amount awarded, at the legal rate, until the date on which the award is paid.

(b) For the purpose of this section, the phrase “within 30 days” shall mean within 30 days after the Insurance Commissioner issues a decision awarding compensation, unless the insurance company submits a timely petition for reconsideration or judicial challenge of the decision or any part for which compensation is sought by the intervenor, in which case no payment shall be required until 30 days after a decision on reconsideration or judicial challenge.

Note: Authority cited: Section 1861.10, Insurance Code; and CalFarm Insurance Company, et al. v. George Deukmejian, et al., 48 Cal.3d 805, 824 (1989), 20th Century Insurance Company v. John Garamendi, 8 Cal.4th 216, 281, 32 Cal. Rptr. 2d 807, 847 (1994). Reference: Sections 1861.10(a) and 1861.10(b), Insurance Code; and CalFarm Insurance Company, et al. v. George Deukmejian, et al., 48 Cal.3d 805 (1989), 20th Century Insurance Company et al. v. John Garamendi 8 Cal. 4th 216,32 Cal. Rptr. 2d 807 (1994).

§2662.8. Securing Payment.

The Commissioner shall make every reasonable effort to secure payment of award, including cooperating with other agencies of the state. Note: Authority cited: Section 1861.10, Insurance Code; and CalFarm Insurance Company, et al. v. George Deukmejian, et al., 48 Cal.3d 805, 824 (1989), 20th Century Insurance Company v. John Garamendi, 8 Cal.4th 216, 281, 32 Cal. Rptr. 2d 807, 847 (1994). Reference: Sections 1861.10(a) and 1861.10(b), Insurance Code; and CalFarm Insurance Company, et al. v. George Deukmejian, et al., 48 Cal.3d 805 (1989), 20th Century Insurance Company et al. v. John Garamendi 8 Cal. 4th 216,32 Cal. Rptr. 2d 807 (1994).