A former administrative law judge in the California Department of Insurance has filed a lawsuit accusing Commissioner Ricardo Lara and his former special counsel of approving insurance rate hikes outside the bounds of state law and retaliating against her for pushing back.
Kristin Rosi, who served as the department’s chief administrative law judge until she was fired last year, filed suit in Alameda County Superior Court in late September against Lara and Lucy Wang, who previously served as both special counsel and deputy insurance commissioner. According to the complaint, Rosi was forced out after she refused to alter her rulings or comply with directives she believed violated the separation between the department’s executive, legal and judicial functions.
“When Judge Rosi was making rulings consistent with the law she was informed improperly that she ought to rule certain ways, and that she ought not to hold hearings,” said her attorney, Wendy Musell, who added that Rosi does not plan to speak publicly about the case.
Department spokesperson Gabriel Sanchez declined to answer questions about the lawsuit or make Lara available for comment, saying only, “We have no comment.”
The lawsuit describes a pattern of blurred boundaries inside the department, particularly in the handling of insurance rate reviews — the process by which the state evaluates and approves how much companies can charge homeowners for coverage. The allegations surface as Lara wraps up eight years as insurance commissioner, a tenure marked by repeated controversy, including reports that he accepted campaign contributions from the insurance industry and later made rulings benefiting those same donors, criticism over international travel, and a series of destructive wildfires that have strained insurance availability and affordability across the state.
“The judges observed that the underlying rate processes included settlement agreements for unprecedented rate increases, and it was relatively apparent that the Department was using prior rate approval procedures that are neither codified by insurance law, nor found in the regulations,” the lawsuit states.
Homeowners across California have seen insurance premiums climb 23% since 2023, according to data from Bankrate.com.
Beyond the civil suit, Rosi filed complaints last year with the State Bar of California against four department employees, including Wang. Those complaints remain confidential and unresolved, though CalMatters reviewed copies of them. They offer additional detail about the rate-review disputes, which hinge on a process allowing insurers to request rate hikes while “intervenors” — typically ratepayers or watchdog groups such as Consumer Watchdog — can formally object and, under state law, receive compensation for their involvement. Normally, the department’s legal division reviews such requests before they move to the executive branch for final sign-off, sometimes with input from the judicial branch, which is intended to serve as a neutral body for conducting hearings and mediations.
According to the complaints, Wang — and in at least one instance, Lara himself — held private discussions with the legal team handling active rate cases without including other parties, such as insurers or intervenors. Critics say that is roughly equivalent to a judge conferring privately with one side of a legal dispute while excluding the other.
In October 2024, while ruling in favor of a compensation request from Consumer Watchdog, Rosi wrote that she believed the department was greenlighting rate increases without adhering to legal procedure.
Following that ruling, Wang and other department leaders — some of whom could be named later in Rosi’s suit — began stripping authority from administrative law judges, the complaint alleges. At one point, Lara reportedly emailed Rosi directly, urging her to “get on board” with a department plan that would redefine the judges’ jurisdiction, including limiting their review of settlement agreements to cases where a formal hearing notice had already been issued.
Wang declined to discuss the specifics of the case. “I was sued in my official capacity as Special Counsel and am being represented by the (attorney general’s) office, so I can’t comment on the present litigation,” she said. She has since left the department and now works at a San Francisco law firm representing insurance companies.
When asked about its role representing Lara and Wang, the Attorney General’s Office referred questions back to the Insurance Department.
Dave Jones, who served as insurance commissioner before Lara and originally appointed Rosi as chief administrative law judge, described the allegations as “shocking and disturbing.”
“The way it’s supposed to work is that the commissioner gets walled off from the rest of the department when there is a hearing in a matter where the commissioner is the ultimate decider, by law,” Jones said.
The Insurance Department’s judicial branch has shrunk dramatically — only one administrative law judge remains on staff. In an August ruling, that judge pointed to the branch’s lack of staffing and resources.
Harvey Rosenfield, founder of Consumer Watchdog, called the situation “really dirty and scandalous,” adding that Californians deserve assurance that “people who engage in this conduct will be held accountable.”
Robert Herrell, executive director of the Consumer Federation of California and a former deputy commissioner under Jones, said his organization occasionally intervenes in the department’s rate proceedings. Though he had limited direct interaction with Rosi because of the separation between branches, he described her as sharp, serious and widely respected. Rosi joined the department as an administrative law judge in 2007 and was elevated to chief in 2016.
“An (administrative law judge) calls balls and strikes… they wanted the (insurance) industry to win almost all the time,” Herrell said. “Too bad it took this long for some of this stuff to come out.”
Both Jones and Herrell said incoming Insurance Commissioner Jane Kim should move quickly to restore confidence in the department once she takes office in January.
“Jane Kim as soon as she’s sworn in ought to initiate an investigation of these allegations and not wait for a superior court to make a decision,” Jones said. A case management conference in Rosi’s lawsuit is scheduled for Feb. 16.
In a statement issued through a spokesperson, Kim said, “While I can’t comment on pending litigation against the Department, I am committed to transparency and accountability — in rate decisions, and in general.” She added that she intends to look into the allegations as soon as she assumes the role.
Original source: CalMatters
