A former top administrative judge at the California Department of Insurance has filed a lawsuit accusing Insurance Commissioner Ricardo Lara and his former special adviser of improperly approving rate increases for insurance companies and interfering with the independence of the department’s judicial branch.
Kristin Rosi, who served as chief administrative law judge for the department, filed the suit in Alameda County Superior Court in late September. She alleges that Lucy Wang, Lara’s former special adviser who also held the title of deputy insurance commissioner, along with other senior department officials, retaliated against her after she raised concerns about their conduct and refused orders to overturn or alter her legal rulings.
“When Judge Rosi issued rulings in accordance with the law, she was wrongly told that she needed to rule a certain way and that she should not be holding hearings,” said Wendy Musell, Rosi’s attorney. Musell said her client would not be giving interviews about the case.
Department of Insurance spokesperson Gabriel Sanchez did not respond to questions from CalMatters about the lawsuit or to a request to interview Lara, saying only in an email, “We have no comment.”
Rosi’s complaint paints a picture of a department that routinely blurred the lines separating its executive, legal and judicial functions — including during the rate review process, in which the agency determines how much insurers are allowed to charge homeowners for coverage. The allegations surface as Lara’s eight years leading the department come to a close, a tenure marked by repeated controversy, including reports that he accepted campaign contributions from the insurance industry and made decisions that appeared to benefit those same donors, criticism over his overseas travel, and the strain placed on insurance affordability and availability by devastating wildfires across the state.
“The judges observed that the underlying rate-setting processes included settlement agreements for unprecedented rate increases, and it was fairly apparent that the Department was relying on prior rate-approval procedures that are not codified in the insurance code or found in any regulations,” the lawsuit states.
According to the comparison website Bankrate.com, home insurance premiums in California have climbed 23% since 2023.
Last year, Rosi also filed complaints with the State Bar of California against four individuals within the department, including Wang. Those complaints remain pending and have not previously been made public, but CalMatters obtained copies.
The bar complaints offer a more detailed account of Rosi’s allegations surrounding the rate review process. Under that system, insurance companies request rate increases, and “intervenors” — either policyholders or advocacy groups such as Consumer Watchdog — may challenge those requests and receive compensation for doing so under California law. The department’s legal branch reviews these applications, while the executive branch holds final authority, sometimes after the judicial branch has already weighed in. The judicial branch is intended to serve as a “neutral forum for fair and independent evidentiary hearings and mediations,” according to the department’s own website.
The complaints allege that Wang — and, in at least one instance, Lara himself — met with the legal team to discuss cases that team was actively reviewing, without including all relevant parties, such as insurers and intervenors. The arrangement mirrors a courtroom scenario in which a judge would be barred from meeting privately with one side of a case without the other side present.
In October 2024, while approving compensation requests from Consumer Watchdog, Rosi wrote in her ruling that she had found the department was approving rate applications without following the law.
According to the lawsuit, Wang and other department officials — some of whom may be named later in the case — began stripping authority away from the administrative judges. At one point, Lara emailed Rosi asking her to go along with a departmental plan dictating what fell within the judges’ jurisdiction, including instructions to review settlement agreements in rate proceedings only after a hearing notice had already been issued, the lawsuit states.
Wang declined to comment on the lawsuit. “I was sued in my capacity as Special Advisor and I am represented by the Attorney General’s Office, so I am not able to comment on the pending litigation,” she said. She now works at a San Francisco law firm representing insurance companies.
When CalMatters asked Attorney General Rob Bonta’s office about its representation of Lara and Wang, the office referred the matter back to the Department of Insurance.
Dave Jones, who preceded Lara as insurance commissioner and originally appointed Rosi to her position, called the allegations in her lawsuit “shocking and troubling.”
“Here’s how it’s supposed to work: the commissioner is walled off from the rest of the department when there’s a hearing in a matter where, by law, the commissioner is the final decision-maker,” Jones said.
Only one administrative law judge currently remains at the Department of Insurance. In an August ruling, that judge referenced a judicial branch that is understaffed and lacking resources.
Harvey Rosenfield, founder of Consumer Watchdog, described the allegations as “really dirty and scandalous.” He said Californians deserve to know that “those who engage in this kind of conduct will be held accountable.”
Robert Herrell, executive director of the Consumer Federation of California — which occasionally intervenes in the department’s rate reviews — previously served as deputy commissioner under Jones.
Herrell said that because of the separation between different sections of the department, he didn’t interact much with Rosi directly, but knew her to be sharp, serious and widely respected. She had served as an administrative law judge at the department since 2007 and was promoted to lead the division in 2016.
“An administrative law judge decides the moves… they wanted the insurance industry to win almost every time,” Herrell said. “It’s unfortunate that it’s taken this long for all of this to come out.”
Both Jones and Herrell said incoming Commissioner Jane Kim should make clear, upon taking office in January, that the department will operate under the rule of law.
“Jane Kim, as soon as she’s sworn in, should launch an investigation into these allegations and not wait for a higher court to rule,” Jones said. The first case management hearing in Rosi’s lawsuit is scheduled for February 16.
Kim’s office provided a statement through a spokesperson: “While I cannot comment on pending litigation against the Department, I am committed to transparency and accountability, both in rate decisions and more broadly.” She added that she plans to look into the allegations once she assumes office.
Original source: CalMatters
