The Consumer Watchdog group filed papers yesterday with theCalifornia Supreme Court arguing that the state's Consumer LegalRemedies Act should apply to insurance companies.

In a "friend of the court" brief, the organization urged thecourt to overturn a ruling last summer by the Court of Appeal inLos Angeles.

That court decided that insurance companies that break the lawcannot be sued under the Consumers Legal Remedies Act (CLRA)because, the court said, insurance is neither a "good" nor a"service" and thus the CLRA does not apply.

Consumer Watchdog called on the high court to ignore the lowercourt's view that the best public policy would be to allow only thestate insurance commissioner to hear complaints against unlawful orunfair practices by insurance companies.

The non-profit advocacy group, formerly the Foundation forTaxpayer and Consumer Rights, said that the court's public policybeliefs were irrelevant and did not follow Proposition 103, thepublic initiative approved in 1988 which requires that insurers besubject to lawsuits when they break the law.

Harvey Rosenfield, author of Proposition 103, who wrote thebrief filed by Consumer Watchdog today, said, "Insurance is a bigpart of the $115 billion financial services marketplace inCalifornia. There is no basis in the law to give the insuranceindustry a special exemption from the CLRA's protections, and thisis especially true since the voters directed that the insuranceindustry be subject to all the laws that are applicable to otherbusinesses."

The case being heard by the Supreme Court Pauline Fairbanks v.Farmers New World Life Insurance Co. was brought by a consumer whobought a life insurance policy from Farmers Insurance after beingtold that paying the premium would keep her policy in forceindefinitely. In fact, that was not true.

In 2003, Ms. Fairbanks sued Los Angeles-based Farmers, charginga violation of the Consumers Legal Remedies Act (CLRA), which barsfraud and other unlawful conduct in a "transaction intended toresult or which did result in the sale or lease of goods orservices to any consumer."

Farmers argued that insurance was neither a "good" nor a"service," and thus the law did not apply. A decision by Division 3of the Second District Court of Appeal, authored by Justice WalterCroskey, agreed with the insurance company.

Farmers did not immediately respond when asked for comment onthe Watchdog group's filing.

Mr. Rosenfield said in a statement that "consumers areincreasingly beleaguered by misleading advertising, fraud and othertrickery in the marketplace."

"If insurance is not a 'good' or a 'service,' what is it?" heasked.

The decision, he added, "places insurance companies beyond thelaw. Moreover, this is the second time in the last two years thatthis same court panel has issued a decision incorrectly barring theright of a consumer to sue an insurance company. This court hasrefused to respect the laws passed by the voters."