Consumer Watchdog Responds to Commissioner Lara Fake News: Case That Lara Rules Violate the FAIR Plan Statute Is Going Forward
LOS ANGELES, July 23, 2025 /PRNewswire/ -- Today, a Los Angeles Superior Court judge adopted a ruling allowing Consumer Watchdog's lawsuit to move forward against Insurance Commissioner Ricardo Lara, rejecting his attempt to dismiss the core legal challenge to his controversial surcharge scheme. The court's final ruling confirms that the case will proceed on the ground that Lara's actions may violate the FAIR Plan statute, which requires insurers to share wildfire costs proportionally—not shift them to consumers.
In a press release today, Lara misstated the result: "Judge sides with Commissioner Lara, upholding authority to protect consumers and stabilize the CA FAIR Plan"
"The elected Insurance Commissioner should not be misleading the public about the results of a case that challenges a half billion dollars in overcharges on their insurance bill," said William Pletcher, Director of Litigation for Consumer Watchdog. "It's inappropriate for the Commissioner to misstate the results of the hearing and lead people to believe the case—which is going to trial—is over."
The ruling, now final per the court's July 22 Minute Order, overruled Lara's demurrer to the third cause of action, which challenges his approval of unprecedented FAIR Plan surcharges on legal grounds. The court scheduled a trial setting conference for November and authorized discovery to begin immediately.
Despite this clear outcome, Commissioner Lara issued a misleading press release earlier today claiming the court had sided with him. In fact, the court explicitly ruled that Consumer Watchdog may proceed with its claim that Lara violated the FAIR Plan statute by approving surcharges without legal authority.
"It's deeply troubling that the Insurance Commissioner is now running a disinformation campaign to mislead Californians about what the court actually ruled," added Pletcher.
Consumer Watchdog's lawsuit challenges Lara's approval of "temporary supplemental fees" that shift FAIR Plan wildfire costs—required by law to be shared among insurers—onto the backs of homeowners, renters, and small businesses. As the lawsuit states:
"The FAIR Plan operates as California's 'insurer of last resort.' Participation in the FAIR Plan is mandatory for all property/casualty insurers doing business in the state, who are required to share proportionally in the FAIR Plan's 'expenses, profits, and losses' based on a two-year market share lookback period. When necessary due to financial conditions, the FAIR Plan may levy 'assessments' against member insurers—subject to Respondent's approval—to fund its operations and pay claims. No provisions of the FAIR Plan statutes contemplate that assessment costs can be surcharged by member insurers to their policyholders." (Verified Petition ¶ 4)
Insurance companies tried to get the law changed in the legislature and failed. Rather than defend the law, Commissioner Lara made agreements with insurers to issue bulletins authorizing surcharges without any hearing, transparency, or statutory authority. He then misrepresented the court's tentative ruling, which actually preserved the key claim that his actions are unlawful.
"This ruling means the Commissioner's legally unsupported surcharge scheme will now be tested in court," said Ryan Mellino, who argued the case for Consumer Watchdog. "The law doesn't allow insurers to profit from the FAIR Plan while pushing their losses onto the people they're supposed to insure. This fight is just beginning—and we intend to prove in court that the Commissioner's plan isn't just unlawful, it's a betrayal of the very consumers he's supposed to protect."
Lara's misleading spin comes as his so-called "Sustainable Insurance Strategy" continues to unravel, failing to stem the exodus of insurers from California while triggering a surge in FAIR Plan enrollment and skyrocketing costs for consumers.
Commissioner Lara's failed approach has drawn growing criticism—including from former Insurance Commissioner John Garamendi, who managed the FAIR Plan in the aftermath of the 2003 wildfires, and recently said that Lara has failed to protect consumers and should resign:
"Over the last three years, I have observed that this commissioner is not willing to take the hard task and the necessary task to stand up to the insurance industry. If the commissioner is not willing to do that … then he's not doing his job, and he should leave."[1]
Consumer Watchdog will continue to press its case to stop these unlawful surcharges and restore the FAIR Plan's core mission: a backstop for wildfire risk shared among insurers, not a conduit for forcing policyholders to pay for corporate losses.
SOURCE Consumer Watchdog
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