Cindy Ossias

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Cindy Ossias is a San Francisco, California, based lawyer and musician. In the early months of the year 2000, while serving as a long-time senior lawyer for the California Department of Insurance (DOI), Ossias leaked confidential documents exposing the allegedly illegal and corrupt activities of Chuck Quackenbush, then Insurance Commissioner of California and head of DOI, to the state legislative consultant investigating the Commissioner's actions. In 2004, Ossias also took a seat as Director for California government watchdog group Californians Aware.

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[edit] Education and early career

In 1983, Ossias graduated from Golden Gate University School of Law. In 1991, she was appointed by then DOI commissioner John Garamendi, to a special task force that wrote the state's regulations governing unfair claims practices by insurance companies. During her tenure at DOI, Ossias served as project manager and lead counsel for DOI's activities following various natural catastrophes, including the Oakland firestorm of 1991, the Southern California wildfires of 1993, and the Northridge earthquake of 1994.

[edit] Insurance industry corruption whistleblower

In early 2000, Ossias photocopied confidential department documents, supplied them to the California State Assembly Insurance committee, and disclosed that fact to the California Highway Patrol. In testimony before the California State Assembly Ossias detailed how the DOI's upper management had suppressed findings of insurer wrongdoing after the Northridge earthquake of 1994 and instructed her to shred documents. The reports detailed claims-handling violations by State Farm , Allstate and 20th Century Insurance, used by Quackenbush to reach settlements with those insurers requiring them to contribute millions of dollars to foundations created by the commissioner. In return, Quackenbush agreed not to fine the companies or to finalize the reports, allowing the firms to donate $12.8 million to private foundations in lieu of fines of up to $3 billion. Quackenbush routinely neutralized staff members who were effective in prosecuting insurer misconduct by moving them out of enforcement positions. In exposing the corruption within California's DOI, Ossias risked losing her State job, held since 1990, her license to practice law, and her very liberty.

Ossias uncovered evidence of corruption while reviewing the insurance company claim files reflecting the claims handling practices following the 1994 Northridge earthquake. The scandal also involved a scheme whereby fraudulent settlements were entered into between the DOI and insurers who had committed unfair claim and business practices. Quackenbush and top aides also used money from insurers to fund projects for personal financial gain and political advancement.

Quackenbush was once considered the most promising Republican candidate for the next Governor’s race, before Ossias came forward to reveal DOI corruption. According to testimony by DOI employees, including Ossias, and Assistant Chief Counsel Robert Hagedorn, the commissioner and his top aides abused their positions for personal gain and acted against consumers’ interests for many years.

[edit] Aftermath

Quackenbush resigned from office shortly after Ossias testified before the Legislature. He was never charged, although his Deputy Commissioner was charged with and pled guilty to having accepted kickbacks from contributions made from the insurance foundations set up by Quackenbush. Two others were indicted in the same scheme.

In the wake Ossias' whistleblowing, a measure was passed (AB 363) permitting lawyers representing governmental clients at any level to report crimes and fraud to law enforcement or to government oversight bodies "in order to prevent or rectify substantial harm to the public." That bill was vetoed by Gov. Gray Davis. A subsequent similar measure passed and was vetoed by Gov. Arnold Schwarzenegger.

[edit] Present career

Ossias was lead counsel in DOI's case involving the claims and business practices of the nation's largest disability income insurance holding company, UnumProvident Corp. The investigation concluded with a settlement with UnumProvident, in which the company paid an $8 million fine, agreed to make substantial changes to their disability income insurance policies sold in California to make them more favorable to their insureds, and agreed to reassess claims that had been denied or terminated between 1997 and 2005. The company also agreed to provide an independent third party review to those claimants not satisfied with the company's reassessment. Some sources indicated that Ossias thought about running for Insurance Commissioner in 2006 as a Democrat. However, she did not run, and Lieutenant Governor Cruz Bustamante defeated Kraft Foods heir John Kraft for the Democratic nomination. Bustamante, in turn, lost to Republican businessman Steve Poizner.

[edit] External links

  • ConsumerWatchDog.org - 'Whistle-Blower Emerges in Quackenbush Probe Scandal: Staffer provided documents, saying she could no longer tolerate misconduct', Virginia Ellis, Carl Ingram, Los Angeles Times (June 23, 2000)
  • GuerillaLaw.com - 'Whistleblower Cindy Ossias'
  • Peer.org - 'California Legislature Passes Government Lawyer Whistleblower Bill — First Major State to Free Public Agency Attorneys to Reveal Confidential Information', Public Employees for Environmental Protection (September 5, 2002)
  • UnitedPolicyholders.org - 'Quackenbush Scandal No Surprise' (Summer, 2000)