An administrative judge in California’s Insurance Department who was fired last year is suing Commissioner Ricardo Lara and his former special counsel, accusing them of illegally approving insurance rate increases and undermining the judicial branch of the department.

Kristin Rosi, former chief administrative law judge for the department, filed the lawsuit in Alameda County Superior Court in late September. She alleges that Lucy Wang — the former special counsel who was also a deputy insurance commissioner — and other top officials at the department retaliated against her for calling out their practices and refusing to comply with orders to revoke or change her rulings.

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“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 Rosi’s lawyer, Wendy Musell. Rosi will not be giving interviews about the lawsuit, Musell said.

Gabriel Sanchez, an Insurance Department spokesperson, did not address CalMatters’ questions about the lawsuit or a request to interview Lara. “We have no comment,” he said in an email.

Rosi’s lawsuit paints a picture of an Insurance Department that regularly breached the separation of its executive, legal and judicial branches — including in rate reviews in which the department approved how much insurers can charge homeowners for their policies. The allegations come at the end of Lara’s eight years at the helm, which have been beset with controversy that included him accepting insurance-industry donations and making decisions that allegedly benefited those contributors; criticism about his overseas travels; and major wildfires that affected insurance availability and affordability.

“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 alleges.

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Californians’ home insurance premiums have increased 23% since 2023, according to comparison website Bankrate.com.

Rosi also filed complaints last year against four people from the department, including Wang, with the California State Bar. Those cases are pending and have not been made public, but CalMatters obtained copies of the complaints.

They give more detailed accounts of the judge’s allegations, which are related to rate reviews. That process involves insurance companies requesting rate increases and “intervenors” who are ratepayers or advocacy groups such as Consumer Watchdog that can object and get compensated for doing so, under California law. The department’s legal branch reviews those requests, and the executive branch has the final say, in some cases after the judicial branch has weighed in. The judicial branch provides a “neutral forum for conducting fair and independent evidentiary hearings and mediations,” according to the Insurance Department’s website.

The complaints say that Wang, and in at least one case Lara, as the people deciding on the rate reviews, should not have been meeting with the legal team about cases being reviewed by that same team without including all stakeholders, such as insurance companies and intervenors. It’s similar to how in lawsuits, a judge cannot meet with one side without the other also being present.

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In October 2024, in approving Consumer Watchdog requests for compensation, Rosi said in her ruling that she found that the department was approving rate requests without following the law.

Wang and other members of the department — some of whom may later be named in Rosi’s lawsuit — then began to wrest away power from the administrative law judges, according to the suit. At one point, Lara emailed Rosi and asked her to “get on board” with the department’s plan dictating what’s in the judges’ jurisdiction, including “instruction to review settlements in rate proceedings only when a notice of hearing has (been) issued,” the lawsuit said.

Wang declined to comment on the lawsuit. She said, “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 now works for a San Francisco law firm and represents insurance companies.

When CalMatters asked Attorney General Rob Bonta’s office about representing Lara and Wang, the office deferred to the Insurance Department.

Dave Jones, Lara’s predecessor who appointed Rosi as chief administrative law judge, called the allegations in Rosi’s lawsuit “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.

There is now only one administrative law judge left in the Insurance Department; that judge in a ruling in August alluded to an understaffed and underresourced judicial branch.

Harvey Rosenfield, founder of Consumer Watchdog, called the allegations “really dirty and scandalous.” He said Californians need to know that “people who engage in this conduct will be held accountable.”

Robert Herrell is executive director of Consumer Federation of California, which sometimes intervenes in the department’s rate reviews. He was a deputy commissioner under Jones.

Herrell said that because of the separation between the branches in the Insurance Department, he did not have a lot of interaction with Rosi, but that he knew her to be smart, serious and well-respected. She had been an administrative law judge in the department since 2007, and was appointed 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.”

Jones and Herrell both said Commissioner-elect Jane Kim should make it clear the department needs to follow the rule of law when she takes the reins 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. The first case management conference in Rosi’s lawsuit is scheduled for February 16.

Kim sent a statement via a spokesperson: “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 plans to investigate the claims as soon as she takes office.