California Bar Journal
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State Bar exonerates Quackenbush whistleblower
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Cindy Ossias, the Department of Insurance attorney who leaked documents to the legislature that contributed to the resignation of Insurance Commissioner Chuck Quackenbush, will not be disciplined for ethical violations by the State Bar. The bar found that Ossias’ disclosure of confidential client information, because it involved public protection, was protected by California’s whistleblower law.

In a six-paragraph letter to her attorney, bar deputy trial counsel Donald Steedman exonerated Ossias because, he said, her conduct “was consistent with the spirit of the Whistleblower Protection Act; (and) it advanced important public policy considerations bearing on the responsibilities of the office of insurance commissioner.”

In closing the bar’s investiga-tion, Steedman wrote, “We have concluded that Ms. Ossias did not engage in conduct which warrants disciplinary prosecution.”

He had reviewed whether Ossias violated client confidences, whether she complied with the obligations of attorneys who represent organiza-tions and whether her conduct was permissible under the Whistleblower Protection Act.

Ossias provided information to the Assembly Insurance Committee about secret settlements Quackenbush reached with six insurance companies after the 1994 Northridge earthquake. Under the settlements, the companies were allowed to donate $12.45 million to private foundations that Quackenbush created and avoid possible fines for mishandling the claims.

Ossias had testified that the companies should have been fined between $20 and $60 million.

Before he left office, Quackenbush placed Ossias on administrative leave and took steps to fire her. J. Clark Kelso, a McGeorge Law School professor who served as interim commissioner after Quackenbush resigned, reinstated Ossias after a seven-week suspension, saying her actions were protected by the whistleblower law. He also commended her “for her her extraordinarily difficult, courageous decision to make a disclosure of information when she thought she might suffer adverse consequences.”

Steedman said he took Kelso’s actions into account in reaching the decision to not discipline Ossias.

In addition, the bar’s relatively new prosecutorial guidelines, under which ethical offenses are prioritized and the focus is placed on the most serious, played into Steedman’s decision. Ossias’ actions were considered relatively minor under the guidelines, prosecutors said.

The state’s whistleblower statute protects ordinary people from getting fired for revealing wrongdoing at work, but it does not clearly cover lawyers.

And under ethics rules, an attorney can almost never disclose a client’s wrongdoing. Ossias’ situation was further governed by a Rule of Professional Conduct which requires attorneys who represent a company or other organization to report complaints to the organization’s highest authority.

Although some legal experts interpreted the bar’s decision as an opening for public lawyers to divulge confidential information, bar lawyers backed away from such a suggestion.

“There is no formal ‘opinion’ of the State Bar that ‘whistleblower’ protections apply to attorneys,” said deputy executive director Robert Hawley. Instead, he said, the decision amounts to the exercise of  prosecutorial discretion.

“The application of ‘whistleblower’ protections to attorneys is a complex area currently under review by both the State Bar and the legislature,” Hawley said, adding that he hoped more definitive guidance for attorneys will be offered soon.