STATE ATTORNEY GENERAL REJECTS CALL TO END REPRESENTATION OF RUTHARDT

BOSTON-The Massachusetts Attorney General has rejected a call by the head of the state Legislature's Insurance Committee to withdraw from representing Insurance Commissioner Linda Ruthardt in the Electric Mutual Liability Insurance Co. case.

The office of Attorney General Scott Harshbarger last month withdrew as counsel to the Insurance Division in another case involving a life insurer demutualization, complaining that regulators had given its lawyers inaccurate information.

In a May 6 letter, state Sen. Dianne Wilkerson, D. Suffolk, chairwoman of the Joint Committee on Insurance, urged Mr. Harshbarger to take similar steps in the EMLICO case.

"If the actions of the commissioner raised serious 'ethical issues' in the State Mutual (Life Assurance Co.) case, then I would submit that there are similar concerns in the EMLICO matter," Sen. Wilkerson wrote.

During a Feb. 13 meeting to review the proposed EMLICO settlement, Sen. Wilkerson said Commissioner Ruthardt told her "unequivocally that it was clear to her that EMLICO had not been forthcoming in its application (to redomesticate to Bermuda) and further that they clearly knew more than they stated about their financial condition at the time of the application," the letter said.

"If the commissioner believes misrepresentations were made. . .as the chief law enforcement officer in the Commonwealth, why are you allowing the commissioner to negotiate away her investigatory powers and provide a release to those who may have committed the fraud?" the senator asked. "Perhaps. . .you should not merely withdraw as counsel but should be conducting your own investigation with an eye toward prosecution."

Thomas Barnico, assistant attorney general involved in the EMLICO case, said Mr. Harshbarger's office will not withdraw.

"The only effect of withdrawing as counsel to the division would be to remove the attorney general's supervision and control over the division's litigation position. Nothing in the circumstances of the EMLICO case make this necessary or appropriate," Mr. Barnico said.

An Insurance Division spokeswoman declined to comment on Sen. Wilkerson's letter.