The California Court of Appeal has upheld a Los Angeles Superior Court ruling by dismissing Mercury Insurance Co.’s lawsuit challenging Insurance Commissioner Dave Jones’ authority to decrease the insurer’s homeowners rates.

Jones in March issued a decision providing for an 8.18 percent rate reduction in homeowners insurance by Mercury. Jones’ decision followed a public hearing on Mercury’s request to raise its rates by 7.3 percent.

The reduced rates would impact more than a quarter-million homeowners in California and will save Mercury’s California customers more than $16.5 million, according to the California Department of Insurance.

Mercury then filed a lawsuit in state Superior Court in Sacramento challenging Jones’ rate reduction, arguing that its homeowner policy rates are among the lowest in the state and that Jones based his rate reduction decision on outdated data.

Additionally, suit states Jones’ rate reduction deprives Mercury of the right to earn a fair rate of return.

Mercury declined to comment or state if an appeal of the decision is planned.

“Mercury’s not making any comment right now,” said Mercury spokesman Jeff Green.

Jones said the ruling affirms his authority.

“I am pleased that the Court of Appeal recognized that Mercury’s lawsuit lacked merit and must be dismissed,” Jones said in a statement. “The Court of Appeal clearly affirmed the insurance commissioner’s exclusive authority to adjudicate disputes between the Department of Insurance and insurers in an administrative forum and that insurance companies such as Mercury must wait until I render a final decision before seeking judicial intervention.”

(This article originally appeared in Insurance Journal. Reporter Don Jergler is the West Coast editor of Insurance Journal.)