What’s Behind “ConsumerWatchdog” Attacks on Insurance Commissioner Lara? Revenge

Steven Maviglio
Principal of Forza Communications, a Sacramento-based public affairs/campaign firm

California Insurance Commissioner Ricardo Lara has been in the news lately after a San Diego Union Tribune article noted that he had accepted campaign contributors from insurance companies – an unwritten no-no that dates back to the Quackenbush scandals of 2000.

By all accounts, Lara’s acceptance of the contributions was an honest mistake, the result of a fundraising snafu where the donations weren’t tagged as coming from the insurance industry. 

To his credit, Lara acted quickly. He is returning the checks and recusing himself from decisions he had to make on the donor, Those were bold and responsible moves by Lara, a former state senator who has been in office as commissioner for only a few short months.

While several articles were quick to point out that the donor was an insurance company, they failed to note that Lara, like his predecessors, has largely rejected the company’s requests as insurance commissioner. In nearly every case that was put before him, Lara rubber-stamped the decisions of non-political administrative law judges in the department and turned down the company. There simply are no dots to connect between Lara’s actions and the returned contributions.

Lara’s moves have been the right thing to do. But there’s a reason why there’s been some continued noise about this episode. And all paths lead to ConsumerWatchdog, the faux advocacy group that Lara has tangled with during his Legislative career.

For those not familiar with them, Santa Monica-based ConsumerWatchdog excels at headline-grabbing attacks, highlighting campaign contributions to elected officials from interest groups. It then turns around and uses these articles in fundraising pitches and in appealing to deep-pocketed donors – just as it has with its attacks on Lara (an email soliciting contributions went out barely after the ink was dry on the Union-Tribune story).

But here’s the hypocrisy that rarely gets reported: ConsumerWatchdog refuses to disclose who finances their pay-to-play operations, hiding under the shield of being a “charity.” It’s a classic do-as-I-say, not-as-I-do tactic.

In this instance, reporters also failed to note that the group has received hundreds of millions of dollars from the Department through its intervenor program – a novel initiative that allows the group to interfere in insurance rate cases and get paid more than $600 per hour for the privilege. The program was set up in a ballot initiative, Prop 103, that was funded and sponsored by (guess who?!?) Consumer Watchdog, then known as the Foundation for Taxpayer and Consumer Rights. It’s a profitable arrangement that nets the group, on average, several million dollars per year. 

The group’s extravagances don’t end there. According to its 2015 filings with the California Attorney Generals Office (the last available), ConsumerWatchdog’s  part-time president Harvey Rosenfeld collected $449,300 in income. Its Executive Director, Jamie Court, hauled in $325,427 – not bad for a “charity” with a handful of employees and zero members (unlike legitimate consumer groups like Consumers Union). 

Rosenfeld also operates another “charity”, the Consumer Education Foundation, that he paid himself $100,000 from. The “group”, which has assets of more than $2.1 million (and again, no members), has one sole purpose: to make a single grant of $200,000 to Rosenfeld’s other organization, ConsumerWatchdog. Nice arrangement, huh?

But why is this controversial group that has been fined by the FPPC in its past stoking the fire about Lara? There’s history.

Last year, Lara joined the chorus of elected officials calling for disclosure of ConsumerWatchdog’s dark money funders in a candidate interview with the San Diego Union-Tribune. Here’s what he said: 

“…they need to be transparent on who their funders are … transparency’s everything. You lose your stance and your credibility if you are not transparent in the work that you’re doing, and in who’s funding your efforts and, you know, we have to abide by those same rules when we fill out our forms on who is giving us money, and I think organizations that do… you know, non-profits that do this work should be held to the same standard.”

Lara also was in the State Senate when its Office of Research issued a report calling a ConsumerWatchdog study “misleading.”

So it’s no surprise that object has become the target of ConsumerWatchdog’s attacks. Perhaps it’s time for the tables to be turned on the group for its contributions. Anybody know someone at the IRS?

——

CORRECTIONS:
The author in the original version of the article made numerous factual inaccuracies in his post that are corrected below:
The author Mr. Maviglio falsely states:
“Lara rubber-stamped the decisions of non-political administrative law judges in the department and turned down the company.”
Mr. Lara himself told KQED  “I did reverse the ruling from the law judge.”
 Mr. Lara admitted he intervened on behalf of the company on four separate occasions after taking contributions from executives and spouses of executives with ties to the company.
A link to the actual orders of reversal by Lara’s office are in this press release:https://www.consumerwatchdog.org/insurance/new-evidence-shows-lara-intervened-insurance-donors
Mr. Maviglio inaccurately states Consumer Watchdog has  “received hundreds of millions of dollars from the Department through its intervenor program.”  He also incorrectly states the program “nets the group, on average, several million dollars per year.”
The California Department of Insurance website shows that intervenor fees paid to Consumer Watchdog in cases that yielded $3.4 billion in savings for policyholders due to averted rate hikes totaled $10.2 million between 2003 – 2018.  Roughly half of those dollars went to outside experts, like actuaries, who had helped in the cases and was not retained by Consumer Watchdog. An additional $2.4 million in fees show on the the Department’s website for rule making proceedings.
Source:
Jamie Court is the president and Chairman of the Board of Consumer Watchdog as reflected on Consumer Watchdog’s IRS tax returns for more than a decade.
Those tax returns also show Harvey Rosenfield is not on the staff of Consumer Watchdog, but serves as outside counsel and an independent contractor for the organization. as reflected on  the group’s IRS tax returns for more than a decade. His income is derived from legal fees paid to the organization in cases, as documented in the returns.
Source:

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