Walters: Tone-Deaf Insurance Czar Lara and His Critics

During his first months as the state’s elected insurance commissioner, Ricardo Lara was rocked by disclosures that he had accepted more than $50,000 in campaign contributions from insurance industry sources after pledging to shun such dealings during his campaign.

It was not exactly a scandal, since there’s nothing illegal about receiving campaign funds from those Lara regulates, as long as he doesn’t make any quid pro quo actions or promises in return.
It was, however, unseemly, and he handled it clumsily.
At first, he denied doing anything wrong in accepting the contributions and meeting with executives of insurers such as Applied Underwriters.
“I meet with CEOs all the time with insurance companies,” he said in an interview with KQED shortly after the revelations emerged. “In the six months that I’ve been in office, I’ve met with CEOs, I’ve met with consumer advocates, I’ve met with fire victims. If you’re asking me if I met with the CEO of Applied Underwriters, I did. I met with him.”
The denial phase was followed by a semi-acknowledgment that the allegations were factually true. Finally, last week, he issued the inevitable mea culpa.

End of Story? Not Quite.

“I believe effective public service demands constant adherence to the highest ethical standards,” Lara said in a letter to critics. “But during my campaign and first six months in office, my campaign operation scheduled meetings and solicited campaign contributions that did not fall in line with commitments I made to refuse contributions from the insurance industry. I take full responsibility for that and am deeply sorry.”
Lara, who had — perhaps foolishly — acted as his own campaign treasurer, pledged to halt campaign fundraising at least temporarily.

Related Story: CA Insurance Commissioner 'Sorry' for Taking Industry Donations

“Even though no laws or rules were broken — and these interactions did not affect nor influence my official actions in any way — I must hold myself to a higher standard. I can and will do better,” Lara wrote. “These failures are not consistent with my personal values nor my long career in public service.”
End of story? Not quite.
One of Lara’s earliest and sharpest critics about his fundraising, a Southern California organization called Consumer Watchdog, was not exactly disinterested.
Consumer Watchdog, which originally had another name, was founded by Harvey Rosenfield, a self-described acolyte of fabled consumer activist Ralph Nader. He wrote the 1988 ballot measure, Proposition 103, that changed the Department of Insurance from an arm of state government headed by an appointee into an independent agency with an elected commissioner, and gave it new powers over insurance premiums.

Fees Were Especially Heavy During the Reign of Lara’s Predecessor

One provision of Proposition 103, little noticed at the time, allowed outsiders to “intervene” in pending regulatory cases and be awarded “intervenor fees” by the commissioner – the only such process in any state.
Two years ago, Sacramento Bee reporter Jim Miller delved into the process and discovered that more than three-fourths of the $17.6 million in intervenor fees awarded since 2003 had gone to Consumer Watchdog or its predecessor organization.
The fees were especially heavy during the reign of Lara’s predecessor, Dave Jones. And Jones, not surprisingly, enjoyed a supportive relationship with Consumer Watchdog.
Obviously, therefore, Consumer Watchdog has an interest in having a friendly politician in the office. Tellingly, perhaps, Rosenfield wrote in a recent CalMatters commentary, “Commissioner Lara knows the punishment for protecting insurance companies at the expense of consumers: exile from public life.”
So did his criticism reflect a sincere reaction to Lara’s tone-deaf lapses of judgment or was it a warning of another sort?
CalMatters is a public interest journalism venture committed to explaining how California’s state Capitol works and why it matters. For more stories by Dan Walters, go to calmatters.org/commentary.