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California Insurance Commissioner Issues an Apology

Posted By Administration, Tuesday, September 10, 2019

Ricardo Lara, California Insurance Commissioner

California Insurance Commissioner Ricardo Lara has officially apologized for taking campaign contributions from insurance industry representatives. The San Diego Union-Tribune started the investigation when it found Lara’s 2022 election campaign took in $54,300 in campaign donations. It identified the people making the contributions as being associated with Applied Underwriters and Independence Holding Co.

At that time the California Department of Insurance was dealing with regulatory issues involving both companies.

He did so by sending a letter to groups that have been highly critical of his campaign’s actions. They include United Policyholders, Public Advocates, Health Access and Consumer Watchdog.

In his letter the commissioner admitted that his campaign solicited those contributions in spite of a pledge from him not to ask for industry support. “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,” the letter said. “I take full responsibility for that and am deeply sorry.”

While apologizing, and saying he has severed the relationship with those who did that fundraising, Lara pointed out that no laws were broken and no rules violated.

“I must hold myself to a higher standard,” he concluded.

Lara says he has returned the money and has outlined some reforms he’s planning to implement:

  I am implementing rigorous vetting protocols and am retaining experts to develop new processes for the screening and reporting of all outside political activity — to ensure greater transparency and no direct connection to the insurance industry or Department-regulated entities — consistent with best practices.

  I am placing a strict moratorium on all fundraising activity for my re-election campaign until at least the end of this calendar year, while these new processes are being implemented.

  I am requesting that Department attorneys develop new publicly-available protocols for scheduling and conducting meetings with external stakeholders, especially Department-regulated entities.

  I am ordering regular public release of my official calendar of meetings with external stakeholders.

Lara concluded his letter by saying, “I look forward to the work ahead, and renew my commitment to hold myself to the highest ethical standards as your state Insurance Commissioner.”

That’s not good enough for the San Francisco Chronicle and for the groups demanding that Lara produce the public records that involve the meetings he held with the companies that reportedly gave him the campaign contributions.

They — says Consumer Watchdog — still have not received those records.

Lara’s explanation is not good enough according to an editorial written by the San Francisco Chronicle editorial board. The newspaper says the commissioner has admitted to being deeply sorry and has said he takes personal responsibility but at the same time, he is suggesting it is staff — and not him — that are to blame.

“The commissioner’s belated apologia, issued in a letter to consumer groups Tuesday, doesn’t seem to be motivated purely by further reflection,” the newspaper’s editorial board wrote and it noted that the amount of money Lara’s campaign took in from the insurers is now estimated to be much higher than the $50,000 and change noted by the San Diego Union-Tribune.

The figure is now estimated to be — says the Chronicle — around $250,000.

“The newly detailed contributions include more than $20,000 associated with a lawyer for Applied Underwriters, a workers’ compensation insurer at the center of dozens of disputes and a pending sale being reviewed by the Insurance Department,” the newspaper wrote. “Last month, two companies moved to overturn department decisions favoring Applied, arguing that they were influenced by contributions linked to the insurer.”

Lara continues to maintain that the decisions he has made involving the insurers conforms to precedents set by the department before he became commissioner.

“But it hasn’t helped that the commissioner took the money and met with Applied’s chief executive,” the editorial said. “That could be why he has hesitated to respond to press requests for his calendars or come to terms with the full extent of his compromising contributions. Lara’s mea culpa would be more convincing if it were accompanied by transparent and unflinching accountability for his past and future behavior.”

 

Source links: Insurance Journal — link 1, link 2, San Francisco Chronicle

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