Another controversy has hit California Insurance Commissioner Ricardo Lara. In response to a report from the publication POLITICO, Consumer Watchdog has asked California Attorney General Xavier Becerra and the district attorneys in Sacramento, San Francisco and Los Angeles to investigate.
Lara is already under scrutiny for controversial campaign contributions from representatives of insurers.
At the center of this storm is Lara’s charging of the cost of his apartment in Sacramento, and travel to and from his Los Angeles home to the taxpayers. POLITICO broke down the expenses Lara has submitted for reimbursement:
• Lodging and rental — $1,925 to $3,270 from January to June
• Railroad fare — $570 to $700 per month
Lara earns $161,342 per year for the commissioner post.
Michael Soller is a spokesman for Lara. He said these expenses are justified and are not in violation of state law. “The department staff vetted this and found it not only violated no laws but it also had the potential to benefit taxpayers by saving on hotel costs,” Soller said.
Some government watchers like Jessica Levinson — a law professor at Loyola University — say Lara’s decision is at least a gray area.
“For some jobs, you have to move — as millions of Californians will tell you,” she said. “The rent is high, and a good percentage of their salary goes to it — and that’s how it goes. They don’t get the taxpayers to pay for it. And frankly, neither should the insurance commissioner.”
Consumer Watchdog president Jamie Court and litigation director Jerry Flanagan agree and sent a letter to Becerra and the attorneys general from the cities. “We are deeply troubled to report that California Insurance Commissioner Ricardo Lara appears to have committed crimes punishable by up to four years in prison by using public funds for his personal benefit and fraudulently representing expenses for his second home in Sacramento as a legitimate public expense,” they wrote.
Back to Soller’s comments on Lara saving the taxpayers money on hotel costs. Soller said the apartment rental is $700 a month on the apartment and it is the same one he rented when he served as a senator in the California Legislature. “The costs captured represent the monthly lodging costs for the commissioner to conduct official state business in Sacramento,’’ Soller said.
The publication looked in the Department of Human Resources manual and how executive branch employees are to be reimbursed. The manual says those employees “shall only use commercial lodging establishments such as hotels, motels, bed and breakfast inns, public campgrounds, or short-term rentals (such as Airbnb) that cater to the general public.”
Soller said a Department of Insurance lawyer disagrees and pointed out that Lara has not violated the regulations in the manual because Lara is only billing the state for the days he spends in Sacramento. “Department staff determined he could apply this lodging reimbursement to his rental rather than hotel bills,” Soller noted. “His true costs for lodging would be higher if he weren’t renting.”
What Soller would not do is name that lawyer.
California Controller is Betty Yee. Her spokeswoman Jennifer Hanson said this is not unusual. Each agency makes its own decision on reimbursements and have “an internal accounting team that reviews travel claims and maintains receipts for auditing purposes.”
Court, Flannagan and Consumer Watchdog disagree with her assessment of the situation and believes Lara is breaking the law.
“The public has a right to know what really happened,” they said in their letter’s conclusion. “Only an investigation by the office of a public prosecutor can compel answers about whether the insurance commissioner engaged in criminal activity. No public official should be above the law. All state workers should know that every state employee, including elected officials, are held accountable to the law.”
In a recent interview Court said Consumer Watchdog is terribly disappointed with Lara’s decisions. “The job of the insurance commissioner does not come with a second home in Sacramento,” he said. “It’s perfectly permissible to get reimbursed for overnight stays but if these living expenses are related to setting up a second home, then this crosses the line of using public funds for private benefit.”
By the way, members of the California Legislature get $201 per day in per diem in addition to their salary. Assembly members earn between $110,000 and $127,000 per year and senators take home around $110,000.
The commissioner’s decision to ask for these reimbursements is a break from the two previous office holders Dave Jones and Steve Poizner. As for other office holders, When Arnold Schwarzenegger held the governorship he lived at the Hyatt Regency in Sacramento and those costs were paid by a foundation.
Current governor Gavin Newsom has moved to Sacramento from San Francisco. He did so at his own expense.
Source links: POLITICO, Insurance Journal