Emails Blurred The Line Between Politics And Policy In California Insurance Department

By Hannah Wiley, SACRAMENTO BEE – CAPITOL ALERT

September 19, 2019

https://www.sacbee.com/news/politics-government/capitol-alert/article235153252.html

When an industry executive reached out on May 1 to California Insurance Commissioner Ricardo Lara’s department staff, he emailed with two meeting requests: a “formal policy discussion” and a “political meeting.”

“We would like to schedule two meetings with the commissioner,” United Insurance Company CEO Jamie Sahara wrote to Lara’s special assistant in the department, David Green, in an email that included fundraiser Dan Weitzman.

“1. Formal policy discussion with the commissioner to discuss The California Insurance Company. 2. Political meeting with the commissioner, Lena Gonzale(z) and Dan Weitzman.”

A week later, Lara met with Sahara and Steve Menzies, the CEO of workers compensation agency Applied Underwriters, for lunch in Los Angeles. Berkshire Hathaway is selling Applied, and the California Insurance Company is its subsidiary. Sahara and Menzies are seeking to acquire separate portions of the agency, a transaction Lara’s department has to approve.

It’s unclear in calendar and email records recently obtained by The Sacramento Bee whether the meeting was political or policy-related. But it wasn’t the first time a company executive felt comfortable scheduling an appointment with agency personnel that appeared to blur department business and campaign fundraising.

State Sen. Lena Gonzalez, a Long Beach Democrat who filled Lara’s seat when he became commissioner, said she never attended the May meeting, and was unaware that her name was mentioned in the original invitation. It’s unclear whether Weitzman, Lara’s consultant, was at the table either.

Weitzman did, however, arrange a March 12 meeting “to benefit” Lara’s 2022 re-election, according to a memo he sent to the commissioner. To secure a slot on Lara’s calendar, Weitzman and his staff bounced the details back and forth via email with taxpayer-paid insurance department personnel.

“Dan chatted with Ricardo and he said he’s in for the Berkshire Hathaway lunch on 3/12,” Weitzman’s client relations director emailed to Lara’s scheduler. “Just wanted to check in with you.”

Sahara and Menzies were expected at the March 12 luncheon, according to the records, as well as Applied Underwriters’ attorney Jeff Silver and former New Mexico Insurance Superintendent Eric Serna.

Executives “will be joining you for a relationship-building lunch in support of your Ricardo Lara for Insurance Commissioner 2022 campaign,” Weitzman wrote in the memo.

“Coordinating is okay to make sure there is no conflict,” said Bob Stern, former president of the Center for Government Studies. “But using the staff to set up fundraising meetings is a problem. Because it looks like the political meeting and the discussion are going to be linked together. And that’s not appropriate at all.”

Jessica Levinson, professor at Loyola Law School and government ethics expert, said elected officials should make sure that government staff aren’t handling campaign business.

“We care about taxpayer dollars taking care of taxpayer business,” she said. “It’s a wall, not a net between those two things.”

After a March 12 meeting with the CEOs, and after a department-funded trip to New York in April that included fundraising on the side, checks totaling $46,500 from out-of-state donors connected to Applied Underwriters were sent to Lara’s campaign. The Democratic commissioner was serving as his own campaign treasurer, and he pledged during his 2018 run for the post not to accept industry money.

The donations and meetings prompted an apology from the commissioner, who also agreed to recuse himself from any future decisions related to Applied Underwriters, including the pending sale. Email records cite a Sept. 30 deadline for the transaction.

“I believe effective public service demands constant adherence to the highest ethical standards,” Lara wrote in a Sept. 3 letter to consumer advocates. “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.’

Department spokesman Michael Soller noted that Lara has asked agency attorneys to strengthen scheduling protocol with “external stakeholders, especially department-regulated entities.”

Lara also terminated Weitzman in July and promised Californians a “strict moratorium” on fundraising until the end of the year and until his staff could build a better system to vet donations.

Lara said in his letter that “these interactions did not affect nor influence my official actions in any way.”

Jamie Court, president of advocacy group Consumer Watchdog, however, argued that the communications between executives and Lara’s team indicate he was “aware and actively participating in what looks like a pay-to-play scheme.”

“There was clearly some pay,” Court said. “Whether the play worked is irrelevant. The change of ownership has been tainted by the fundraising that has surrounded it.”

Weitzman and Sahara did not respond to The Bee’s requests for an interview. Silver also refused to answer questions.

Serna previously said his connection to Lara was a personal one based on their interactions through the National Association of Latino Elected and Appointed Officials.

Serna is the general counsel for Goldwater Taplin Group, which represents and consults for the insurance industry. He also resigned as the New Mexico superintendent in 2006 amid investigations into his business with a bank.

“(Lara) is honest and hard working and owns up to any mistakes he makes and moves on,” Serna said on Monday. “I believe he has the highest of ethical standards.”

Serna also denied having an “official role” with Applied Underwriters, Berkshire Hathaway or United Insurance Company, as well as the executives involved in the March 12 meeting. The records, however, show Serna was copied on emails to department officials regarding the sale.

Serna additionally appeared on a Jan. 30 calendar appointment to discuss “Short Term Medical” with Lara, and the two attended the same immigrant justice ceremony in Santa Fe in February, according to photos of the pair at the event. Lara dined with Serna again during a department-funded trip to New York in April.

Soller said Lara and Serna never talked about the pending sale of Applied Underwriters.

“What this comes down to is Commissioner Lara’s actions, and the record clearly shows Commissioner Lara has broken no laws or rules and these meetings had zero effect on department actions,” Soller said.

“Taking office in the aftermath of the state’s most destructive wildfires, Commissioner Lara has met with more disaster survivors, small business owners and California consumers than any previous insurance commissioner at this point in his term,” Soller added.

“The department has held the first community forums on wildfire insurance availability in our history attended by more than 1,000 people. He will continue to make his calendar available to the public as he represents the interests of Californians.”


 

 

916-321-5236

Hannah Wiley joined The Bee as a legislative reporter in 2019. She produces the morning newsletter for Capitol Alert and previously reported on immigration, education and criminal justice. She’s a Chicago-area native and a graduate of Saint Louis University and Northwestern.

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