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Consumer Watchdog Seeks Disclosures Regarding Influence-Peddling Scandal Under Public Records Act

Thu, 07/18/2019 - 11:47
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Gives Insurance Commissioner Lara Until End of the Month to Produce Records or Face Lawsuit 

Insurance Commissioner Lara

Los Angeles, CA -- The non-profit, non-partisan Consumer Watchdog gave California Insurance Commissioner Ricardo Lara until July 31 to produce public records related to his meetings with insurance industry representatives who gave him $54,300 in campaign contributions in a letter sent late last week. 

The letter responded to the Department of Insurance’s refusal to provide Commissioner Lara’s calendar and other records reflecting his meetings with insurance company executives. Consumer Watchdog sought the information in a Public Records Act request initially submitted in June.

Read Consumer Watchdog’s letter, including a copy of the original Public Records Act (PRA) request, HERE

In the letter sent to attorneys for the Department of Insurance, Consumer Watchdog Litigation Director Jerry Flanagan wrote: “…the Governor’s Office makes the Governor’s full calendar available to ensure public trust in the integrity of the office. Commissioner Lara should do the same.”

Beginning with a story in the San Diego Union-Tribune, multiple California newspapers have reported that Insurance Commissioner Ricardo Lara received $54,300 in campaign donations for his 2022 reelection campaign from people linked to two insurance companies, Applied Underwriters and Independence Holding Company.  In some instances, Commissioner Lara received large checks from the relatives of insurance industry executives with business pending before the commissioner.

“The apparent structuring of these contributions to hide the true origins of the money raises serious ethical questions,” according to an Editorial by the Sacramento Bee.  

Although Commissioner Lara has now agreed to give the money back, the PRA request is necessary to help answer questions about whether Commissioner Lara or someone acting on his behalf solicited the contributions, according to Consumer Watchdog.

In the letter, Consumer Watchdog wrote:

“Disclosing such public records is essential to restoring the public trust in the Office of the Insurance Commissioner in the wake of recent news reports of influence peddling involving Commissioner Lara and insurance companies regulated by the Department ...Given the importance of the requested documents to the public and the integrity of our democratic institutions, you are hereby on notice that Consumer Watchdog intends to file a lawsuit to compel production of the records (as revised by this letter) by July 31, 2019.”

Applied Underwriters and its California subsidiary, California Insurance Company (“CIC”), settled an enforcement action brought by the Department for “bait and switch” marketing tactics in 2017 and the companies are currently fighting legal actions brought by five other businesses it insured. Applied Underwriters and CIC are also currently undergoing a change in ownership that will require Commissioner Lara’sapproval pursuant to Insurance Code section 1215.2 (“Section 1215.2”).

A Department of Insurance spokesperson told the Sacramento Bee that Commissioner Lara will not be involved in any decision regarding Applied Underwriters. However, a report published yesterday revealed that a senior advisor for Commissioner Lara already intervened in several proceedings at the Department involving Applied Underwriting and CIC.

Read that report here: https://www.wcexec.com/flash-report/lara-took-money-before-favorable-actions-in-applied-cases/

IHC is one of the largest sellers of short term “junk” health insurance in the United States.  California banned short term insurance in 2018.

In the letter Consumer Watchdog wrote,

“The public has an interest in knowing whether Commissioner Lara met with these individuals, as the campaign contributions appear to have been intended to inappropriately influence Commissioner Lara’s decision regarding the sale of Applied Underwriting and CIC. In the case of IHC, the purpose of the political contributions may have been to encourage support for IHC’s efforts to re-enter the California market. As you know, a public official may be criminally liable if he or she ‘asks, receives, or agrees to receive, any bribe, upon any agreement or understanding that his or her vote, opinion, or action upon any matter then pending, or that may be brought before him or her in his or her official capacity, shall be influenced thereby....’”

Following the Department’s initial refusal to provide the records requested under the Public Records Act, Consumer Watchdog narrowed its request to focus on the specific individuals and companies associated with the campaign contributions.

The insurance industry contributions totaling $54,300 include:

  • $15,500 from Stephen Acunto, managing director of the Constitution Group, which wholly owns Constitution Insurance Company and whose directorate interlocks with Applied Underwriters and California Insurance Company. Acunto is also a spokesperson for Applied Underwriters.
  • $15,500 from Carole Acunto, identified in campaign reports as the president of a production company and the wife of Stephen Acunto.
  • $15,500 from Theresa DeBarbrie, identified in campaign reports as an administrator at a nursery school. She is the wife of Carl DeBarbrie, an insurance broker for Applied Underwriters and former executive with Constitution Insurance Company and California Insurance Company.
  • $7,800 from Darlene Graber, identified as a homemaker in campaign reports and the wife of Larry R. Graber, Senior Vice President and Director of Independence Holding Company which has multiple health insurance subsidiaries. 

View the reports at the California Secretary of State campaign finance website: http://cal-access.sos.ca.gov/Campaign/Committees/Detail.aspx?id=1415175&view=late1

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