June 30, 2000
The Honorable Gray Davis
State of California
Sacramento, CA 95814
Re: Acceptable and Unacceptable Candidates for Interim Insurance Commissioner
Dear Governor Davis:
The duty of appointing the next California Insurance Commissioner is yours. California policyholders must be protected and their faith in the state regulation of insurance must be restored. For these reasons, it is vital that the interim appointee be an individual who has credentials that are above reproach.
The appointee should have no conflict of interest. Obviously that excludes anybody who has worked for or on behalf of the insurance industry. The candidate, if a sitting legislator, should have neither accepted large sums of campaign contributions from the insurance industry nor voted consistently with the insurance industry’s interests. The public deserves and will insist upon a regulator who is committed to protecting the consumers of the state and who could never be labeled an industry partisan.
A short list of candidates whom we feel meet the qualifications for appointment, and for whom we respectfully request your consideration, follows.
Aileen Adams — a member of your cabinet with strong consumer credentials
Lloyd Connelly — sitting judge
Rose Ann DeMoro — Executive Director of the California Nurses Association
State Senator Joe Dunn
State Senator Martha Escutia
Bob Fellmeth — law professor and consumer advocate
State Senator Liz Figueroa
Terry Friedman — former state legislator and sitting judge
Robert Hunter — former Insurance Commissioner Texas, appointed by Ann Richards, former Federal Insurance Commissioner, appointed by President Gerald Ford
Richard Katz — former state legislator
State Assembly Member Fred Keeley
Burt Margolin — former state legislator
Leon Panetta — former white house chief of staff
Troy Smith — long-time Legal Aid attorney and former member of the California Assigned Risk Pool board
Harry Snyder — former director of Consumers Union
State Senator Jackie Speier
Art Torres — former chair of the Senate Insurance Committee
Tom Umberg — former state legislator and prosecutor
Some of the candidates who, according to news reports, may be under consideration for the appointment have voting records that demonstrate that they are industry partisans and would be unacceptable for appointment. We respectfully suggest that the following individuals would be viewed by the public as partisans of the industry, and would no doubt continue the climate of controversy presently surrounding the office.
Pat Johnston, California Senate.
o Senator Johnston is the author of a number of legislative enactments, sponsored by the insurance industry, which repealed provisions of Proposition 103, and which were subsequently invalidated by the courts as violating the voter’s will. In one such case, he authored the legislation at the behest of insurance industry lobbyist Clay Jackson, who was subsequently convicted in the insurance political corruption scandal involving former State Sen. Alan Robbins.
o Senator Johnston has been the insurance industry’s leading point person in the Legislature, authoring numerous anti-consumer, pro-industry bills. A very pertinent example: Mr. Johnston carried the insurance industry’s legislation to keep the Department of Insurance Market Conduct Examinations, which investigated the misconduct of insurance companies in the aftermath of the Northridge earthquake, secret from the public.
o Senator Johnston has consistently voted against policyholders and consumers and with the insurance industry. For example, he was the only Democrat to vote against 1999 legislation you signed to restore the right of injured victims to hold insurance companies accountable when they fail to pay legitimate claims fully and fairly. Mr. Johnston also voted for the state bailout of the insurance industry on earthquake coverage.
o Senator Johnston is among the top recipients in the legislature of insurance campaign contributions. Between 1990 and 1997, state records show Mr. Johnston received over $400,000 in campaign contributions from insurance companies.
Gary Condit, U.S. House of Representatives.
o Congressman Condit has voted consistently against his own party’s concerns for individual rights and with the interests of big business. For instance, he was a sponsor of H.R. 2366 “Small Business Liability Reform Act” (Rep. James Rogan was the primary sponsor), and one of the few Democrats who voted for the measure. The bill limited the rights of injured individuals to recover punitive damages to three times compensatory damages or $ 250,000, whichever is less. The anti-consumer legislation also abridged the traditional doctrine of joint and several liability so that if one corporation that committed a harm went bankrupt another that participated in committing the harm would not be liable for the first’s damages. In addition, the GOP-backed bill limited liability for manufacturers of dangerous and defective products. The legislation preempts state consumer protection laws that are far more generous to individuals.
o Congressman Condit joined Republicans in supporting the medical savings account concept and diversion of budget surpluses to tax deductions for the account rather than shoring up Medicare and Social Security. (Congressman Condit was one of six Democrats to vote for the “Financial Freedom Act,” H.R. 2488, which was vetoed by President Clinton). Condit also voted against the “Defense of the Environment” Act in February 1999 and was targeted by the Sierra Club in newspaper ads (along with Rep. Rogan).
o “Gary Condit has been a more consistent friend of Big Business than he has been a friend of consumers,” said Frank Clemente, Director of Public Citizen’s Congress Watch, a Washington, D.C.-based consumer group. “Condit played a lead role in trying to erect roadblocks against federal agencies trying to develop stronger environmental, health, food safety and workplace protections. He’s consistently voted with corporate America’s effort to take away the right to hold companies accountable for defrauding investors and manufacturing defective products. He’s regularly voted to continue nuclear power industry subsidies and oppose more funding for energy efficiency programs. And he regularly votes against attempts to stop taxpayer funds from being used to subsidize tobacco crops.”
o According to the Center for Responsive Politics, the insurance industry ranked fifth among Congressman Condit’s biggest campaign contributors and the Finance/Insurance/Real Estate Sector was his second biggest donor base.
Louis Caldera, a former member of the California Assembly.
o Caldera voted for legislation, sponsored by the insurance industry, which effectively
repealed Prop. 103’s provision requiring insurance companies to obey the
antitrust laws. This law was later amended by the S.F. Superior Court in
order to protect the will of the voters. (AB 1086, 1993).
o Caldera voted for legislation, sponsored by the insurance industry, to reduce the amount of rate rollbacks policyholders would receive under Prop. 103 by the amount
of the commission kept by insurance agents. This law was later ruled an
unconstitutional infringement on the will of voters by the Court of Appeal. (SB 905,
o Caldera voted for legislation, sponsored by the insurance industry, to undermine the Prop.103 process under which insurers must open their books and obtain approval of rate changes. (SB 871, 1993).
o Caldera voted to permit refunds which should have been paid by insurers to
policyholders to escheat to the state. (AB 3137, 1996).
In the interests of restoring public confidence in the insurance commissioner post, we felt it prudent to communicate our concerns immediately. We will submit other names as this process unfolds.