CAPITOL WATCHDOG: A surge in contributions;

Published on

The timing of industry donations to the state Assembly’s new Insurance Committee chairman suggests early notice of the appointment.

The Orange County Register (California)

SACRAMENTO, CA — During his first two years in the Legislature, Assemblyman Joe Coto, D-San Jose, showed no interest in insurance.

He didn’t serve on the Assembly Insurance Committee or sponsor any insurance bills.

As far as I can tell, he raised just $11,900 from seven insurance groups during the 21 months before the 2004 election.

But, suddenly, in late August and early September, insurance money started flowing to Coto — right before he was named chairman of the Insurance Committee.

Coto was one of a few lawmakers rumored to get the job, but the industry didn’t give nearly as much to the other potentials I heard about.

In fact, none of this session’s new committee chairmen experienced the sort of focused giving Coto saw in the weeks leading to their September appointments.

In all, 10 insurance groups gave Coto $18,800 in little more than three weeks before Assembly Speaker Fabian Nunez appointed him on Sept. 11.

Of those 10, six had never given him a dime before.

Assemblyman Pedro Nava, D-Santa Barbara, was also rumored to get the job. He received $8,000 from insurance interests during that time. But he had served on the committee.

I asked the insurance groups and their lobbyists what was going on. One lobbyist said he knew of the coming appointment, but the others told me the timing of their donations to Coto was a coincidence.

“It was part of our effort to support moderate Democrats,” Nicole Mahrt of the American Insurance Association said in a typical answer.

AIA gave Coto the maximum $3,200 on Aug. 23 after having never given to him before.

The timing could indeed be coincidental, and it’s certainly not new for lawmakers to take money from industries they regulate. Assembly Judiciary Committee Chairman Dave Jones, for example, took at least $52,000 from attorneys in 2005 and 2006.

I remained interested, however, because the Insurance Committee is a particularly desirable post. Insurance is a “juice” committee, so called because membership yields big contributions, or juice. Few jobs in recent years have been juicier than that of Insurance Committee chairman.

Take Coto’s predecessor, former Assemblyman Juan Vargas, D-San Diego. Vargas was criticized as an industry puppet for taking $300,000 from insurance groups and then siding with them on policy matters. He defended himself by vowing never to work in insurance after leaving office.

In December, just days after leaving the Assembly, Vargas became vice president of California external affairs for Safeco, an insurance company.

Vargas’ predecessor, former Assemblyman Tom Calderon, also took an insurance-related job after accepting tens of thousands of dollars from the industry when he was in the Legislature.

“My sense of the insurance industry is if there’s a practice to leverage power and influence, they’re doing it,” said Ned Wigglesworth, a policy advocate for the good government organization California Common Cause.

Wigglesworth told me the timing of Coto’s contributions suggests the insurance industry could have learned early that he was getting the job. That would give the industry a green light to contribute while deflecting criticism that Coto was being paid off.

The money, after all, came before the announcement.

“You don’t want the money tied to the announcement because you can say it was quid pro quo,” said Doug Heller of the Foundation for Taxpayer and Consumer Rights, a campaign finance and insurance industry watchdog.

Coto, who has said he’s considering a self-imposed ban on insurance contributions, declined to comment for this article.

However, Mark Rakich, chief consultant with the Assembly Insurance Committee, said in an e-mail, “Mr. Coto is unaware of any prior notice provided to anyone about potential appointments prior to any of the Speaker’s appointments being finalized.”

The speaker’s spokesman, Richard Stapler, sounded a similar note when I asked him if Coto’s appointment was announced early.

“It’s pure speculation,” Stapler said in an e-mail. “The Speaker’s Office did not announce chairs to anyone besides the members themselves prior to the press release we sent out in early September.”

Still, I can’t shake a brief conversation I had with John Norwood, a dean of the insurance lobby. His firm, Norwood & Associates, represents more than a dozen insurance groups, including Orange County-based Pacific Life.

Norwood told me it is standard practice for the industry to be “told” early who the new insurance chairman will be. He said he learned Coto was the choice a few days before it was announced.

He didn’t know exactly when, but it was definitely before the announcement went out.

Norwood said there was nothing shady about it and acted like it was no big deal until I asked him who, specifically, had told him.

Then he said he couldn’t remember.
Brian Joseph covers Capitol issues for the Register. His Capitol Watchdog column focuses on government practices. To reach him with questions and tips, call 916-449-6046 or [email protected]

Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

Latest Videos

Latest Releases

In The News

Latest Report

Support Consumer Watchdog

Subscribe to our newsletter

To be updated with all the latest news, press releases and special reports.

More Releases