Campaign funds from companies Insurance Commissioner Chuck Quackenbush regulates were used to pay off his wife’s personal loans to her own failed state Senate campaign. That’s bad enough, but it gets worse. According to a report by Virginia Ellis of the Los Angeles Times, reprinted in The Bee on Sunday, the biggest contributions came from two companies that benefited from industry-friendly regulatory actions taken by Quackenbush.
The chairman of the Assembly Insurance Committee says he will convene hearings to investigate the department’s regulatory practice. More is required. Taken all together–the amounts of money involved, the questionable regulatory actions taken and the fact that the funds went to pay off the personal campaign debts of Chris Quackenbush–these events raise questions about whether there was a quid pro quo. They need to be answered in an investigation by the state attorney general.
Rather than levying tens of millions of dollars in fines against one of his insurance company contributors for unlawful practices regarding the payment of claims after the Northridge earthquake, Quackenbush allowed the company to contribute $2 million to an educational foundation. Beyond the fact that the contribution was far less than the potential fines involved, critics point out that nothing in the insurance codes allows misbehaving companies to make charitable contribution in lieu of fines.
A second insurance company contributed $93,350 to Quackenbush in 1999, even though the commissioner cannot run for re-election. Just nine days before the contribution was deposited in Quackenbush‘s campaign bank account, the commissioner proposed an 18.4 percent workers’ compensation insurance rate hike that greatly benefited the company but was twice the increase consumer groups said was necessary.
That same year, Quackenbush transferred $175,000 to repay his wife’s personal loans to her failed 1998 state Senate campaign. Chris Quackenbush lost that race to Deborah Ortiz, who at the time represented Sacramento in the Assembly.
Regulators always risk becoming a captive of the industry they regulate. That risk increases when the regulator is elected. When a powerful industry contributes millions of dollars to the election campaigns of a regulator, as the insurance industry has done with Quackenbush, the appearance of impropriety– if not impropriety itself–cannot be avoided.