New Evidence That Poizner Aide Destroyed Key Document In Attempt to Help Industry;

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Industry’s Strength In Department of Insurance At Issue As Commissioner Announces New General Counsel Hired From State Farm’s Law Firm

Santa Monica, CA — Insurance Commissioner Steve Poizner‘s special counsel William Gausewitz destroyed a fax sent to him by an insurance lobbyist that appears to have served as the basis for a declaration he claimed to have prepared independently for submission to a Sacramento Superior Court this summer, according to new documents consumer advocates have obtained from the Department of Insurance through a Public Records Act request. Last month, the Foundation for Taxpayer and Consumer Rights (FTCR) obtained a series of e-mails between Mr. Gausewitz and insurance company lawyers and lobbyists indicating that Mr. Gausewitz privately tried to assist companies’ effort in court to have the Department of Insurance pay legal fees associated with a failed lawsuit the insurance companies brought against the Department of Insurance, rather than the insurers themselves.

Insurance industry lawyers later filed a document signed by Gausewitz in the court case — but made it appear that the California Attorney General had filed it.

In a November 5, 2007 written response to FTCR, which requested a copy of the draft declaration that the insurance industry first sent to Mr. Gausewitz, the Department of Insurance stated:

“[Insurance industry lobbyist Jeff] Fuller faxed a proposed declaration to Mr. Gausewitz. Because Mr. Gausewitz was unwilling to sign the draft declaration prepared by the insurers, he prepared text for an alternative version of the declaration and provided that text to Fuller… Mr. Gausewitz then discarded the fax.”
Click here to download this document.

Consumer advocates said the destruction of a key public document added another layer of concern to the incident, which caused the group to call on Commissioner Poizner to fire Mr. Gausewitz. FTCR noted that without the original document, the public cannot know whether or not Gausewitz actually made even a single word change to the industry’s requested declaration.

“By destroying documents, Bill Gausewitz tried to cover his tracks in order to avoid the appearance that he was abusing his authority and serving as an insurance company toady at the Department of
Insurance,” said FTCR’s Executive Director Douglas Heller.

Commissioner Poizner Names Lawyer from State Farm‘s Law Firm As General Counsel of the Insurance Department

The latest revelation concerning the Department’s upper level management, comes as Insurance Commissioner Steve Poizner announced today his appointment as General Counsel a lawyer from a law firm that has frequently gone to court to block enforcement of insurance reform Proposition 103.

Poizner’s new General Counsel, Adam Cole, is a partner in the San Francisco office of Heller Ehrman, a national corporate law firm. Heller Ehrman has played a leading role in attacking Proposition 103 in court on behalf of its client State Farm, California’s largest insurance company. Heller Ehrman has gone to court on behalf of State Farm to:
– strike down regulations requiring insurance companies to pay over $1.2 billion in premium refunds;
– evade State Farm‘s responsibility to pay millions in rate rollbacks;
– prevent the Department from publishing data about insurance service in low-income communities that 103 require to be disclosed to the public;
– prevent consumers from going to court to stop insurance companies from violating Proposition 103; and

– block rules that would require insurers to base auto insurance premiums on motorists’ driving records rather than their ZIP Codes.

“Like their colleagues at several other big law firms who represent the industry, Heller Ehrman’s lawyers have prospered by representing State Farm in its continuous assault on the voter-approved initiative. But the mission of the California Department of Insurance is to enforce the laws passed by the voters and protect consumers from unfair practices by insurance companies; and the office of General Counsel is one the most important positions in the Department in pursuit of that mission,” said Harvey Rosenfield, the founder of FTCR and author of Proposition 103. “The ‘Gausewitz Affair’ highlights how easily the Department’s ‘fierce independence’ from the insurance industry, embraced by Mr. Poizner, can be quietly yet deeply subverted. Mr. Cole must now demonstrate that he has transferred his loyalty from the firm he represents and its clients to the consumers and taxpayers of California whom he serves, and we intend to hold the Commissioner accountable for the actions of all of his appointees.”

The Commissioner’s new General Counsel was hired after a taxpayer-funded search by a private firm, which apparently focused only on corporate law firms.

A list of Proposition 103 suits Mr. Cole’s former firm Heller Ehrman has been involved in on behalf of State Farm is available upon request.

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FTCR is California’s leading public interest watchdog. For more information, visit us on the web at:

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.

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