Revenge of the Insurance Deregulators

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Sacramento loves to hate Consumer Watchdog, because we expose the dirty deeds politicians do for corporations, confront regulators who are asleep at the switch, and don’t believe you have to go along with big corporations to get along. We also take on the rich and powerful in the initiative process on behalf of consumers, which the legislature and lobbyists consider a slap in the face.

Whenever we have a big fight with the insurance industry, most of which we have won, some PR flack materializes as the voice of Sacramento’s hatred. There was a Republican operative in the Schwarzenegger years, before that a soon-to-become Blue Shield executive, and now a former chief mouthpiece for two disgraced California Democratic politicians, who recently took to Capitol Weekly’s pages with venom for all things Consumer Watchdog.

It’s somewhat flattering to have a stalker, since it’s reserved for only the most successful public interest groups. It means that the insurance industry, Silicon Valley and the other corporations we fight and beat are very worried about us.

The big difference between journalists and political bloggers is that a journalist gets fired for lying and a political blogger can get paid to do it.

Political bloggers like CW’s latest official stalker Steve Maviglio don’t disclose how much they are paid or who pays them, nor do they live by journalistic standards. That makes them the perfect hit-men-for hire by crooked corporations and politicians who want to attack the credibility of their critics with phony facts and outrageous allegations.

Recently, the chair of the Fair Political Practices Commission proposed new rules to require political bloggers to disclose the source of their funding when engaging in political campaigns. The rules were temporarily beaten back by Sacramento’s PR lobby including Maviglio, the former communications chief for Assembly Speaker Fabian Nunez and Governor Gray Davis, both driven from Sacramento in scandalous firestorms that Maviglio mismanaged. Only in Sacramento do the PR hacks responsible for politicians’ falls from grace become putative pundits.

Maviglio’s recent blog/oped in Sacramento’s Capitol Weekly erroneously attacking our nonprofit Consumer Watchdog came within days of a remarkably similar op-ed attack on us in the Union Tribune by a Republican consultant Jeffrey Barker, former Schwarzenegger communications deputy. (Despite Maviglio’s crazy claim that Consumer Watchdog reserves its criticism for Latino Democrats, Consumer Watchdog was one of the toughest critics of Schwarzenegger’s pay to play politics.)

Why the well-orchestrated attacks on Consumer Watchdog now?

There’s no force the insurance industry fears more.

Our sister organization Consumer Watchdog Campaign has turned in 800,000 signatures for a ballot measure to require health insurance companies to justify rate changes and get permission from the insurance commissioner before raising rates. Maviglio and his compadre Barker falsely stated we didn’t collect enough signatures to qualify for the ballot. In fact, county election officials are counting all the signatures now and have to report back to the Secretary of State by August 23.

We are also fighting Prop 33, a venal scam paid for by Mercury Insurance company’s billionaire founder to deregulate auto insurance and unfairly penalize drivers with perfect driving records. Voters rejected the nearly identical Prop 17 in 2010 after we led the effort against it, notwithstanding the $16 million spent by the insurance company. But insurance companies rarely take no for an answer.

Our consumer group is the insurance industry’s chief watchdog. Since 2003 we have stopped over $2.2 billion in unreasonable proposed rate hikes by property casualty insurance companies.

Insurance companies would love to escape our scrutiny and return to the good old days of highway robbery; hence Maviglio’s critiques of Consumer Watchdog and the intervener program. Fact: The cost of the experts, attorneys and advocates to save $2.3 billion (all paid for by insurance companies that failed to raise rates) was about $5.7 million over the decade. That’s 25 cents paid to experts for every $100 saved, the most effective regulatory process for consumers in American history. State records show, despite Maviglio’s ridiculous claims, that Prop 103’s author and Consumer Watchdog founder Harvey Rosenfield made less than $25,000 each year during the last ten years from intervener fees.

Who else but the companies and their bought and paid for politicians would fund Maviglio’s online advertising and blogging? Maviglio refuses to disclose his company’s client list.

By contrast, Consumer Watchdog discloses all of our donors and income to the Internal Revenue Service and the Attorney General of California. We have an independent board of directors, a consistent charitable mission to protect consumers that hasn’t changed in two decades, and our tax returns are public documents.

Our advocacy affiliate, Consumer Watchdog Campaign, publicly discloses all campaign contributions for ballot measure and political activity on the Secretary of State’s website. Maviglio falsely charges that Consumer Watchdog Campaign concealed the identity of donors to the health insurance rate regulation ballot initiative. In fact, every one of the campaign donors are disclosed on the Secretary of State’s website. And the contributions coming directly from Consumer Watchdog are clearly disclosed on these state finance reports as “non-donor” funds; money that Consumer Watchdog earned, rather than raised from others. These dollars were principally obtained from successful litigation against telecommunications, insurance, and hi-tech companies that we beat in court after they ripped off consumers. Our legal cases and their public interest outcomes are a matter of public record – protecting consumers in important ways.

Ironically the money the political mudslingers accuse Consumer Watchdog of hiding may have come from the very corporations that are funding Maviglio and Barker. But of course we won’t know. Unlike nonprofits and political committees, they are accountable to no one and have to disclose nothing.

The real flaw with Maviglio’s attacks is his failure to recognize the irrefutable record of insurance reform Prop 103, authored by Rosenfield. The Consumer Federation of America reported in 2008 that drivers have saved $62 billion on their auto insurance bills due to the law’s regulation. California has the fourth most competitive state for auto insurance. It’s a model that works because of the elected insurance commissioner’s post, also created by Prop 103, and the effective intervention system. And that’s why it should be extended to health insurance under our new ballot measure.

We are willing to debate the merits, policies and politics anywhere any time. But Maviglio could care less about consumers or ethics. A great example is his effort recently to have a Democratic official in Sacramento sanctioned for filing an ethics complaint against Maviglio’s client Sacramento Mayor Kevin Johnson. Maviglio claims an ethics complaint is an attack, when in fact it is a matter of public honor and responsibility.

The failure to have perspective and proportion about propriety and ethics has haunted Maviglio and his prominent clients. He is no doubt angry that Consumer Watchdog has called them out and focused pubic opinion on their breaches of the public trust.

When Governor Gray Davis took money from energy companies that were pillaging the state, and refused to use his eminent domain powers to seize power plants that were later shown to be manipulating electricity prices, we raised questions. When Davis wanted the legislature to force ratepayers to bail out the utility companies, we worked with Senate leaders and stopped him. Davis and Maviglio’s failure to understand the public’s anger with him led to Davis’s recall.

Meanwhile, as Davis’s deputy, Maviglio was privy to insider information on what was going on in the industry and himself traded in energy stock of a company, Calpine, that got massive state contracts. He was properly chastised by us and in the court of public opinion. Five other Davis aides resigned in the insider trading scandal that ensued, but Maviglio refused.

When Assembly Speaker Fabian Nunez flew around the world living high on his campaign contributors’ credit cards, then ran away from a television news reporter’s questions in Los Angeles, he became the poster child for Sacramento corruption. Maviglio’s mismanagement of the scandal led not only to Nunez’s fall from political grace but the failure of a term limits extension initiative championed by Nunez. Opponents featured footage of the Maviglio-inflamed scandal.

Maviglio’s career under the Capitol Dome also suffered from an ethical lapse that we called out. The high frequency of Maviglio’s private political blogging during the work day while he was communications deputy for the Assembly Speaker Fabian Nunez led us to file an ethics complaint questioning whether Maviglio was using a government computer and state time for private political activity. After a formal investigation, we received a letter from the Assembly Rules committee that stated: “Following a review of the facts produced from this investigation, appropriate action has been taken to ensure there is compliance with Assembly policies.” Not long after, Mavigilio went to work for Johnson’s Mayoral campaign and turned to private clients.

Many of the fights Consumer Watchdog now finds itself in are extensions of old ones Maviglio is connected to. Our battle with Mercury Insurance over Prop 33’s insurance deregulation scheme is basically the same legislation Gray Davis signed as governor after taking big campaign contributions from Mercury Insurance. Consumer Watchdog invalidated that law in court as an illegal amendment to Prop 103. Nunez jet-setting included a high-price World Cup fundraiser patronized by Blue Cross, shortly after legislation to regulate health insurance premiums failed on his Assembly’s floor.

Insurance deregulators and the politicians in their pockets will always find Steve Maviglios to speak for them. It’s high time that the same strict regulation that applies to nonprofits, political committees and politicians apply to political bloggers too.
Ed’s Note: Jamie Court is the president of Consumer Watchdog, author of The Progressive’s Guide To Raising Hell, and a leader of

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