Consumer Group Says Calif. Commissioner’s Aide Helped Insurers in Lawsuit

November 2, 2007

The Foundation for Taxpayer and Consumer Rights is claiming a former insurance industry lawyer, a senior counsel to California Insurance Commissioner Steve Poizner, covertly assisted insurance companies in a lawsuit they brought against the Commissioner. FTCR says it has e-mail messages supporting the allegation.

The lawsuit, which was opposed by consumer advocates and the Commissioner, sought to block Department of Insurance regulations limiting the impact of motorists’ ZIP Codes on their auto insurance premiums.

In a letter sent to Commissioner Poizner, FTCR founder and Proposition 103 author Harvey Rosenfield and FTCR’s Executive Director Doug Heller said the aide, William Gausewitz, should be fired.

Gausewitz has publicly denied any wrongdoing.

Last February, consumer advocates criticized Poizner for hiring Gausewitz, who had served more than a decade as an insurance industry lobbyist, which they said violated the Commissioner’s inaugural pledge that “This office must always be fiercely independent from those being regulated,” FTCR said.

FTCR said the e-mails it obtained under the California Public Records Act show that the insurers drafted a “declaration” they wanted Gausewitz to submit to the Sacramento Superior Court to support the companies’ position that a Department of Insurance fund should pay the legal costs of consumer advocates, rather than the insurance companies that brought the suit and lost. The consumer groups that had defended the new regulations in court opposed the insurers’ scheme, the group said.

Gausewitz sought to keep his assistance to the insurers secret, FTCR said. The group claims the e-mails show that Gausewitz and insurers withheld the draft declaration and his communications with the insurers from the Department’s lawyers in the California Attorney General’s office, despite their awareness that the Attorney General should have been informed.

“When an employee of the Department of Insurance helps insurance companies in a lawsuit they brought against his own agency, hides the scheme from his own lawyers at the Attorney General’s office, all for the purpose of relieving those companies of the responsibility to pay the costs of their lawsuit, it is clear that the interests of consumers and taxpayers are being undermined along with the integrity of the Department of Insurance,” FTCR’s Rosenfield said.

In their letter to Commissioner Poizner, FTCR wrote:
“The documents obtained by FTCR show that Mr. Gausewitz continues to work closely with and on behalf of the insurance industry, albeit in a covert fashion – conduct that is utterly incompatible with your pledge of an independent administration. … This time, of course, the industry lost in court and Mr. Gausewitz got caught. But the Department will act on many, perhaps thousands of, other important decisions that will directly involve the interests of consumers. Californians have the right to expect that these decisions will be made in their best interests, not the industry’s.”

A spokeswoman for Poizner, Jennifer Kerns, told the Associated Pres>/i> the foundation’s criticism is unfounded.

“While Harvey’s work is admirable, he’s just plain wrong on this,” Kerns said. “The fact is, it is not uncommon for the Department of Insurance to submit statements of fact on particular issues, which is what Bill Gausewitz did in this case.”

Gausewitz said the declaration provided historical information about the department’s payment of consumer group court costs from a fund set up to enforce Proposition 103. That initiative, passed by voters in 1988, governs auto insurance rates.

He said in the e-mail to the Consumers Union attorney and others that the declaration was “provided to give factual information only. No (department) position is implied by or should be inferred from this declaration with respect to any legal issue before the court in this litigation,” he commented to AP.

View FTCR’s letter to Commissioner Poizner at www.consumerwatchdog.org/resources/Ltr_Poizner_11-1-07.pdf.

The Associated Press contributed to this article.

Source: Foundation for Taxpayer and Consumer Rights

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