Creator of Consumer Watchdog Attack Site Says More Attacks to Come

By | February 16, 2012

The owner of a website that launched an attack last week against a consumer group that often does battle with the insurance industry is now calling the attacks and information he put on the site “just the tip of the iceberg,” and he denied he is working on behalf of anyone in the insurance industry.

The site,, which takes on Santa Monica, Calif.-based Consumer Watchdog, accuses the group of being a “pay to play” organization that generates millions of dollars for itself, and it contains several income tax documents detailing Consumer Watchdog’s legal fees and contributions made to the group.

“I think they’re a total fraud. They’re more interested in self-gain than consumer gain,” Steven Maviglio, who launched the site last week, told Insurance Journal on Thursday. “They have a long history of grandstanding just to put money in their own pockets.”

Consumer Watchdog spokespersons, who defended their group against the site last week, quetsioned who was really behind the site.

“We’re working on behalf of tens of millions of Californians who can’t afford unfair and excessive insurance premiums, and we expect the insurance industry will spend all the money in the world to distract from the true concerns of Californians,” Consumer Watchdog spokesman Doug Heller said.

Heller added, “The insurance industry will do whatever it takes to avoid accountability. Whatever kind of histrionics we’re seeing form their campaign team, it was to be expected.”

After Maviglio launched the site, several insurance associations scrambled to distance themselves from the site, as did the campaign for the 2012 Automobile Insurance Discount Act. The act is being supported by the American Agents Alliance and Mercury Chairman George Joseph.

Despite their efforts to publicly put space between themselves and the site, several consumer groups in California bashed the organizers and backers of that campaign and insurance companies for allegedly taking part in the site.

But Maviglio on Thursday said that neither insurance companies, nor organizers of the campaign, had no part in the site.

“I’m a progressive Democrat,” the former press secretary for Gray Davis said. “I’m not a fan of insurance companies.”

He added,”I can assure you that I have not received a nickel from Mercury Insurance nor from their ballot campaigns.”

Maviglio, who now does communications work mostly for labor groups and clean energy companies, said to expect more information on Consumer Watchdog to be added soon, including information on “how they operate and move money around from their quote nonprofit organization.”

He says he has documents that show the 501(c)3 group has a proposal to shift employees working on nonprofit activities to working on attack campaigns on health insurance companies.

“I think there will be a lot of questions raised about their nonprofit status,” he said.

After the website went up, Consumer Watchdog called into question Maviglio’s motives, saying he put the site up as a “personal vendetta.” The group alleged that Maviglio, the former chief of staff for former California Assembly Speaker Fabian Nunez, “was forced to resign in disgrace” because of a Consumer Watchdog investigation.

Maviglio on Thursday said that Consumer Watchdog did not get him ousted from his job with the speaker.

“I voluntarily left on my own accord,” he said.

As for his motives, Maviglio said that when he was Davis’ press secretary, Consumer Watchdog opposed most things the governor was doing, and later when he was chief of staff for Nunez, “they waged war against the healthcare plan the speaker and Gov. (Arnold) Schwarzenegger planned for California.”

The most recent affront, Maviglio said, was when Consumer Watchdog took on state Sen. Ed Hernandez, D-West Covina, putting out a television ad on Hernandez in September of last year alleging he had an improper business connection with Kaiser in Permanente, which opposed a healthcare bill Hernandez supported but allegedly watered down.

The group called for Hernandez, chairman of the Senate Health Committee, to step down.

Maviglio said the Consumer Watchdog attack had to do more with plans by Hernandez to take a look at the state’s interveor program, of which Consumer Watchdog is the largest beneficiary.

“I saw them beat up one of the most straight-arrow state Senators we have, Ed Hernandez, simply because he was trying to shed some light on their intervnor fees.”

At the heart of Maviglio’s website is an attack on California’s intervenor program, which pays legal fees from a Proposition 103 fund for parties who intervene in rate filings. Dating back to the program’s launch in 2003 along with Prop. 103, Consumer Watchdog has been the most commonly listed intervenor, according to the California Department of Insurance.

A major provision of Prop 103 dealt with personal automobile insurance, requiring personal automobile insurance rates to be determined using the following factors in decreasing order of importance: insured’s driving safety record, number of miles driven annually by the insured, and number of years of driving experience the insured has had.

The proposition also prevented rates from being determined based on a person’s history of insurance.

Since 2008, Consumer Watchdog, and its predecessor, Foundation for Taxpayer and Consumer Rights, is the only intervenor listed in rate fillings. Last year, Consumer Watchdog was paid $849,194.28 for intervening. The group was paid nearly as much in 2010, and in 2009 the group was paid nearly $2.5 million for intervening.

Consumer Watchdog has defended those fees, stating the group has taken in about $2.4 million in legal fees for intervening in rate hikes, but has saved consumers $2 billion in doing so.

Because it’s an election year and campaigning for the November election is beginning to ramp up, the attacks and counter attacks between Maviglio and Consumer Watchdog will likely continue. And the insurance industry, as well as two auto insurance related initiatives possibly headed toward the Nov. 6 ballot, may continue to get dragged into the middle of the battle.

Consumer Watchdog, which filed the Insurance Rate Public Justification and Accountability Act last year, is still collecting signatures to qualify it. Consumer Watchdog’s initiative would require health insurance companies to file for rate increases like auto insurers do now.

However, it’s not just about health insurance. Among the proposed act’s 900 words is language that prohibits “unfair pricing” not only for health, but for auto and home insurance based on prior coverage and credit history.

That initiative would compete against the 2012 Automobile Insurance Discount Act, which promotes portable persistency. While its backers, which include AAA (American Agents Alliance) and Mercury Chairman Joseph, say its consumer friendly and offers auto insurance consumers the option of taking their insurance history to new companies, Consumer Watchdog opposes the initiative because the group believes it punishes those who have been uninsured for a period of time.

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