Insurer political contributions have surfaced as an issue in theNew Jersey governor's race, with Democrats attacking Republicanstandard-bearer Douglas R. Forrester for his ownership of aWashington, D.C.-based captive insurer.

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At issue are a variety of state laws, including Section 34-2a ofthe state's election statutes, part of the criminal law, whichoutlaws contributions by insurance corporations. The measure wasenacted in 1911 when a slew of reform bills were passed to halt theinfluence of election spending by a variety of industries.

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Today's Democratic attack came not from Mr. Forrester's opponentin the governor's race==U.S. Sen. Jon Corzine==but from a leader inthe Democratic-controlled Assembly, who called for an investigationand hearing concerning Mr. Forrester's business dealings.

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Mr. Forrester has a 51 percent interest in Heartland FidelityInc., a pharmacy benefits captive, and Democrats are contendingthat his ownership means his use of personal monies to fund hiscampaign is illegal.

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A spokesman for Heartland, Peter J. McDonough, said the companyis chartered in Washington, D.C., its premium is collected thereand it is regulated by the Washington Department of Insurance,Securities and Banking.

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"Our lawyers have reviewed this [contribution question] andthere is frankly no issue," declared Mr. McDonough, who said that aletter had been sent to the New Jersey Department of Insurance andBanking seeking an advisory opinion, which the company expects willsupport the findings of its attorneys.

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Heartland's position was attacked by Assemblyman Neil M. Cohen,D-Union, who is deputy majority leader as well as the chairman ofthe Assembly Financial Institutions and Insurance Committee.

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Mr. Cohen announced he had written Donald Bryant, commissionerof the N.J. Department of Banking and Insurance, asking him to holda formal investigation and public hearing.

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According to Mr. Cohen's reading of the law, the state oflicense or domicile is irrelevant. "If you are doing business inthe state then you are subject to the law," he said.

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Mr. Forrester is the owner of Benecard, which, according to Mr.McDonough, manages prescription purchasing and dispensing fees forself-insureds and organization pharmaceutical plans, and alsooffers fully-funded plans with a fixed limit.

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He said Heartland is the captive of two organizations, made upof Benecard clients==Benecard Association Trust and BenecardAssociation. Mr. McDonough explained that the captive, created in2003, is managed by the McCarren Ferguson captive managementcompany in Washington and has a locally-based manager. It providesstop-loss insurance for the programs that go over their contractspending limit, he said.

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Mr. Cohen, in his letter requesting an investigation, saidBenecard operated from Lawrenceville, N.J. as Heartland's generalmanaging agent, offered its product in New Jersey and soldHeartland insurance by bargaining with and securing "officialapprovals of municipal and county officials in New Jersey forBenecard contracts."

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If Heartland is doing business in New Jersey, Mr. Cohensuggested, it is not only violating campaign finance rules, but isalso avoiding a 1 percent premium tax amounting to $2 million ayear.

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Public employees in programs with Heartland backing don't haveNew Jersey Life and Health Insurance Guaranty Fund support if the"thinly capitalized Heartland" becomes insolvent, he wrote, andsuggested that several insurance statutes may be violated ifHeartland and Benecard are illegally commingling non-insurance feeswith premiums.

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A spokeswoman for the N.J. department, Jaimee Gilmartin, saidthe letter has been referred to the agency's legislative andregulatory affairs unit for a review, and she could not say howlong that might take. It would depend, she said, on whether all thenecessary information is there to make a finding.

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If the N.J. Department of Insurance and Banking should decide torefer the matter to the state attorney general, "we would weighin," said Lee Moore, a spokesman for the N.J. Department of Law andPublic Safety. "So far, there has been no overture to have usformally involved."

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News of Mr. Forrester's insurance dealings have come at a timewhen Sen. Corzine is the focus of stories questioning his dealingswith a former girlfriend, Carla Katz, who heads Local 1034 of theCommunications Workers of America, which represents New Jerseystate workers. Sen. Corzine has acknowledged forgiving a $470,000loan to her without repayment.

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Mr. McDonough suggested that the Democrats questioning of Mr.Forrester's dealings was designed to "take the well-heeled and thehigh-heeled off the front page."

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New Jersey's governorship, has been the target of a vigorous GOPcampaign ever since New Jersey Democrat Jim McGreevey resigned asgovernor after revelations he had cheated on his wife and had a gayaffair.

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Mr. Cohen conceded that insurance infractions as a topic areunlikely to excite the electorate, but said the Corzine campaignwould probably present the issue as one of "illegal campaigncontributions."

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