Consumers Charge Covert Action By Poizner Appointee

A consumer group said it had e-mail evidence that a lawyer in the California State Insurance Department worked secretly to help the insurance industry with a legal action against his own agency.

As a result, the Foundation for Taxpayer and Consumer Rights said they have written Insurance Commissioner Steve Poizner asking him to fire attorney William Gausewitz, whose background they said included 10 years working as an insurance industry lobbyist.

The FTCR said e-mails showed Mr. Gausewitz, who holds the post of senior counsel, had "covertly assisted insurance companies" in legal action related to a lawsuit the industry brought against the commissioner seeking to block regulations limiting the use of ZIP codes to rate customers.

FTCR founder Harvey Rosenfield and FTCR Executive Director Doug Heller, in a letter sent today to Mr. Poizner, said his staff's action questioned his commitment to be an independent regulator.

They said e-mails obtained through an open records request showed Mr. Gausewitz "attempted to assist the industry in a surreptitious manner."

Mr. Heller in an interview said that after insurance interests lost their case and the regulations had been upheld in court, the FTCR asked the court to have the insurers pay more than $200,000 in legal bills FTCR had piled up litigating in favor of the regulation. Mr. Gausewitz, he said, covertly aided insurers efforts to avoid paying.

He said Mr. Gausewitz after discussions with insurers had drawn up a "declaration" discussing the history of such payment issues, which was virtually a mirror of a similar document submitted to the court earlier by insurers.

According to Mr. Heller, Mr. Gausewitz sent a letter to all the litigants in the case saying basically that "somebody asked me to draft this declaration and if anyone would like to do something with it, please do so."

Mr. Heller said an attorney for insurance interests had taken the declaration and submitted it and that Mr. Gausewitz had improperly used stationary with the State Attorney General's Office on the letterhead.

Yesterday's letter to Mr. Poizner said Mr. Gausewitz misrepresented "his actions not only to consumer organizations that are parties to the case, but to the Superior Court of Sacramento, where a document apparently first drafted by the insurance companies was submitted to the court as if it came from the California Attorney General but in fact was filed by lawyers for the insurance industry."

The letter noted that the regulation concerning auto rating factors promulgated by Mr. Poizner's predecessor John Garamendi, "as you pointed out in a news release...led to $700 million in savings for California motorists."

The letter noted that last February, consumer advocates criticized Mr. Poizner for hiring Mr. 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."

Among Mr. Gausewitz e-mails that the FTCR obtained under the California Public Records Act was one written to insurance industry lobbyist Jeff Fuller telling him in part to "Send the draft declaration in Word format, to me alone. Please don't talk about this to other folks until we have talked about it further."

The e-mails said the FTCR letter "make quite clear that Mr. Gausewitz attempted to hide his assistance to the insurance companies and fool the public."

Contacted yesterday Mr. Gausewitz said he could not answer questions because of departmental rules that "press calls go through the communications office."

Jennifer Kerns, a spokesperson for the department, said by e-mail that Mr. Poizner would not fire Mr. Gausewitz.

Mr. Rosenfield, who was the architect of Proposition 103, the groundbreaking ballot initiative that set stringent new rules for the insurance department and rolled back insurance rates, does admirable work, Ms. Kerns wrote, but, "he's just plain wrong on this. 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."

"His call for Bill's resignation is personal, and it crosses the line. I don't believe Harvey's unfounded accusations merit much more comment than that."

She wrote also that, "It is not uncommon to gain input and feedback from various groups prior to issuing a statement of fact. I'm sure we have gained similar input from the Foundation on previous issues."

Ms. Kern said the department appreciates "Harvey's passion and the work he does on behalf of consumers, but he's just plain wrong in this particular issue."

The FTCR letter and e-mails it obtained are online at

http://www.consumerwatchdog.org/resources/Ltr_Poizner_11-1-07.pdf