Insurers Liking the Coverage of Schwarzenegger’s Policies

With a onetime State Farm official and a former insurance lobbyist in top staff jobs, Gov. Arnold Schwarzenegger is repeatedly siding with insurers in legislative battles as they maneuver to fend off fees, fines and concessions to policyholders.

A veteran insurance lobbyist, Dan Dunmoyer, is now the governor’s deputy chief of staff, helping to craft his entire policy portfolio. Former State Farm official Kathleen Webb is Schwarzenegger’s insurance advisor, vetting insurance-related bills that reach his desk and recommending which he should sign into law.

Both have given the insurance industry special access to Schwarzenegger’s government and taken positions that protect insurers’ financial interests. Webb, in particular, has met continually with industry trade groups and attended private meetings where insurance lobbyists plot strategy and discuss ways to push their agenda, her calendar shows. She has not recorded a single meeting with a consumer representative.

When insurance-related bills have crossed Schwarzenegger’s desk, he has sided with -- or at least not opposed -- the industry nearly nine times in 10, a review of 56 bills tracked by insurance groups shows. At other times, he has sought to kill or blunt legislation before it reached him.

Administration officials have sent letters to lawmakers, for example, warning of their opposition to bills that the industry wants defeated -- letters that in some cases coincide with industry lobbying campaigns to beat back the legislation.

“I don’t know that I can point to one pro-consumer bill that has made it through and been signed by the governor in recent history,” said Sen. Deborah Ortiz (D-Sacramento).

The governor vetoed one bill that would have extended for nine years insurance industry fees that pay for seismic research. He rejected another that would have barred insurers from raising auto rates for home healthcare workers who use their cars to assist low-income patients. He also vetoed a measure that might have required insurance companies, rather than the state, to pay the medical expenses of certain accident victims.

“People expected of Arnold Schwarzenegger independent advisors who would bring a fresh perspective,” said Doug Heller, executive director of the Foundation for Taxpayer and Consumer Rights. “Instead, the governor has brought in State Farm and its cronies.”

Meanwhile, insurance money has poured into Schwarzenegger’s campaign accounts. Since he jumped into the recall campaign in 2003, he has collected about $4.4 million in donations from insurance interests, state records show.

Schwarzenegger promised as a candidate in 2003 that he would purge the capital of powerful “special interests.” But he pleased environmental activists in 2003 by hiring one of their own, Terry Tamminen, who was among the governor’s most influential aides before resigning last month. And Richard Costigan, a former lobbyist for the California Chamber of Commerce, the state’s chief business advocate, is the administration’s top liaison to the Legislature.

Now Schwarzenegger has elevated insurance interests to senior levels of his government, giving them too much influence, in the view of consumer groups.

The governor’s aides insist that the industry receives no special treatment. If consumer groups don’t see the governor’s staff, it is because they haven’t asked, they said.

Consumer activists said they’ve seen no point in contacting insurance advisor Webb.

“It’s pretty much assumed that under this administration, we were not going to get anything meaningful signed,” said Amy Bach, executive director of United Policyholders, a nonprofit group that offers information to the public on insurance matters.

Bach added: “As an advisor, it’s incumbent on her to seek us out.”

For Dunmoyer’s part, his involvement in insurance issues is limited to offering “expertise” to colleagues inside government who are responsible for insurance matters, said Adam Mendelsohn, Schwarzenegger’s communications director.

“No industry or organization gets a more sympathetic ear from this administration to the exclusion of another industry or organization,” Mendelsohn said.

But insurers see in the governor a reliable ally. Stephen Lilienthal, chief executive officer of CNA insurance companies, wrote in a June letter soliciting money for Schwarzenegger’s reelection that the governor “has been a critical first line of defense” for the industry.

CNA, a commercial insurer, has spent $275,000 lobbying in Sacramento since Schwarzenegger took office.

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Insurance interests have long been a formidable player in Sacramento, adept at derailing or neutralizing unfriendly legislation. The Schwarzenegger administration is helping.

“The controversial stuff doesn’t make it all the way,” acknowledged a Schwarzenegger aide, who was not authorized to speak publicly on the issue and requested anonymity. “It gets watered down or it gets killed.”

In 2004, former Assemblyman Darrell Steinberg, a Sacramento Democrat, introduced a bill that would have barred insurers from refusing coverage to nonprofit developers. Housing activists said the insurance industry was crimping the affordable housing market by engaging in such practices. Insurance companies denied they had done so.

A meeting between the two sides took place July 14. Among the two dozen lobbyists speaking for the insurance industry was Dunmoyer, then president of the Personal Insurance Federation of California. Housing advocates said the lobbyists vowed to kill the bill.

Less than a week later, on July 20, the Schwarzenegger administration sent a letter to Steinberg saying the bill went “too far.’’

Fearing defeat, Steinberg changed his bill so it no longer banned the industry from denying coverage to the developers and required simply that the state Department of Insurance study the matter.

Stripped of its original purpose, the measure passed the Legislature, and Schwarzenegger signed it.

When a bill the industry dislikes passes intact, the governor can veto it -- and often does.

Terry Tillery earns $10 an hour working for a state program aimed at helping sick and elderly people remain in their homes. The Sacramento resident cares for three patients, driving her 2000 Ford minivan to supermarkets and drugstores for food and medication.

One day in 2004, she got a letter from her auto insurance company: Her rates would be going up. Her job put her in the same commercial category as a pizza delivery driver, her insurer said, making her a higher-risk driver.

Tillery said she told her insurance company, “I don’t speed. My driving record is good, and I haven’t had any tickets in the last 14 years.”

Assemblyman Gene Mullin (D-San Mateo) offered a bill last year that would have barred insurers from raising rates in circumstances like Tillery’s. Among the measure’s opponents was the Assn. of California Insurance Cos., which represents 300 property-casualty firms.

Lawmakers passed the bill, but the governor vetoed it. If rates dropped for these workers, his veto message said, echoing arguments made by insurers, then other motorists would be forced to pay more.

Mullin said the governor failed to see the larger picture. If it is too expensive for caregivers to do their jobs, he said, patients might be forced to leave their homes -- possibly at great expense to the state.

Insurance lobbyists said it is hardly the case that they get everything they want. They said they have endured their share of disappointments: friendly bills vetoed, onerous regulations approved.

“We don’t feel we’re getting special accommodations,” said Rex Frazier, who succeeded Dunmoyer as president of the Personal Insurance Federation. “We feel we have to outwork our opponents just to mitigate the damage.”

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But pro-insurance voices have been gaining clout in Schwarzenegger’s government. After the defeat of his ballot initiatives in the November 2005 special election, Schwarzenegger ordered a shake-up. In came Dunmoyer and Webb.

Dunmoyer had spent the previous 16 years at the Personal Insurance Federation, which represents State Farm, Farmers, 21st Century and other insurers. Companies that are part of the federation have donated about $213,000 to Schwarzenegger’s campaign accounts.

At the Schwarzenegger campaign team’s request, Dunmoyer attended an event in June that was co-sponsored by one of the major insurance trade groups that lobby in the Capitol: the American Insurance Assn. The group last year donated $200,000 to Schwarzenegger’s campaign causes.

While Dunmoyer was president of the Personal Insurance Federation, he devised a political strategy for the insurance industry through 2010.

The document, obtained by The Times, calls for putting more people from the insurance industry into elective office. It also says the industry should support pro-business candidates by paying for political mailings signed by groups with a better public image.

Since joining the government, Dunmoyer said, he is scarcely involved in his old profession.

“My role in insurance here is phenomenally limited,” he said in an interview.

Appointment records and interviews show that Dunmoyer is involved.

In April, he spoke at an event hosted by State Farm, telling employees “what the top priorities will be for the governor,” according to the agenda.

That same month, Dunmoyer appeared before the political action committee of his former employer. A trade association newsletter describing his appearance said Dunmoyer urged the group to “let their legislators know the active role agents play in the growth and financial health of their communities.”

Dunmoyer also played a role in an issue he was involved with as a lobbyist: the Seismic Safety Commission.

Insurance officials are unhappy that the commission’s work is underwritten by a 7-cent-per-policy fee. Dunmoyer shared that view when he was a lobbyist, sending a letter to the administration and lawmakers in 2004 likening the fee to an “illegal, unfair tax.” He takes much the same position now.

Sailaja Cherukuri, a legislative aide, met with Dunmoyer and others in the governor’s office in March to talk about the future of the commission, which researches ways to help California withstand earthquakes.

Dunmoyer’s position was that the commission’s funding should come from “something other than the insurance industry,” Cherukuri said.

Asked about Dunmoyer’s role, some lawmakers said a lobbyist shouldn’t be able to step out the door and into a job in the Capitol. A cooling-off period of some kind would be preferable, to discourage a revolving door between government and industry, they said.

“We as legislators have a waiting period where we’re barred for one year” from lobbying former colleagues, Ortiz said. “There ought to be a comparable one-year waiting period for lobbyists.”

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Webb was not a lobbyist for State Farm -- her job was legislative specialist. But part of her function was urging company employees to speak with lawmakers in hopes of swaying votes. Now it is the industry’s job to sway Webb.

To date she has sent the governor’s office written recommendations on 60 insurance bills. The governor’s office declined to make the letters public.

Administration officials say Webb does not have the final word on whether Schwarzenegger should sign or veto insurance bills. Her recommendations go to one of his legislative liaisons.

But she confers often with the insurance industry. Calendar records obtained through the state’s Public Records Act show that from January to July, Webb met 30 times with insurance lobbyists and officials -- and not once with consumer groups. At such meetings, she speaks with lobbyists about pending bills, among other matters.

The American Insurance Assn. bought her lunch in February and again in March. She had coffee with an association executive in June.

Webb has twice attended the private meetings that insurance lobbyists hold to strategize about bills. These sessions are at the headquarters of the Personal Insurance Federation.

In an interview, Webb said she went to the meetings to “get a consensus from them on certain legislation” and to learn “what’s on their radar screen.”

She said she invited insurance lobbyists to meet with her in February to learn where they stood on a bill by Assemblyman Mark Ridley-Thomas (D-Los Angeles), who wants insurers to do more to help struggling communities.

His measure would require insurers to disclose any investments they make in low- and moderate-income neighborhoods. That information would then be disclosed on the state Insurance Department website.

One opponent of the bill is the American Insurance Assn. Webb was another. There is no need to demand such reports, she said, because “the insurance industry is already doing it on their own.”

Disclosure of such information is now voluntary; the Ridley-Thomas bill would make it mandatory. The measure passed the Legislature; Schwarzenegger has until Saturday to act on it.

Asked if she reaches out to industry opponents, Webb said she has greeted them at meetings and passed out her business card, but none has bothered to call. Consumer groups say they’ve seen little of her.

Mark Savage, senior attorney for Consumers Union in San Francisco, said he has met with some insurance advisors who preceded Webb but has not heard from her.

“There’s been no outreach to me,” he said.

peter.nicholas@latimes.com