Some Checks Still Aren’t in the Mail

Despite promising to return donations from insurance companies, Lt. Gov. Cruz Bustamante has kept tens of thousands of dollars from them and accepted money from others he will oversee if he becomes state insurance commissioner.

Just before the June primary election, Bustamante, facing criticism for taking insurance money, announced that he would repay such contributions, then estimated at $158,000. He has since given some of that money back and used some to reduce an old campaign debt.

Meanwhile, he has accepted new donations from groups affected by an insurance commissioner’s actions: companies that sell home warranty policies; attorneys and healthcare providers involved in workers’ compensation cases; bail bond companies -- which are regulated by the state Department of Insurance -- and lawyers who represent insurance companies before the state.

“The Insurance Commission has tremendous power over these industries,” said Larry White, recently retired senior staff counsel in the Department of Insurance division that oversees workers’ compensation. “In a lot of cases, people cannot operate without a license from the insurance commissioner.”

Since 2005, Bustamante, a Democrat, has collected $260,000 from entities he would oversee if he wins Nov. 7. He returned $123,000 to its insurance-related sources. He used 17 other such donations, totaling $65,950, to help pay debt from his 2003 run for governor. More than $73,000 remains for his current campaign, although Bustamante said Wednesday that he would return $16,000 identified by The Times as insurance money.

In an earlier interview, Bustamante said his policy of spurning insurance-related contributions stands, though he defended his acceptance of the money from bail bond companies and workers’ compensation attorneys.

“If it is an insurance company, we’ll send it back,” Bustamante said. “We’ve tried to have a policy that was pretty clear. We’ve combed through a list a couple times and if there is more, the policy is still the policy.”

One company that contributed to Bustamante is the United Services Automobile Assn., which provides coverage to military personnel. The group has given him $30,000 since April 2005. He returned $11,200 and used $18,800 to help retire his gubernatorial campaign debt. Bustamante still owes $207,000 to consultants and attorneys who were involved in his run for governor in the 2003 recall. He said he saw no problem using insurance money to pay off debt: “That is not promoting me to run for insurance commissioner.... I was paying bills from 2003. I wasn’t appearing on TV. I wasn’t promoting myself.”

Regardless, “Nobody running for insurance commissioner who wants consumers’ trust should take a dime from any insurance company,” said Douglas Heller of the Foundation for Taxpayer and Consumer Rights.

Harvey Rosenfield, the group’s founder, led the 1988 initiative campaign that fostered the existing regulatory system for the industry, and created an elected insurance commissioner with broad powers. Rosenfield has endorsed Bustamante’s Republican opponent, Steve Poizner, in part because Poizner refuses to take insurance donations.

Bustamante has struggled to raise money in his race against Poizner, a Silicon Valley entrepreneur and a multimillionaire. Bustamante collected $1.1 million this year for his candidacy, and had less than $500,000 left at the end of September.

Poizner is relying on $8.3 million of his personal wealth to pay for his own campaign, which features television commercials criticizing Bustamante’s fund-raising.

In the interview, Bustamante noted that Poizner, too, had taken insurance money. He cited donations by a rental car company -- it sells insurance -- and Charles Munger of Berkshire Hathaway, which has insurance holdings. Poizner has given that money back.

Bustamante and Poizner traded charges on the issue during a debate Wednesday in San Francisco. Both candidates said they would support legislation to make it illegal for insurance commissioners to accept contributions from the insurance industry.

A review of Bustamante’s campaign reports shows he has:

* Returned $14,200 in donations from title insurance companies, but kept $5,000 and used it to repay his indebted gubernatorial fund. The next insurance commissioner will consider rules that could cut title insurance costs by $1 billion.

* Taken $29,000 from bail bond firms; bail is a form of insurance.

* Turned back donations from some workers’ compensation companies, including $10,000 from Zenith Insurance Co. But he has taken more than $30,000 from attorneys and healthcare providers involved in the workers’ compensation industry.

“Their career is based on fighting insurance companies,” Bustamante said in defense of those donations.

Among his workers’ compensation donations was $1,250 in May from Accident Help Line Medical Group of Fresno. In September, Department of Insurance agents and local police arrested 12 employees of the Central Valley clinic in a fraud case.

Norman Williams, a spokesman for Insurance Commissioner John Garamendi, said the owner cooperated with the investigation.

Last month, Bustamante took $11,200 from Eric Serna and Serna’s wife. Serna resigned as New Mexico’s insurance commissioner in May amid an investigation involving a nonprofit entity he established.

New Mexico Atty. Gen. Patricia Madrid continues to investigate the case, spokeswoman Sam Thompson said this week.

Bustamante also took $16,600 last month from Norman E. Taplin of West Palm Beach, Fla., and his wife and business associates. Taplin served through 2005 on a corporate board that described him as having been “active in insurance matters since 1975 and ... represented a variety of insurance companies in the United States.”

Bustamante said Taplin does not do business in California. Taplin did not return phone calls from The Times seeking comment.

dan.morain@latimes.com

Times staff writer Marc Lifsher contributed to this report.

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