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Associated Press
Oct 11, 2005 - 01:00 AM

by JULIET WILLIAMS, Associated Press Writer

Taxpayer group asks Schwarzenegger to return insurance donation

SACRAMENTO, CA -- A government watchdog group is calling on Gov. Arnold Schwarzenegger's campaign to return a $105,000 donation from the insurance industry that came the same day he vetoed a bill the group opposed.

The American Insurance Association donated the money Friday, the same day the governor vetoed SB399, a bill that would have forced insurers to pay medical costs when people who are covered by Medi-Cal are injured in an accident caused by an insured driver.

Medi-Cal pays those costs now. The Santa Monica-based Foundation for Taxpayer and Consumer Rights said such payments amount to $225 million a year.

In his veto message, Schwarzenegger said he rejected the bill and a similar one last year because they would encourage litigation and would drive up medical costs.

"I understand that health care providers should be reasonably compensated for services they provide, but this bill proposes a solution that provides for inflated medical and settlement costs," he wrote.

Opponents, including the insurance association, had argued that the bill would let hospitals and doctors charge inflated rates for services rather than the lower costs paid by Medi-Cal, the state's health care system for the poor, elderly and disabled. That would drive up costs in personal-injury lawsuits, they said.

The Personal Insurance Federation of California, which also opposed the bill, said it would have allowed a doctor to return a Medi-Cal payment and request a higher payment from the insurer. The legislation also was opposed by the Association of California Insurance Companies.

The bill was authored by Sen. Martha Escutia, D-Norwalk. Her office did not immediately return messages seeking comment Monday, a state holiday.

Schwarzenegger is campaigning for measures on the Nov. 8 special election ballot that he says will save taxpayers money, yet vetoed a bill that would have saved taxpayers millions of dollars, said Doug Heller, executive director of the Foundation for Taxpayer and Consumer Rights.

"He puts politics above the needs of taxpayers. This bill would have alleviated $225 million of taxpayer waste every year," Heller said Monday. "I think it's a startling contrast from the governor who helped Californians get rid of the last cash-register governor."

The governor has come under fire in the past for accepting contributions from groups with business before the state, including the pharmaceutical, energy and insurance industries. He has consistently said that political contributions do not influence his decisions.

The timing of the latest insurance industry donation, to Schwarzenegger's California Recovery Team, was pure coincidence, said Rob Stutzman, a spokesman for the governor's election campaign.

"Obviously, the governor's never made a policy decision that has any connection to contributors to a campaign," Stutzman said. "The governor's engaged in the final weeks of a campaign, so there's literally millions of dollars that are being raised, and by law the governor is dispensing with hundreds and hundreds of bills that are on his desk."

Schwarzenegger had until last weekend to sign or veto all the bills sent to him by legislators this session. Stutzman said the campaign has no reason to consider returning the donation.

Nicole Mahrt, a spokeswoman for the American Insurance Association, said a contribution to Schwarzenegger's campaign had been in the works for months. That it was delivered on the day of his veto was just coincidence, she said.

"We support the governor, we support his agenda. It just happens that we dropped the check off to the committee on Friday. We didn't know the bill was vetoed," she said. "One had nothing to do with the other."




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