Nunez and the Revolving Door

Monday, December 8, 2008 | 0

By Julius Young

Zenith Insurance, an important player in the California workers' comp market, has a new director on its board.

This director isn't just your usual insurance veteran or financial services executive. It's the termed-out Speaker of the California Assembly, Fabian Nunez.

Nunez hasn't had a great week. His son was arrested several days ago, charged in the murder of a San Diego college student.

And before that story broke, Nunez' appointment to the Zenith board generated criticism from "good-government" watchdog groups, including consumerwatchdog.org.

Doug Heller of Consumer Watchdog, which tracks the insurance industry, criticized Nunez' appointment, noting that it is "the revolving door at its worst". You could sense that blood was drawn when a former Nunez spokesperson baited Heller on his blog, demanding Heller disclose his funding sources, which may include the California Nurses Association.

Nunez has been active recently. He's joined a national lobbying firm, Mercury Public Affairs. Among the stars in Mercury's lineup are John McCain's campaign manager, Steve Schmidt, Adam Mendelsohn, Governor Schwarzenegger's former communications director, Brian Jones, the McCain campaign's communications director, Andy Davis, who handled the communications for the Samuel Alito and John Roberts confirmation hearings, and a number of other Republican party operatives as well as a few Democratic vets.

At Zenith, Nunez will make $90,00 per year plus $40,000 for each committee on which he serves.

And joining Mercury is a move that may enable Nunez to continue shopping at Louis Vuitton (he received some unwanted publicity for spending in Paris on a junket). Nunez originally came out of Los Angeles labor union circles to his Assembly political post.

The Mercury Consulting post in particular is not a move likely to further his stature in California Democratic party circles. Once seen as a possible viable statewide candidate, his star may be dimming fast for any statewide run in the near term.

But back to the workers' comp angle.....

Zenith's President,Stanley Zax, has been a major respected figure in California workers' comp for years. Zenith has been one of the best managed companies in the industry (and in my experience, a carrier with an experienced and professional claims staff). Zax has contributed to and befriended governors and politicians on both sides of the aisle. Zax is said to have supported some benefit increases that were opposed by others in the employer/carrier community.

Zenith and Nunez were involved in a small scandal in 2007 when it was revealed that Nunez used a "Toy Drive" charity as a conduit to funnel $300,000 from companies having business interests under consideration in the legislature (including Zenith) to events that helped him politically. The link to the LA Times article on that is attached:
http://articles.latimes.com/2007/nov/02/local/me-nunez2

But Nunez is no stranger to controversy.

In April 2008 there was a dustup as labor leaders demanded that Nunez return $4 million to the Democratic Party. The money had been transferred by the California Labor Federation to Nunez' account as speaker:
http://www.sbctc.org/default.asp?id

Nunez voted for the harsh 2004 California workers' comp reforms. But later he joined Senate Pro Tem Don Perata in pushing for post 2004 benefit increases, all of which were vetoed by Governor Schwarzenegger.

Nunez joins a number of prominent figures on Zenith's board, including former FBI Director William Sessions and Max Kampelman, who headed the United States delegation to Geneva negotiations with the Soviet Union on nuclear issues. It's understandable why Zenith would want Nunez.

So does Heller have a point in criticizing Nunez' joining the Zenith board? It does seem to be an example of the "revolving door". Big corporation hires politician who had major role in life-or-death issue for the corporation. Politician undoubtedly has friends in the legislature-and favors in the favor bank-that may help sway the debate on future legislation. Politician provides access.

It's not likely to be a popular move at a time when the popularity of legislators and lobbyists is at an all time low. But as a termed-out politician, Nunez is just doing what so many do.

Politicans feed around the edge of the comp system. After SB 899 passed a few years ago, California Democratic Party Chair Art Torres and State Senator John Burton were doing some hustling for a venure of billionaire Ron Burkle's Yuciapa that would have promoted "carve-out" alternate dispute resolution in workers' comp. Most rank and file Democrats and unionists were unaware of these efforts (just as most of us don't understand the role of Bill Clinton at Yuciapa, either)

Again, it's how some choose to play the game.

Julius Young is an applicants' attorney with Boxer Young in Oakland. This column was reprinted with his permission from his blog, http://www.workerscompzone.com