San Gabriel Valley Democrat Ed Hernandez might have opened a committee to raise money for a lieutenant governor campaign in 2018, but it's more likely that the state senator runs for Insurance Commissioner. By mid-April, ten candidates had opened committees to run for lieutenant governor in 2018, five Republicans and five Democrats.
Democrat politicians with higher name recognition than Hernandez, including current Senate President Pro Tem Kevin De Leon, former Senate President Pro Tem Darrell Steinberg and Mark Leno, D-San Francisco, have also opened committees for the race. A statewide candidate can move money from one position to another, while keeping donors to the same campaign contribution limits. They can also park the money for future use. So if Hernandez is not going to run for lieutenant governor, what other statewide office would seem to fit? Insurance Commissioner.
Current commissioner, Dave Jones, will be termed out in 2018, and so far, only Assemblyman Henry Perea, D-Fresno, has opened a committee for that office. Hernandez's tight relationship with the insurance industry is well known and controversial. Since 2006, Hernandez, the Chair of the Senate Health Committee, has earned more than $600,000 in rental income from the state’s largest health plan, Kaiser. The Los Angeles Times reported on this in 2011, and Hernandez rebuffed any attempts to recuse himself on votes dealing with Kaiser.
“This level of income from a company that is constantly before his committee, and whose interests touch upon every level of the committee’s work, is hardly incidental and compromises Senator Hernandez’s ability to independently chair the committee,” wrote Consumer Watchdog in a letter to then-California Senate Pro Tem Darrell Steinberg, seeking Hernandez’s removal as Chair of the Health Insurance Committee.
Consumer Watchdog also aired a television advertisement that highlighted Hernandez's indifference to a constituent who testified about his mother being unable to afford health insurance at a hearing for Assembly Bill 52, which would have regulated health insurance premiums. Kaiser opposed AB 52 vehemently and Hernandez proved the principal roadblock to the premium regulation measure’s passage.
The ad showed the senator's response to the moving testimony of Monterey Park resident Joseph Villela about his family’s health insurance struggles. Committee chairman Sen. Hernandez simply laughed and noted that after redistricting, Mr. Villela would no longer be in his district. After cracking his joke, and without even acknowledging the witness’s family plight, Hernandez immediately called “Next,” for the next witness.
In its letter to Steinberg, Consumer Watchdog wrote: "As the summer wore on, it became clear that Chairman Hernandez would be the chief roadblock to regulating the premiums health insurance companies could charge to Californians. What was not clear at the time was the conflict of interest that should have required Senator Hernandez to recuse himself from the AB 52 vote and, more importantly, should have prohibited him from serving as Chair of the committee that oversees health insurance and California’s health plans… With Californians so desperate for protection from high health insurance rates, it’s a travesty that the Senate’s appointed leader on health care issues is earning hundreds of thousands of dollars from the state’s biggest HMO. He should be removed from this position immediately."
The payments from Kaiser to Sen. Hernandez appear on his financial statements, but are more detailed on Kaiser’s quarterly lobbying reports, Form 635, as “rent for office building lease” paid to Hernandez Family Properties, LLC.
