After laboring faithfully for years in the shadow of Jeb Bush, the ads suggested, the chief financial officer was just the man to replace the term-limited conservative stalwart in the 2006 election. All that time alongside Jeb had made the cabinet member truly fit for the governor's mansion.
"Today, Tom Gallagher has a record that strikes fear in the personal injury lawyers who profit from lawsuit abuse," the ads proclaimed. "Take a look at Tom Gallagher a fiscal conservative, in the Jeb Bush tradition."
Around the same time those ads aired, New Times published an investigative report about United Automobile Insurance Co. of North Miami Beach, a privately held company that provides personal injury insurance that's required for all Florida drivers ("The Bad-Hands People," September 15, 2005).
For years, the company has been the bane of policyholders, medical professionals, and lawyers because of its refusal to pay claims. The cases have left doctors and injured drivers holding the bag and sometimes falling into insolvency. With litigation the only recourse, thousands of cases now clog South Florida courts. Many have questioned why Gallagher's office, which is in charge of processing complaints against insurance companies, hasn't done more to straighten out this errant insurer.
The money behind those radio ads offers a compelling explanation. United Auto kicked in a whopping $50,000 for the airwaves blitz supporting Gallagher against a common foe: the attorneys who've forced United to pay out on claims.
Here's how it worked. The radio spots were sponsored by the Conservative Education Network (CEN), a political committee referred to as a "527," relating to the Internal Revenue Service section that codifies the rules governing them. A 527 can raise unlimited amounts of cash (as with the conservative-funded "Swift Boat Veterans for Truth," which assailed presidential candidate John Kerry in 2004 in mudslinging ads), and it provides a route for wealthy donors to get around campaign contribution limits.
Little was known about the group's financing last fall, only that among its officers were Geoffrey Becker, a lobbyist for the Florida Chamber of Commerce and Walt Disney World, and Katherine Johnson, who used to work with Broward lobbyist Ron Book.
But in February, the IRS posted on its website copies of financial disclosures filed by the CEN as required by law. Roughly half of the $100,000 collected in 2005 by the group came from surprise, surprise United Auto and its various subsidiaries.
Gallagher's ties with the company, however, go even deeper. During the 1990s, he earned thousands of dollars working for United Auto as a lobbyist. Last year, the company hosted a fundraiser for Gallagher, held in a skybox during a Marlins game.
Gallagher became a statewide figure in 1988, when he was elected Florida's treasurer and insurance commissioner. A year later, United Auto was founded in Florida by Richard Parrillo, who had co-owned Safeway Insurance Co. in Chicago, a firm that had earned a reputation, say critics, of living by the motto "Deny, delay, don't pay."
Gallagher was elected Florida's commissioner of education in 1998, and in 1999, he made a brief run for the U.S. Senate before GOP movers and shakers persuaded him to step aside for the preferred candidate, Bill McCollum.
Gallagher's aborted Senate run, however, provides a glimpse into how close he'd become to United Auto. As a Senate candidate, Gallagher was required to fill out a lengthy financial statement. In it, he disclosed that he'd worked as a consultant to United Auto. Although he wasn't required to describe the nature of the work or the total he earned, the disclosure indicates the amount was at least $5,000. Albert Martinez, a Gallagher campaign worker, says his boss acknowledges working as a paid lobbyist for United in the mid-1990s but doesn't recall how much he earned or what work he did for them.
Gallagher immediately shifted gears and was elected treasurer/insurance commissioner again in 2000. This was a cabinet-level position that morphed into the position of chief financial officer as the result of a constitutional amendment. Under the system now in place, Gallagher and the other three cabinet members appoint an insurance commissioner, who is currently Kevin McCarty. But as CFO, Gallagher still oversees the Department of Financial Services (DFS), which is in charge of investigating insurance fraud.
United Auto would seem fertile ground for such fraud hunting. Beginning in the late 1990s, the company adopted a policy treating virtually all personal injury claims filed by its policyholders as fraud. Parrillo argues that 95 percent of such claims are fraudulent, and accordingly, the company deals with all claims by refusing to pay them.
It's United Auto's deeds, however, that don't pass the smell test, critics say. The company routinely defies court orders, which have resulted in numerous sanctions by judges. In early 2005, Broward County Court Judge Robert Lee granted a default judgment to a United policyholder who was seeking $2,060 in lost wages as the result of an accident.
In his court order, Lee wrote, "[United] has been sanctioned dozens of times by this court alone. Having now handled two different civil divisions and having had the opportunity to review hundreds of files from predecessor judges, [I'm] also personally aware that this defendant has been sanctioned dozens of times by other judges for similar conduct. The defendant itself, and not its attorneys, has paid thousands of dollars in sanctions. The client itself then must clearly be aware of the misconduct. And yet, the sanction of fees alone has been unable to remedy the defendant's misconduct."
In July 2005, a Miami-Dade judge called the roughly 10,000 United Auto cases languishing in the courts "mind-boggling."
Despite the New Times investigation last fall, Gallagher's DFS still doesn't see a problem with United Auto's tactics. In an e-mail response to questions concerning the company's practices, Tami Torres, a DFS spokesperson, wrote that the number of complaints received about United in 2005 was just under 600, slightly more than the number received on two other "nonstandard" insurers, which means they target high-risk drivers.
As far as Gallagher's looking into United Auto, Torres raised the same Catch-22 voiced by DFS staffers last fall. "Gallagher's office does not have the statutory authority to do market conduct examinations, which investigate a company's practices," she wrote. That would be up to McCarty's Office of Insurance Regulation. (McCarty's office wouldn't comment on whether it's investigating United.) The DFS' online homepage, however, lists as one of the agency's responsibilities the investigation of insurance fraud.
Of course, Gallagher is interested in the subject of fraud, Torres quickly added. "With respect to reporting and investigating fraud, CFO Gallagher is pursuing rules and legislation outlining stricter requirements for insurance companies to report insurance fraud and calling for penalties for failure to report fraud."
Now that's the kind of enforcement that United Auto can get behind.
On the other hand, those who do battle with United Auto over claims are still waiting for an ounce of consumer protection from the CFO-who-would-be-governor.
In late 2004, Alex Barak, a Hollywood attorney who has represented scores of policyholders burned by United, wrote a complaint to the chief financial officer.
"Mr. Gallagher, what is the purpose of complaint against an insurance carrier if we do not see any action taken?" he wrote. "Why is it that when people commit crimes against the insurance companies, it gets significant publicity, yet when insurance companies commit fraud against the public who have legitimate claims, no one cares?"
Having received no response, Barak wrote again last year. "Is your office blind and deaf to the crisis involving United Automobile Insurance Company?"
Maybe he needs to buy some radio ads to be heard.