Friday, December 28, 2012




          No one spent more money trying to influence California politics during last year’s election season than the billionaire Munger siblings, Molly and Charles Jr., the children of Charles Munger Sr., who has provided them piles of money he made as the business partner of famed investor Warren Buffett.

          Molly spent just short of $45 million on a failed attempt to raise taxes on almost all Californians to benefit public schools from kindergarten through high school.

          Meanwhile, the $37 million put out by Charles Jr., a physicist at the Stanford Linear Accelerator Center south of San Francisco, went toward efforts to defeat Gov. Brown’s relatively modest tax increase proposition and to push for the latest incarnation of the three-time-loser “paycheck protection” plan aimed at reducing the political power of workers and their unions.

          But Charles Munger Jr. was also active on the intimidation front. This effort demonstrated a gross disregard for the future ability of Californians to challenge initiatives and other laws.

          It stemmed from Munger’s 2010 investment in Proposition 14, which established the “top two” primary election system that last fall produced numerous runoff races matching members of the same parties.

          Minor political parties considered themselves the prime victims of the new system, whose hope it was (still is) to put more moderates into state offices and break some of the partisan deadlocks that often afflict California and the nation.

          Top two cost minor parties like the Libertarians, Greens, American Independent and Peace and Freedom their usual spots on the November ballot. Of course, their members had the same opportunities to run and to present their ideas as anyone else during the primary. None advanced to a runoff.

          Rather than going back to the drawing board and devising ways to develop more mass appeal, they and their supporters sued the state. Enter Munger, as an intervenor. He contended state Attorney General Kamala Harris and Secretary of State Debra Bowen were not equipped to defend Proposition 14 on their own. This was entirely his choice.

          Munger, as usual, spent big, hiring a prominent, politically-connected law firm with offices in Sacramento and Marin County to make his case.

          When the plaintiffs, led by 69-year-old minor-party advocate Richard Winger, longtime publisher of the Ballot Access News blog, lost the case, Munger insisted they be dunned for his legal fees. A San Francisco Superior Court judge assessed Winger and his fellow plaintiffs $243,000, of which Winger is liable for one-fifth as things now stand. He says paying that sum would just about break him and likely put his blog out of business.

          It’s clear Munger doesn’t need the money. It’s also clear he wants no mere citizen activists to interfere with any of his future efforts. Keep the world safe for billionaires, seems to be his motive. His lawyers have refused to answer questions on why they’re intent on collecting from people exponentially less wealthy than Munger.

          But Winger and his fellow plaintiffs are not meekly accepting the trial judge’s assessment. They’ve appealed to the state Court of Appeals and they may have a better shot at winning there than they did in the late October hearing where that judge denied them so much as a re-hearing on the issues of the fees.

          While their lawsuit was pursued by the private practitioner attorney Gautam Dutta of Hayward, the appeal has been picked up on a pro bono basis by Andrew Byrnes, a partner in the large international law firm of Covington and Burling, who has considerable experience in election law and some clout of his own: He’s co-chair of the finance committee of the state Democratic Party.

          Since the junior Munger has been most active over the years on behalf of Republican-backed measures, this can now be seen in a political context, with a major behind-the-scenes Democrat moving against a GOP moneybag.

          Like Munger’s attorneys, Byrnes says little about the appeal.

          But most large law firms don’t expend unpaid time of their partners on cases they deem insignificant. So it’s clear Covington and Burling agrees with those who see Munger’s insisting on collecting what is a pittance to him but an enormous sum to those who might have to pay as an attempt to intimidate future possible plaintiffs from challenging any of his upcoming efforts.

          Whether or not you agree with Winger and friends that top two should go (and this column has frequently disagreed with them), it’s clear the large fee assessment does not serve the overall public interest. The more that can be done to overturn it and make the world a little more uncertain for billionaires, the better.

          Email Thomas Elias at His book, "The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It," is now available in a soft cover fourth edition. For more Elias columns, go to




          Six months after pulling back about $12 million worth of grants to help build refueling stations for the hydrogen fuel cell cars due to debut by 2017, the California Energy Commission is ready to take applications for new grants.

The problem: Revised rules issued by the commission appear at first glance to cut out the favoritism that sullied last spring's stymied grants, but the new rules still seem likely to place all or almost all the money in the same hands that would have received the cancelled grants. They also encourage a modicum of pollution over completely clean air.

The grants commissioners tried to dole out last spring required prior approval for any prospective refueling location from at least one of the eight big carmakers that will produce the first hydrogen cars.

          Oddly enough, all but one station approved by those billion-dollar-plus corporations – Mercedes Benz, Nissan, General Motors, Toyota, Honda, Chrysler, Volkswagen and Hyundai – would have belonged to two other huge international companies, German-based Linde Group and Pennsylvania-based Air Products & Chemicals Co.

          The Energy Commission only pulled back its millions after this column exposed the fact that smaller operators were systematically excluded, including some that proposed making H2 fuel from water – almost the ultimate in pollution-free renewable energy.

          The money has been lying around ever since, and now the commission is about to accept applications for new grants using the same funds, plus more, for a total of about $28.5 million. It all comes from the state vehicle license tax.

          But as always, the devil is in the details. And some see the details as particularly devilish in the commission’s new “program opportunity notice,” a 49-page document ( calling for grant applications to be submitted by Jan. 17.

          That date, for example, is no problem for the two big industrial gas suppliers who, like the car companies and the Energy Commission are members of the California Fuel Cell Partnership organization, where membership costs almost $90,000 per year. They have sufficient staff to complete complex documentation quickly for every service station to which they’d like to add a hydrogen pump or two. But smaller firms reported they had difficulty getting staff to work on those applications through the holiday period.

          “A Feb. 17 deadline date would be much more fair to small companies like ours that will sell purely renewable hydrogen,” said Paul Staples, president and project director for Eureka-based Hygen Industries. “They can still reset that due date.”

The new plan also names new areas for the refueling stations, while eliminating other places targeted in previous versions, another advantage to big companies with multiple operatives to recruit service station owners.

          Because at least one large company signed up a few stations in the new areas several weeks before those locations showed up in any commission documents, there’s also a possibility commission insiders tipped off outfits they favor for the grants.

          The Energy Commission has also changed the amount it plans to reimburse builders of the new hydrogen stations, without which no one would likely buy fuel cell cars, no matter how efficient they are or how they look and perform. Where grants were once intended to fund 70 percent of building costs, that figure is down to 65 percent in the newest filing and a 5 percent bonus for completing projects within 18 months of approval has disappeared from the plan.

          The reimbursement difference won’t hurt the big fellas much, but makes it tougher for smaller guys to compete.

          The new plan also requires state approval for any loans a company takes out to build a station, and gives state government veto power over any subsequent station sale.

          “That is unacceptable,” says Staples. “Lack of outright ownership makes it harder for small businesses to attract venture capital and project investment.”

          Taken together, the rules the Energy Commission seeks to impose would apparently assure most control of hydrogen refueling by the same companies on whom the commission originally planned to bestow almost all its grant money.

          One way to sum this up is to say that, as the apocryphal Mr. Dooley observed more than 100 years ago, “The more things change, the more they stays the same.”

          Another way to say it: Stymie state bureaucrats in their efforts to favor their cronies one way and they’ll try to find another way to give the same money to the same people and companies. Devilish details, indeed.

          The bottom line: While the newest plan on its face looks like a big improvement over the one abandoned last spring, it still favors the same big companies and their fossil-fuel derived H2 over outfits wanting to use the cleanest form of hydrogen fuel.

       Email Thomas Elias at His book, "The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It," is now available in a soft cover fourth edition. For more Elias columns, visit

Sunday, December 23, 2012




          Calls for change by the Republican Party – especially its California branch – came from all sides in the days immediately following President Obama’s reelection last fall.

          But don’t expect that to go anywhere fast. For this is a party that values its core principles and predilections more than it does victory.

          As early as 1993, when California was just one year into its shift from being a Republican mainstay to becoming reliably Democratic in presidential elections, the GOP was warned that it needed to change its stances on immigration amnesty, gun control, birth control and abortion, equal pay for women and many others.

          The GOP is now generally supportive of equal pay for women. But it has not changed much on anything else. Nor is that likely, despite the fact that some of the change-oriented advice it has lately received comes from its most conservative members.

          Take Ted Cruz, the newly-elected Tea Party-sponsored Republican U.S. senator from the GOP bastion of Texas, where no Democrat has won statewide office since the 1990s.

          “If Republicans do not do better in the Hispanic community, in a few short years Republicans will no longer be the majority in our state,” Cruz told a reporter. “If that happens, no Republican will ever again win the White House. New York and California are for the foreseeable future unalterably Democrat. If Texas turns bright blue, the Electoral College math is simple…the Republican Party would cease to exist. We would become like the Whig Party.”

          So Cruz implies he might compromise on some things. But many other conservative Republicans remain defiant of the need to change. Here’s what newly-reelected GOP Congressman John Campbell of Orange County wrote just days after the election:

          “I’ll be damned if this member of Congress is going…to go along with a slow move towards socialism rather than a fast one. This game is not over!”

          There it is: Almost anything that rubs conservative Republicans wrong, they tend to label socialist. But is allowing women to make their own reproductive decisions socialist, or is it fundamentally libertarian? Is gun control socialist -- especially in the wake of the rampage in Newtown, Conn.? And so on.

          Even the Republicans in the state Legislature, now less than a one-third minority, are being warned not to sell their souls or betray their “no new taxes” pledges.

          “Voting for Democratic bills would be like taking a torch to the city of Rome,” wrote Jon Fleischman, publisher of the conservative Flash Report blog and former executive director of the state GOP. “It’s just a bad idea.”

          What’s more, Republicans are looking at November's national results and seeing that they control governorships and both legislative houses in 23 states, while Democrats have the same one-party rule in just 14 – although the Democrats’ 14 have far more population than the Republicans’ 23.

          But Republicans regained control of the Wisconsin state Senate, lost temporarily to them via several recall elections last summer.

          Those kinds of offices are viewed by national parties as a sort of “farm team” that can often produce future candidates for the U.S. Senate or House. Republicans are doing just fine there, which makes many feel that fundamental change is not needed.

          “Our strength is in the states,” trumpeted Grover Norquist, author of the no-new-taxes pledge signed by most GOP candidates. He suggests that’s where the GOP will try to enact its anti-union, anti-teacher tenure goals, ideas that did not fly in California, where the anti-union Proposition 32 lost handily last fall. The first state moving on this post-election was Michigan, once a union bastion.

          But the party must change, and especially on immigration, suggests new information from the America’s Voice pro-immigration amnesty lobby. “While the Latino electorate’s disconnect from the current Republican Party runs deeper than immigration alone, it will be impossible for the GOP to get a hearing on its other issues unless and until they work to pass immigration reform,” said Frank Sharry, the group’s director. “Continued obstructionism on immigration would threaten the party’s future, especially when reliably red states like Texas and Arizona would go the way of California (as their large Latino populace becomes more politically active).”

          The Tea Party, which ran a couple of longtime Republican U.S. senators out of office last year via GOP primary elections, remains unwilling to accept anything like that.

          “The presidential loss was not on us, but on the country club establishment and Beltway elites,” said Jenny Beth Martin, a Tea Party leader.

          Put it all together and real change will almost certainly elude the GOP both nationally and in California over the next two years. Expecting change, even though the GOP now has sunk below the 30 percent level among California registered voters, is as realistic as expecting a dog to quack.

Email Thomas Elias at His book, "The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It," is now available in a soft cover fourth edition. For more Elias columns, visit




Dr. Norman Carter and his wife Kathleen are not alone, and a lawsuit they are fighting now in San Bernardino County Superior Court might help hundreds of other Californians who also believe they’ve been scammed by companies selling what lawyers often call “junk health insurance.”

          Carter, 63, an independent orthodontist practicing in Chino since 1976, and his dental hygienist wife bought their $400-per-month individual policy from Mid-West National Life Insurance Co. of Tennessee in 2004, switching over from Blue Cross, which they believed was becoming too expensive. Besides their practices, both also taught at Loma Linda University.

          Like many of the self-employed, all they wanted was comprehensive hospitalization coverage in case of a major illness. A high deductible was fine with them, so long as the lifetime cap on expenses was at least $1 million.

          But, their lawsuit charges, what they bought into was a fraud. For their policy contained ambiguous language that set a limit of $18,000 for miscellaneous hospital expenses. When crunch-time arrived for the Carters, their suit charges, Mid-West used that that language to classify almost anything done in a hospital as miscellaneous. The Carters contend they weren’t told this could happen when a Mid-West agent sold them the policy.

          Their lawsuit contends that when Kathleen Carter, also 63, needed surgery and chemotherapy for primary peritoneal cancer in early 2011, Mid-West paid only about $30,000 out of almost $200,000 in bills, the couple today still owing Loma Linda more than $140,000.

          The suit says Mid-West accomplished this mostly with that “miscellaneous” tag. Among doctor-prescribed items placed under this label were $49,660 in operating room charges, $28,300 for anesthesia used during an eight-hour surgery and $24,381 in prescription drugs.

          The Carter’s lawyer, Claremont-based William Shernoff, calls this a combination of fraud, breach of contract and “breach of the covenant of good faith and fair dealing.” His action does not seek a specific amount of damages, instead asking a jury to penalize Mid-West and its parent company, Texas-based HealthMarkets Inc., enough to discourage them and other insurance companies from doing anything similar.

          For sure, it takes a huge penalty to discourage the type of scam alleged here. As recently as 2008, HealthMarkets (owned mostly by the New York-based Blackstone Group and the Goldman Sachs investment bank) agreed to a $20 million settlement with insurance regulators in an action begun by the Massachusetts attorney general. Three years later, the firm was forced to pay another $350,000 in penalties.

          HealthMarkets, Mid-West Life and two sister companies are also now being sued by the Los Angeles city attorney for “unlawful, unfair and fraudulent” insurance sales and advertising. Among other claims, the city’s lawsuit says HealthMarkets’ agents were deliberately trained to defraud customers by not explaining all the limits on their policies.

          How widespread is this type of practice? The state Department of Insurance reports it received more than 100 complaints about Mid-West Life from policy holders who claimed their legitimate claims were denied or massively reduced. And that’s just from one company. Several others – the department wouldn’t name them – supposedly perform similarly.

          HealthMarkets refused either to comment on the lawsuit or to say how many policies it writes in California, saying that information is private. But it reported collecting $73.6 million in premiums here last year. If the Carters’ premiums are close to typical, that would mean somewhere between 10,000 and 15,000 California individuals and families have such “coverage.”

          “These companies used to do this even more than they do now,” said Shernoff, whose firm has won hundreds of millions of dollars in settlements from insurance firms. “But once they paid that $20 million fine and were also banned for a year from selling policies in Massachusetts, they improved a little.”

Shernoff said he has settled 10 cases similar to the Carters’ in the last five years and estimates there were hundreds of instances like the theirs in California during that time.

          No one knows if this will all end when the state health insurance exchange created under the federal Affordable Health Care Act, better known as Obamacare, begins operating in 2014.

          “We can’t speculate on that,” says insurance department spokesman Byron Tucker. “We don’t yet know what companies will sell insurance there and we don’t know how they’ll be regulated and which ones will be eligible.”

          All of which means this remains a classic case of “caveat emptor” – let the buyer beware. If an insurance agent won’t answer every question asked, if a policy is written so ambiguously it might allow an insurer to weasel out of most reasonable and customary expenses, it’s probably best to seek elsewhere for coverage.

Email Thomas Elias at His book, "The Burzynski Breakthrough: The Most Promising Cancer Treatment and the Government’s Campaign to Squelch It," is now available in a soft cover fourth edition. For more Elias columns, go to