State Senate health chairman doing business with Kaiser
A firm owned by Sen. Ed Hernandez, who derailed legislation opposed by the
nonprofit health group, leases office space to Kaiser Permanente. An advocacy
group seeks his ouster from the chairmanship.
By Patrick McGreevy
Los Angeles Times
September 18, 2011
A Southern California lawmaker who helped defeat legislation opposed by Kaiser is benefiting from a business relationship with the nonprofit health group.
The proposal, which died in the Legislature earlier this month after a dispute
over its provisions, would have required state approval for health insurers
including Kaiser to raise their rates.
State Sen. Ed Hernandez (D-West Covina), chairman of the Senate Health Committee,
owns a corporation that leases an office building to Kaiser Permanente in Baldwin Park. Since 2006, Kaiser has paid Hernandez's firm about $387,000 to lease the building. The current rent is $5,752 a month.
Most elected officials in California are disqualified from actions that could affect
a source of their income, but state legislators exempted themselves from that
restriction in 2002. Such dual interests amount to "what a common-sense person
would consider to be wrong," said Kathay Feng, executive director of California
Because his role as Health Committee chairman gives Hernandez considerable power over many bills that affect the health industry, a consumer advocacy group has asked Senate leader Darrell Steinberg (D-Sacramento) to remove him.
"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 … compromises Senator Hernandez's ability to independently chair the committee," wrote Jamie Court, president of the nonprofit group Consumer Watchdog.
Kaiser's payments were disclosed in Hernandez's annual financial interest report on file with the state. But there was no mention of the business relationship when a
Kaiser representative appeared at a June committee hearing presided over by
Hernandez voted for the bill when it passed his committee. But he said he would oppose it on the Senate floor unless it was changed so a panel of actuaries, rather than California's elected insurance commissioner and the director of the state's Managed Health Care Department, would rule on any rate increases.
The bill's author, Assemblyman Mike Feuer (D-Los Angeles), said such revisions
would have left consumers unprotected from excessive rate hikes and, without
enough votes to support his version, he shelved the legislation, AB 52...