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July 27, 2005 at 08:00 PM
Insurer political contributions have surfaced as an issue in the New Jersey governor’s race, with Democrats attacking Republican standard-bearer Douglas R. Forrester for his ownership of a Washington, D.C.-based captive insurer.
At issue are a variety of state laws, including Section 34-2a of the state’s election statutes, part of the criminal law, which outlaws contributions by insurance corporations. The measure was enacted in 1911 when a slew of reform bills were passed to halt the influence of election spending by a variety of industries.
The Democratic attack came not from Forrester’s opponent in the governor’s race–U.S. Sen. Jon Corzine–but from a leader in the Democratic-controlled Assembly, who called for an investigation and hearing concerning Forrester’s business dealings.
Forrester has a 51% interest in Heartland Fidelity Inc., a pharmacy benefits captive, and Democrats are contending that his ownership means his use of personal monies to fund his campaign is illegal.
A spokesman for Heartland, Peter J. McDonough, said the company is chartered in Washington, D.C., its premium is collected there and it is regulated by the Washington Department of Insurance, Securities and Banking.
“Our lawyers have reviewed this [contribution question] and there is frankly no issue,” declared McDonough, who said that a letter had been sent to the New Jersey Department of Insurance and Banking seeking an advisory opinion, which the company expects will support the findings of its attorneys.
Heartland’s position was attacked by Assemblyman Neil M. Cohen, D-Union, who is deputy majority leader as well as the chairman of the Assembly Financial Institutions and Insurance Committee.
Cohen announced he had written Donald Bryant, commissioner of the N.J. Department of Banking and Insurance, asking him to hold a formal investigation and public hearing.
According to Cohen’s reading of the law, the state of license or domicile is irrelevant. “If you are doing business in the state, then you are subject to the law,” he said.
Forrester is the owner of Benecard, which, according to McDonough, manages prescription purchasing and dispensing fees for self-insureds and organization pharmaceutical plans, and also offers fully funded plans with a fixed limit.
He said Heartland is the captive of two organizations, made up of Benecard clients–Benecard Association Trust and Benecard Association. McDonough explained that the captive, created in 2003, is managed by the McCarren Ferguson captive management company in Washington and has a locally based manager. It provides stop-loss insurance for the programs that go over their contract spending limit, he said.
Cohen, in his letter requesting an investigation, said Benecard operated from Lawrenceville, N.J., as Heartland’s general managing agent, offered its product in New Jersey and sold Heartland insurance by bargaining with and securing “official approvals of municipal and county officials in New Jersey for Benecard contracts.”
