The Fine Print

J.D.'s revenge or Jeb Bush's fault? The insurance staredown explained

Florida may have a new insurance commissioner on Friday, then again it might not.

But Gov. Rick Scott and members of the Florida Cabinet will hold their third meeting in the last few weeks in a yet-another effort to reach a consensus on who should replace the outgoing Kevin McCarty (pictured left with Scott). As has been well-reported, Scott and Chief Financial Officer Jeff Atwater have been unable to reach agreement on who should replace McCarty. That's created a stalemate because Florida law requires both officials to agree on a replacement.

There are so many ways to view this ongoing drama, which has played out in public largely because of the rushed secretive way that Scott pushed out Florida Department of Law Enforcement Commissioner Gerald Bailey at the end of 2014. In the end the governor and Cabinet were sued over the entire affair which resulted in new policies that were designed to end behind closed doors decisions regarding the hiring and firing of agency officials who report to the Cabinet.

Atwater has painted the standoff as a byproduct of a process that he says was created to make sure that top officials were deliberative in such an important hire.

Ok.

But perhaps it would be good to take a brief history lesson in how we got here, and why in reality, the process now being used has never really been tested before. And along the way, maybe ask the architect of all this what he thinks about his handiwork (he actually kind of blames Jeb Bush.)

It would be tempting to trace all of this back to the Civil War (yes, really) but let's just say that it became recognized that in the '90s that Florida's governor was considered one of the weaker chief executives in the country.That's because the governor shared power with other elected officials - and in some instances had little control over important areas such as education.

Voters in 1998 were asked to approve a sweeping overhaul of Florida government. This proposal by the Florida Constitution Revision Commission  did a number of things that has generated a lot of debate since then. The education commissioner was changed from an elected to an appointed position. A new State Board of Education (appointed by the governor) became responsible for hiring the commissioner. The governor and Cabinet, which used to be the state education board, no longer had that responsibility. The Secretary of State went from an elected position to an appointed position. And the elected positions of Treasurer and Comptroller would be merged into one new one: the chief financial officer.

As the commission was crafting this proposal, the plan was to also remove the agriculture commissioner from the Cabinet but an uproar from agricultural interests nixed this idea. That eventually created flareups because that leaves four voting members when the governor and Cabinet meet - and leading to discussions on how to weight certain votes so a decision can be made.

Flash forward to 2002: State legislators were under the gun to come up with new laws to put all of these above reforms into action (The amendment did not go into effect immediately). The changes in education, particularly in higher education, sparked an enormous firestorm.

When it came to creating the chief financial officer position, a key argument began to quickly emerge: Should the CFO have complete sway over the regulation of both the insurance and banking sectors - and invariably the large amount of campaign donations that would come from those seeking influence over such important parts of the state economy? In the past, the two jobs were split between the comptroller and treasurer. The treasurer was in essence the insurance commissioner. This led to a public tug-of-war between Comptroller Bob Milligan and Tom Gallagher, who was treasurer and planned to run for CFO.

It was state legislators, including a powerful Republican from Polk County, Rep. J.D. Alexander that came up with the compromise: The jobs of insurance commissioner and banking commissioner would be picked by the governor and the new shrunken Cabinet. And furthermore, there was this addition: The job of insurance commissioner would require BOTH the governor and CFO to agree on who they wanted for the job. The law also states that both elected officials must also agree to fire someone from the position.

Since this was created in 2002 there's been only person to hold the job of appointed insurance commissioner: McCarty. And he's been an ultimate survivor - thanks in no part to the bifurcated law that Alexander helped draw up. CFO Alex Sink wanted to fire him, but then-Gov. Charlie Crist refused to go along. Then during the storm over Bailey's departure it came out that Scott wanted him gone. But Atwater at the time refused to concur and McCarty remained in place until he submitted his resignation earlier this year.

Alexander himself tried to change the law that allowed McCarty to remain in place, saying he was wrong in how they crafted it. He pushed a bill to require that the commissioner be subject to a confirmation vote every two years. It failed to pass.

Now here we are - in a situation that has really not happened since the law took effect.

McCarty was supposed to resign effective May 2 - but then he offered to stay on until 45 days after a successor is chosen - to ensure that Florida has someone in place during hurricane season that starts June 1. Scott's own general counsel, however, maintained that McCarty couldn't do this because the governor and Cabinet had accepted his resignation and could not alter that date without - t'dah - a vote where both the governor and CFO agree. Not so fast, maintained Atwater's team: All the governor and Cabinet did was set a schedule to appoint a replacement. They never "formally" accepted it.

So how does Alexander view all this and how his creation has fared? Well, you could say he waxed a bit poetic about it all, but it sounds as if he is calling on Attorney General Pam Bondi and Agriculture Commissioner Adam Putnam to assert themselves more. (So far Bondi and Putnam have called on Atwater and Scott work out their differences.)

"The genius of the American system of government isn't just democracy but of divided government,'' he said in a message. "Consequently, I wanted the CFO to have the lead over mgt of financial services and insurance. We were forced by the governor of the day to give more authority to his office. An unfortunate outcome of a four member Cabinet. At this point, hopefully the other Cabinet officers will weigh with a choice and consensus will prevail."

Alexander explained that "the governor in my opinion has plenty of power, the constitution seems to give principle authority to the CFO in these matters." He added that the decision all those years ago to keep the agriculture commissioner on the Cabinet "complicated" matters and required them that the governor be given a supervote on certain decision.

"The answer is to lose or gain one Cabinet member," he added. "In the order to pass a bill the governor required a larger role. It was part of the compromise, which we knew had this potential. My guess is the pressure will build and this will be resolved."

Guess we will know if that's true by mid-day Friday.

Bondi's silence amid questions about lobbying, the gift ban and free trips

Right before she was elected to a second term into office, a series of stories by the New York Times detailed the practice of law firms who were skilled at developing contacts and relationships with the top lawyers of various states - including Attorney General Pam Bondi. These firms helped out corporate clients whose businesses had been targeted by some states, but not others.

One of the stories also pointed out that Bondi allowed a lawyer from one of the firms to recuperate from surgery at Bondi's house.

Now 16 months later the matter has come to a quiet close - at least as it concerns Florida's ethics laws.

The Florida Commission on Ethics voted last week there was no probable cause to conclude that the now-defunct law firm Dickstein Shapiro - or one the lawyers who used to work at the firm, Bernard Nash - had broken the state's ethics laws. The finding was made public Wednesday.

The probe into their activities focused on two items: Was it a violation of Florida's gift ban for the firm and Nash to donate money to an organization that wound up paying for trips by Bondi? During her first four years in office Bondi accepted more than $51,000 worth of travel costs, hotels and meals to conferences and other events with other attorneys general. The trips to places such as California, Michigan and countries such as Mexico were picked up by groups such as the Republican Attorneys General Association.

The other part of the probe focused on whether activities by Nash and the firm constituted lobbying even though Nash and members of Dickstein Shapiro had not registered as lobbyists.

An outside lawyer brought in to help look into the case concluded in his report to the commission that in both instances the law had not been broken.

George Reeves argued that a contribution to RAGA was covered by a part of the lobbying law that makes it clear political contributions are not expenditures.

But during the commission meeting, Reeves acknowledged that the lobbying issue was a bit more complicated.

Lawyers are not considering lobbying if they are representing clients involved in a judicial proceeding. But in this instance Nash was reaching out to Florida on behalf of a client who was under investigation in another state. He called Bondi's then chief of staff, Carlos Muniz, and then sent him a follow up email about the issue.

Reeves told commissioners, according to audio that was released along with the files, that what Nash did was "very risky" and that others may be "well served" to register as a lobbyist but said in this instance there wasn't anything that should have prompted the commission to take action.

Yet a deeper look into the information does comes up with several interesting highlights:

1: Bondi herself was never questioned directly by investigators. The investigative report states "Her staff advised that due to her busy schedule and heavy workload she would be unavailable for an interview." Those close to Bondi contend that this may paint a somewhat inaccurate picture, arguing that after investigators interviewed Muniz they did not make it clear they wanted to talk to her.

2: During an hour-long recorded interview with Nash, he tells the commission investigator about how his firm would set up dinners and receptions where they would invite all attorney generals across the state to join them. He said that those from states with ethical restrictions would pay their own way. Nash is unsure if Bondi or Muniz, who usually accompanied her to some of the conferences, attended those dinners. But Nash said no log or register was ever kept of who attended the events. Nash was not asked if any receipts were kept to verify that attendees bound by ethical restrictions in fact paid.

Muniz told investigators that he is certain he and Bondi attended at least one of the meals and maybe more. He said both he and the attorney general always paid for their meals.

3: Nash explained the rationale behind the dinners as a way for his clients to deal directly with attorneys general: "It's an opportunity for them to hear them directly, not filtered through me, what AG’s are saying."

4: Nash downplayed a Bondi fundraiser that Dickstein Shapiro hosted at Mar-A-Lago, the club owned by GOP presidential frontrunner Donald Trump. He said that his firm was listed because it agreed to give a certain amount. "If you contribute less, you are just an ordinary peon."

5: The investigative report points out that Nash denied that he or any of the Dickstein Shapiro employees lobbied. But Reeves in his recommendations to the commission concluded that there was "insufficient evidence" to determine if the other employees  _ including Lori Kalani, the attorney who stayed at Bondi's house, had lobbied Bondi's office. He noted that these employees had called or emailed Bondi's staff regarding issues involving several clients "yet the report of investigation does not elaborate on the substance of these communications and specifically whether matters of policy were discussed."

He added: "This is a very delicate area in which it seems that the line between advocating concerning "policy" and advocating the facts of a specific case could get very blurry," Reeves wrote. "Certainly it seems as though the safer practice would be for such an attorney to register as a lobbyist and then freely advocate for his client regarding the specific facts and policy without concern. However, such safer practice cannot create probable cause where it does not otherwise exist."

Even though Bondi was subjected to scrutiny over her free trips two years ago, she has continued to accept them since she was re-elected.

Gift disclosure forms show that since the fall of 2014 Bondi has received airfare, hotel and meals worth nearly $51,000, including more than $11,000 donated by the government of Taiwan during an eight-day visit in October of last year that appears to have been organized by the National Association of Attorneys General. She has also taken several trips paid by the Rule of Law Defense Fund - a group that bills itself as a "forum for Republican attorneys general to study, discuss and engage on important policy affecting the states and their citizens."

 

New era brings some reshuffling inside the governor's office

It's a new era officially in the administration of Gov. Rick Scott.

With Kim McDougal in as the new chief of staff, there has been a shuffling of responsibilities inside the governor's office. McDougal recently took over for Melissa Sellers and this post highlighted how things could change now that Scott has switched over to his fifth chief of staff. As noted previously McDougal, who has a long background on education policy, is maintaining her oversight in that arena even though she has been promoted from her previous position as legislative affairs director and deputy chief of staff.

Why is this chart important?

Because it shows the names of the people inside the governor's office who have direct responsibility over various functions in state government. These are the people who work day to day with agency heads and serve as the liaison between them and the governor. And they are the ones that lobbyists generally turn to when they have a problem or issue with a particular agency head.

So you can note that as part of the reorganization Kristin Olson, Scott's cabinet aide is now titled a deputy chief of staff and has added some of those agencies under her guidance including the Department of Management Services. DMS is a very important agency to Tallahassee lobbyists and insiders because it controls many important contracts and is involved in everything from the recent bat guano dustup at a state office complex to the state's health insurance program.

Frank Collins, who has held a couple of different positions in the executive office, is no longer dealing with the Department of Corrections, another agency that has been in the news a lot in the last couple of years. That department has now shifted over to Jeff Woodburn, the director of policy. Brad Piepenbrink, meanwhile, has picked up the Department of Transportation from Collins.

Another interesting detail on the new chart: The head of Enterprise Florida no longer reports directly to Scott in this new chart.

When he ran for governor back in 2010, Scott talked about how he would have the head of the economic development agency, who is also known as the Secretary of Commerce, report directly to him and would be just a few doors down.

Bill Johnson, the current head, is departing at some point this year from the post although it remains unclear when that will be. (On a conference call today, it was noted Johnson is heading out on some trade trips in the next few weeks on behalf of Enterprise Florida.) Johnson had clashes with legislators as he pushed the governor's agenda of more incentive funding for the agency. Johnson announced his departure shortly after this year's session ended when the Republican-controlled Legislature refused to grant Scott's request for $250 million. Since that time Scott has also said he wants to look at a restructuring of the agency.

Here's the way the executive office looked when Sellers first took over.