By Elana Schor - 07/13/06 12:00 AM EDT
When Rep. Gene Taylor (D-Miss.) wanted to get a provision passed that would go after the politically powerful and GOP-leaning insurance industry, his journey began with a simple trip down the hall.
Taylor is one of thousands of homeowners on the Gulf Coast locked in a legal battle with insurance companies over whether Hurricane Katrina damage was improperly claimed as water- and not wind-based. Once he had finished his proposal for an inspector-general inquiry into those widespread suspicions of fraud, Taylor walked into the office of Rep. Mike Oxley (R-Ohio) and personally asked for an appointment with the Financial Services chairman.
“I’m kind of lucky, in that his office is around the corner,” Taylor said. Three doors down, in fact.
A Blue Dog centrist and sometime iconoclast, Taylor had won respect from Republicans for participating in the majority’s Katrina hearings despite Democratic leadership’s preference for an independent commission. Taylor even escorted members of the financial-services panel around his storm-wrecked district during a winter field hearing.
But the insurance industry was certain to lobby hard against Taylor’s amendment, which requires the Department of Homeland Security (DHS) inspector general to report within six months on any Katrina claims that may have been wrongfully assigned to the taxpayer-funded National Flood Insurance Program (NFIP). Insurers have contributed more than $24 million to Republicans in each of the past two election cycles, two-thirds of the industry’s total giving and formidable leverage against Taylor.
“He’s trying to penalize the private sector because he’s not getting enough relief from a government program,” one industry lobbyist said, charging Taylor with using his public office to take out the frustrations expressed in his lawsuit against State Farm. “The government created the flood-insurance program. We didn’t create it.”
Not to mention that Oxley himself had already asked for a Government Accountability Office (GAO) study of the same questions Taylor wanted to be probed. During their May 10 meeting, Taylor recalled, Oxley posed a crucial question: “Where’s [Sen.] Trent Lott on this?”
Lott (R-Miss.), who like Taylor lost his home in Katrina, is embroiled in his own court battle against insurers. Consternation over claims shifted onto the NFIP was so ubiquitous in southern Mississippi that the judge who likely would have heard both Lott’s and Taylor’s cases recused himself after filing his own lawsuit.
The next day, Taylor “went and stood outside the Republican senatorial lunch,” he said, hoping to buttonhole Lott, a friend of Oxley’s since Lott represented Taylor’s House district in the 1980s. Taylor explained his amendment to Lott, who said he would give the Ohioan a call.
Lott, in an interview, said he asked Oxley to sign off on the amendment “unless there was some major problem with it.” Despite his assist in Taylor’s quest, Lott added, he has not made a final decision on whether to push for adding the amendment to the Senate version of the flood-insurance bill.
“I’m worried when it will come up, because the Senate calendar has gotten so crowded. … I wouldn’t want to block its movement because of this amendment, but it would still have to go to conference,” Lott said.
The Banking Committee’s flood-insurance bill includes several studies of the NFIP, including claims adjustment, but shies away from the incendiary term of “investigation.”
Insurance lobbyists were bracing for another defeat yesterday as Lott moved to add money for the study by the inspector general to this week’s DHS appropriations bill. Instead of authorizing the investigation outright, Lott said, “we are working to see if we can get some funds earmarked” so that the inspector general can afford to conduct a probe eventually. “I’m working this from all angles.”
Another lobbyist was not surprised that Taylor succeeded by reaching out to the former Senate majority leader.
“I don’t think you can discount the factor that Trent Lott was,” the lobbyist said. “As soon as this became an amendment, I thought it was just a matter of time before language was worked out.”
An Oxley spokeswoman said, “We have worked productively with Representative Taylor and his office.”
Sen. Richard Shelby (R-Ala.), chairman of the Banking Committee, has made a GAO request of his own. “We share Senator Lott’s concerns and have had an ongoing dialogue with his staff to find an appropriate way to address those,” spokesman Andrew Gray said.
Taylor’s prospects looked bleak before the Memorial Day recess, when GOP leadership began planning to put the flood-insurance bill on the suspension calendar, usually reserved for uncontroversial measures that can garner the two-thirds majority needed to pass. Taylor insisted on the opportunity to offer his amendment, and days before the Rules Committee was slated to vote on it insurance lobbyists remained confident they would prevail.
Then, on June 22, Taylor directly challenged Speaker Dennis Hastert (R-Ill.) on the House floor.
“I will note that two of those insurance companies that I think were the biggest culprits reside in Illinois,” the Democrat said, referring to Allstate and State Farm.
The Rules Committee eventually allowed Taylor’s amendment, which was publicly backed by three other influential Democrats. Taylor was still unsure whether the amendment would pass on the floor, he said, but “at some point the word got back to us: [Republicans were] willing to live with the amendment if we didn’t ask for a recorded vote.”
One lobbyist stunned by the Rules decision attributed the turnaround to a request by Hastert’s office.
Hastert made headlines just after Katrina hit when he questioned the wisdom of rebuilding New Orleans, which was particularly ravaged by the hurricane because of its low-lying location. Taylor responded diplomatically when asked whether that episode influenced the outcome.
“When people help, I never question their motives,” Taylor said in an interview earlier this week, as the first of a potential flurry of Katrina insurance-fraud trials began in his district. “And the last thing I want to be is a sore winner.”
Hastert’s office did not return a request for comment on the motivation for accepting Taylor’s amendment.