By Craig Malisow
By Jeff Balke
By Angelica Leicht
By Jeff Balke
By Sean Pendergast
By Sean Pendergast
By Jeff Balke
By Ben DuBose
Powers went on to rankle Bomer for four years as an outspoken advocate for insurance consumers. His criticism of Bomer now, however, is less strident. He says Bomer tried to do the right things, he just went about them the wrong way. For example, Bomer tried to make insurance more available to low-income Texans, but Powers argues that his policies to that end failed.
Powers and Bomer locked horns in 1996 over a settlement in a class action against Allstate and Farmers Insurance Group of Companies. The companies were accused of overcharging for their auto insurance because of the way they calculated premiums. Bomer fumed that the lead attorney in the so-called "double rounding" case, John Cracken of Dallas, was to receive up to $10 million in the settlement while individual consumers were pocketing $5.57 refunds. Powers had assisted Cracken in the case.
With that distaste still fresh, Bomer all but scuttled a proposed class action against several rental car companies accused of illegally selling liability insurance. Under Bomer's direction, the Texas Department of Insurance entered into an agreement in the summer of 1997 in which five of the companies agreed to refund customers. The agreement was announced days before lawyers were to ask a judge for class certification in their lawsuit. The judge never granted it, and Houston attorney Larry Veselka holds Bomer responsible.
Veselka says he shared his research and opened his files with the insurance department only to find out later that Bomer was not interested in anything resembling cooperation. Veselka says he had no problem with the insurance department going after refunds but accuses Bomer of cutting a deal that allowed the companies to undercut the lawsuit.
"Bomer said to us, 'I want to make something perfectly clear: I don't like class actions, and I don't like class action lawyers,' " Veselka says. "We were the initiating and motivating factors for the companies to deal with the insurance department in the first place. And then he allowed the companies to structure the deal in a way that led to our lawsuit being pulled out from under us."
Veselka says the law firms that worked on the class action spent more than $1 million in legal time on the case and have nothing to show for it. Bomer sheds no tears, saying he was trying to avoid a repeat of the double rounding case in which lawyers got rich but consumers did not.
"What you're hearing is just bellyaching by the trial lawyer involved," he says. "In those kinds of lawsuits, I don't think the lawyers are thinking about the best interests of the consumers. They're only worried about what they'll get paid."
As insurance commissioner, Bomer did not reserve his ire exclusively for trial lawyers. In 1998 a chorus of consumer advocates complained that insurers' auto rates failed to reflect massive profits the industry was enjoying, mostly from changes in tort laws, which reduced the cost of liability claims. To the pleasant surprise of the consumer advocates, Bomer ordered his staff to examine the rates of the 300-plus insurers to see if consumers were being fleeced. It was a momentous move considering that in Texas individual insurers have great flexibility in setting their rates as long as they fall within a specified wide range. Once Bomer began his review, companies began sweating.
He threatened some of the state's largest companies that unless they lowered rates, he would challenge them before a panel of administrative law judges, an embarrassing and costly scenario for insurers.
"The various insurance companies did not want to put themselves in a situation where someone else was determining their rates," says John Hageman, Texas executive director for Farmers. It dropped its rates 3.9 percent to get Bomer off its back. "Several carriers, including Farmers, capitulated. We had our own reasons for capitulating, but I can definitely say that the forcefulness of Bomer caused it to happen. Someone of a lesser personality could not have got it done."
As Mary Keller puts it, nothing about Bomer's personality is mellow.
"He's abrupt, and there's a great intensity to him that can be terrifying to those who deal with him," she says. "Yet he has this huge tender streak."
Bomer can somewhat relate the struggles of his own family to those that live in colonias. He remembers the modest house he grew up in on the 50-acre family farm near Montalba, in East Texas. The family of four grew peas, corn, tomatoes and a little cotton. The house had no running water and no bathroom. As a boy, Bomer's job was to draw water from the 60-foot well. He struggled every day with his scrawny adolescent arms to lift the bucket by pulling a heavy metal chain across a pulley. Bomer recalls the day his father replaced the chain with a lightweight rope as one of the happiest days of his youth.
His family lost the farm because of financial problems shortly before he graduated from high school and left home. He eventually moved to Houston, where he worked during the day and earned his degree in business management by attending night classes at the University of Houston. He worked in marketing and sales for IBM from 1965 to 1974 and became senior vice president of East Texas National Bank in Palestine. He served two stints in the Texas House before Bush plucked him away.