On the telephone, Betty Tamisiea doesn't sound angry.
She speaks softly, as if embarrassed to utter words that she knows will later appear in a newspaper. Maybe she is simply nervous because she has never spoken to a reporter before, or because there are two public-relations specialists "on her side" who are also on the line, carefully monitoring her every comment. She chooses her words carefully. Her tone is childlike and utterly without malice.
"I'm just one of those people who usually procrastinate until election day to figure out how I'm going to vote," she says sweetly.
It's a far cry from the self-assured Betty Tamisiea that one million Arizonans encountered when they opened their mailboxes last month to discover a vitriolic personal letter from the self-described Phoenix "homemaker, wife and mother of three growing children." On the envelope was a biting typewritten teaser:
Dear Mr. Jones, I'm writing to warn you about a consumer-fraud scheme . . . a scheme that will rip you off.
The letter begins in a conversational, chat-over-coffee style. It is dated "Monday morning" and opens with the warm salutation "Dear Friend." But it quickly shifts to a no-holds-barred attack on the evils of Proposition 201, an auto-insurance initiative on the November 6 ballot that Tamisiea claims is a put-up job by "politicians and some TV lawyers . . . who lie and cheat us."
On its face, the letter is a sincere, impassioned plea from a concerned citizen, a warning that there is a plot afoot by trial lawyers and politicians to fleece the populace.
"This isn't fun for me. I have a family to take care of, and I don't like to get used," Tamisiea writes. "I resent it when a politician lies to me and uses me as a means to his own political ends."
Remember, Tamisiea urges, the "TV lawyers and the politicians who are pushing for the passage of Prop 201 are not our friends . . . Vote no on Prop 201."
The question is, who are our friends? One way to find out--especially when it comes to insurance--is to read the fine print.
On the back of the letter, in very fine print indeed, is the notation, "Paid for by People for Fair Insurance," an Arizona political action committee financed to the tune of $1.2 million by six of the nation's largest insurance companies.
A variety of insurance-industry front groups is waging a war against Prop 201 and in favor of Props 105 and 203, the so-called "no-fault" or "consumer choice" issues on the November 6 ballot.
As it turns out, the insurance industry's front groups not only paid for the letter, they bought Betty Tamisiea as well.
Tamisiea is indeed a Phoenix housewife and mother. But she's not really a militant who put down her apron so she could lead a ragtag group of angry citizens.
Yes, she's the "co-chair" of People for Fair Insurance. But she doesn't have a desk at the group's headquarters. A former employee of a Valley insurance agent, she admits she was approached by "insurance company interests." She agrees with the letter but confesses that she didn't write a word of it. And she admits she was paid for her signature.
"I was asked to sign the letter--and some money was exchanged," Tamisiea says hesitantly. Then Bill Sileo, the campaign manager for People for Fair Insurance, quickly breaks in. "Betty is being paid a stipend for her work for us," he says, "but I want to point out she wasn't paid directly for this letter--are you going to print this?"
IN THE WAR of auto insurance, things aren't always what they seem.
The insurance industry's campaign against Prop 201 and in favor of Props 105/203 is one of disinformation cloaked in shadowy political tactics and blatant untruths.
"There are probably only a few thousand people in Arizona right now who understand these auto-insurance propositions well enough to cast an informed ballot on them," says Ralph Nader, who visited the Valley earlier this month at the request of no-fault opponents. "And most of those are lawyers or insurance salesmen. What does that tell you?"
At stake is the most radical auto- insurance reform plan ever proposed in the nation. Propositions 105 and 203, the "no-fault" measures that the insurance industry is peddling as "consumer choice," could have the biggest impact on consumers of any new state law in the past decade.
There would be fewer personal-injury lawsuits, but the money people would collect from insurance companies would be less. To compensate for that sour note, there would be a limited, one-time rate rollback.
If two drivers with no-fault policies smack into each other, each driver's own insurance company would pay for that driver's medical, wage and property losses up to the limits of the policy. It wouldn't matter who is to blame, and nobody would go to court to sue for damages.
The insurance companies' idea is to avoid paying huge settlements and spending millions on court costs. More than 7,500 lawsuits springing from auto accidents wound their way through the Maricopa County courts last year. Insurance companies claim this forces rate hikes and profits suit-happy trial lawyers.
Confusing the issue is the presence of Proposition 201, thrust onto the ballot by longtime insurance-industry nemesis John Kromko. (Kromko mounted a petition drive after he couldn't convince his fellow lawmakers to regulate the auto-insurance industry.)
Prop 201--a scary prospect for insurance companies--would require a 20 percent auto-insurance rate reduction, give the state authority over rates and set up a watchdog agency.
Arizona's motorists are unhappy about their auto-insurance rates, which are eleventh highest in the country and have doubled since 1982. The insurance industry, pleading that its profits are declining, claims to have a solution--and that scares personal-injury lawyers. The situation has put Arizona on the front lines of a national battle.
Before they're done, the two sides will have spent $5 million to create a web of front groups, most with cheery- sounding names and acronyms that feature happy but meaningless phrases like "fair insurance" and "citizens' action." But the only thing the slew of organizations on either side seems to have accomplished is to baffle people. Sometimes, however, the sniping is downright entertaining.
"The whole thing boils down to choice," says Ron St. John, campaign manager for the no-fault advocacy group Consumer Choice Coalition. "Even if no-fault is the stupidest thing a consumer could buy, what's wrong with giving people a choice? People are allowed to buy Yugos, and that's stupid."
His opponent, Jim Roush of Fairness and Accountability in Insurance Reform, a group backed by the trial lawyers, calls Props 105 and 203 "an insurance company wet dream."
Trial lawyers fighting insurance salesmen may be like King Kong dueling Godzilla to see who gets the first chance to devour us. But at least the lawyers are at least up-front about their involvement.
"Sure we get financing from the trial lawyers, in state and out of state, to fight no-fault insurance," Roush says. "We've never made a secret of it. That's the difference between us and them. This is just 1986 all over again."
Four years ago, the insurance industry-backed Prop 103, which it called "tort reform," set out to amend the state constitution to limit the right of juries to determine awards for pain and suffering or punitive damages in cases like medical malpractice. The plan was to cut down on cases we've all read about, like the man who suffered a slight ankle sprain after falling from a ladder but became a tycoon after linking up with a greedy lawyer who sued the ladder company for millions. The insurance companies tried to convince the public that such abuses were common and that the cost of fighting those cases contributed to high insurance rates.
It turned out, of course, that the story of the man on the ladder was apocryphal. In the years 1980-86 Arizona juries had ruled in only four cases where more than $1 million was awarded for medical malpractice, and all were justified.
The insurance companies lost that battle. But they're back in business in 1990 with tort reform on wheels. They claim that auto-insurance rates are rising because trial lawyers are suing for grandiose sums.
How important is it to the insurance companies that no-fault sell in Arizona? According to national advocates like Paul Ford of New Start, a group funded by the insurance companies, Arizona will be the "litmus test for future similar initiatives. If it works there, it may work everywhere."
IN PRINCIPLE, no-fault sounds like a square deal.
Replacing extravagant jury awards with reasonable compensation for actual damages leads to lower rates, meaning that the 40 percent of Arizona drivers currently without insurance could afford it, thus protecting everyone.
And in any event, if a driver wants to reserve the right to sue for damages, he can keep the standard liability policy now offered. Best of all, greedy attorneys end up with less of your hard-earned shekels.
But there are faults with no-fault.
Under no-fault, the benefits paid by insurance companies would be far less than what motorists are accustomed to and wouldn't begin to cover the medical bills prompted by serious injuries.
Prop 203 calls for rates to be lowered by 20 percent during the first year of no-fault in Arizona. But after the first year, there would be nothing to prevent the insurance companies from hiking the rates back up to current levels or higher. While rates would temporarily decline, the industry would stand to save millions immediately from lower legal costs and benefit payments.
In addition, "good driver discounts" and higher rates for drivers who practice demolition-derby techniques would be things of the past. While all no-fault drivers would collect the same benefits, those with poor driving records would pay the same for insurance as those with no rap sheets. The failure to reward good, responsible driving and punish recklessness through higher insurance rates, no-fault opponents say, is, well, un-American.
"It's simply social anomie," says Jon Hinz, media coordinator for Citizens Against No-Fault and former executive director of the state GOP. "`It's not my fault, it's not your fault. Let's just forget the whole thing.' Except that there are bills to pay, and the insurance company is going to sneak out on the whole thing."
Under no-fault, you could sue another motorist if your actual damages, in the case of medical bills and lost wages, exceeded $15,000. In practical terms, you probably wouldn't. Why? You would have to bear the up-front cost of hiring an attorney and suing. If you won a suit against another no-fault policyholder, his insurance company wouldn't be liable for a cent. He would--and he might not have the money to pay you.
Here's a scenario: A no-fault policyholder could be sued by a traditional policyholder--and the no-fault driver would have no insurance coverage to protect him from possibly devastating jury-imposed financial losses. "We're going to have a whole bunch of people running around," Hinz says, "who think that because they have no-fault insurance that they can't be sued, or are protected if they are. But it's just not so."
Ron St. John, the driving force behind the Consumer Choice Coalition, listens politely to the litany of criticisms, only to dismiss them with a wave. "Look, what this comes down to is choice," he says. "Why not have it available? If this passes, and you don't want to have a no-fault policy alone, you don't have to."
That approach has become the cornerstone of the no-fault campaign. But as Hinz points out, the "choice" St. John promotes could be an expensive one. Under Prop 203, in order to upgrade your mandatory no-fault policy to include traditional liability protection, you would have to pay extra. That means that drivers, in order to keep the right to sue and to be protected in case of a lawsuit, will be paying more for the same protection they currently have. And there is nothing to prevent insurance companies from pricing the traditional policies out of the reach of many drivers.
Hinz says the no-fault backers are singing the "choice" refrain in an attempt to lull consumers until after the election, when they will awaken to find no choice at all.
"This `choice' thing is a deception, a misnomer, and they're doing it because clearly they don't have specific answers to the questions about this thing," he says. "Why don't they just answer why they can cancel your policy at any time, why your life is only worth $5,000, why you can still be sued and lose everything you own?
"They can't answer those questions, because there are no good answers. So they decided to get deceptive and play dirty."
Then, there's no-fault's track record. Of the ten states with the nation's highest auto-insurance rates, eight have no-fault systems. Of the ten lowest rate-paying states, only two are based on no-fault. Proof enough, say opponents, that the system just doesn't work. Ron St. John says the only thing it proves is that previous no-fault experiments haven't gone far enough.
"Those states with high rates have no-fault systems that have been tinkered with by lawyers and state legislatures so that they aren't really even no-fault systems anymore," he says. The "tinkering" he refers to often is a provision called "a threshold," present in most of the 26 states that have no-fault. The provision allows some lawsuits between no-fault holders if a person suffers a permanent or disfiguring injury--or death--that results in medical costs over a threshold amount.
Kentucky supposedly is the state with the no-fault plan most similar to Arizona's proposed one, but in Kentucky no-fault motorists can file lawsuits if their medical bills push past $1,000 or if they are permanently disfigured. Arizona's no-fault plan has no threshold for serious accidents, St. John says, so there won't be any of those lawsuits that cost insurance companies millions to fight every year. (He says that will help keep rates down.)
The lack of a threshold makes Prop 203 the most radical no-fault plan ever proposed. Hinz puts it this way: "What this proposition does is limit the value of your life, and your wife and child's, to about $5,000 in death benefits. You can't go to court to fight it, so there will be no lawsuit to get some kind of reasonable compensation for loss of loved ones or permanent injury, no matter how negligent the driver who killed or injured you was. There is no appeal."
HOW DID NO-FAULT get on the ballot in Arizona? It all began in California in 1988.
Six of the nation's largest insurance companies, through their national mouthpiece group New Start, spent $30 million on a losing effort to pass a no-fault measure. "The lesson of California," one no-fault staffer says, "is that people hate lawyers, but they hate insurance salesmen almost as much."
The new plan was twofold: Replace the "no-fault" moniker with the more appealing word "choice," and distance future measures from the insurance industry.
Arizona New Start organized in the fall of 1989 for an assault on the legislature, denying from its beginning that it was controlled by the insurance industry. After failing to get lawmakers to take action, the group used the new strategy of "consumer choice" to collect more than 160,000 signatures, forcing the issue on the upcoming ballot.
When Secretary of State Jim Shumway's office issued the ballot language to be used on Props 105 and 203, utilizing the phrase "no-fault," the Consumer Choice Coalition filed suit to get the wording deleted and replaced with alternative "choice" language. In August, however, a Maricopa County Superior Court judge approved Shumway version.
The no-fault proponents have had more success in distancing their campaign from the insurance companies. This complex effort began with a list of Prop 203 endorsements in the secretary of state's election publicity pamphlet, which details all the ballot initiatives. The no-fault advocates stuffed the booklet with "advisory" no-fault pitches from groups like Arizona Sheriffs for Consumer Choice, Mayors Who Support Consumer Choice and Arizona Community Leaders Who Are For Consumer Choice. In reality, the no-fault groups were merely endorsement letters paid for by the Consumer Choice Coalition.
"They really weren't campaign organizations, but were propaganda sent in by a special interest to try to influence people," says Dana Larsen, director of the watchdog group Arizona Common Cause. "It clearly corrupted the purpose of the informational pamphlet."
St. John explains that what has come to be known as "the pamphlet-stuffing incident" was simply a mistake. "That got really blown out of proportion," he says. But that's all he'll say about it.
Such dodging is typical among the earnest young politicos who staff the six insurance-industry front groups. Like St. John, a thirtyish former aide to Barry Goldwater who returned from a teaching stint in Central America to plug no-fault, they are evasive about answering specific criticisms. But they are willing to talk at length about the "proletarian" roots of their crusade.
John Alexander, who came from California to work for the Consumer Choice Coalition, insists that the group is a grassroots consumer advocacy organization with thousands of supporters and contributors statewide.
"If Mother Teresa was to come to Arizona and say we need something else besides the traditional tort system, they would immediately say she was bought off by the insurance companies," he says, shaking his head. "Our opponents are better conspiracy theorists than Mecham ever was."
But it isn't a conspiracy theory. It's a matter of public record.
Financial statements filed with the secretary of state reveal the fingerprints of major insurance companies are all over the "consumer choice" campaign.
The six groups supporting no-fault or fighting Prop 201 all are supported by huge insurance industry donations. The largest of the bunch, Arizona New Start, People for Fair Insurance, the Arizona Consumer Insurance Coalition, and the Consumer Choice Coalition (CCC), share a whopping $3.8 million in mostly industry-provided funding.
Arizona New Start and the CCC, which share the same leadership and are essentially the same group, claim thousands of supporters adding to a nearly $2 million war chest. But the total contribution of the 3,300 "dedicated supporters" adds up to only a few thousand dollars. The rest has been donated by the insurance companies through the national New Start.
No-fault opponent Hinz charges that Arizona New Start/CCC spent $200,000 on a phone bank just to generate a list of supporters that could be trotted out to show "citizen support." It cost more money to do this than what was raked in.
"They spent ten times what they raised just to contact those people so they would have a front for their insurance-company money," Hinz says. Alexander doesn't deny the charge but defends his group's claim that it is "grassroots oriented."
"I don't think it's Pollyannaish to note that there are 3,000 individual contributors out there," he says. "They may be a small percentage of the whole pie, but they have made an investment in the project, and that's important."
JOEL RUDD, A LAW STUDENT at Arizona State University who is a founding member of Arizona New Start and a devoted preacher of the no-fault grassroots gospel, dismisses the charge of insurance-company involvement in New Start/CCC. He claims the Props 105/203 groups were organized spontaneously by groups of consumers concerned about the mounting cost of auto insurance.
"This is clearly a consumer movement," Rudd says. "We went shopping for funding after we organized, so it would be wrong to say that we were set up by the insurance companies or anything ridiculous like that." As evidence, Rudd is careful to point out that the Arizona no-fault drive is supported by "only five or six insurance companies," out of the 4,000 to 5,000 companies in business nationwide.
It's true there are only six insurance companies financially supporting no-fault. But they are a very special six.
The companies--USAA, Allstate, Farmers, Nationwide, GEICO, and State Farm--are among the largest insurers in the country, and have each cut six-figure checks to the organizations for a total of more than $1 million.
Perhaps the most bizarre claim made by no-fault backers is that they are true consumer groups because they are being outspent and outgunned in the TV/publicity war by the groups backed by trial lawyers. "We lose a half point in the polls every day," St. John says, "because we can't keep up with their spending."
But the $3.8 million raised by the no-fault/anti-Prop 201 groups is twice the war chest amassed by FAIR, Citizens Against No-Fault and the other enemy organizations. And the insurance- industry total doesn't even include the cost of millions of letters sent by individual companies like State Farm to customers, a direct form of no-fault advertising that has bombarded state mailboxes in recent weeks.
No-fault backers aren't hurting for money or exposure. Their newest TV commercial, featuring a legion of black-suited lawyers marching like automatons over helpless victims and then enjoying the spoils of war over a drink by the pool, has aired regularly in Phoenix and Tucson. The groups have sent out several mass mailings like the Tamisiea letter to millions of Arizonans, published four different versions of a full-color tabloid newspaper--each designed to reach different constituencies, like the elderly and yuppies--and hired a crack staff of young political advisers and top local and national PR firms.
Of course, the opposition isn't exactly destitute. Trial lawyers in and out of Arizona are lining up, checkbooks in hand, to battle no-fault.
"Quite simply, I'm out of business if no-fault passes," says one Valley attorney whose firm does a high volume of accident-injury cases. "Beyond the fact that drivers are going to get screwed, so am I."
Are we supposed to cry? No, but opponents of no-fault, who readily acknowledge that lawyers are the source of their funding, point out that just because something is bad for lawyers, it isn't necessarily good for the public.
"The difference between us and them," says Jon Hinz of the no-fault opponents, "is that we've never denied having the support of trial lawyers. We do, and so what? That doesn't make no-fault a better idea."
FAULT feature
end of part 2
As it turns out, the insurance industry's front groups not only paid for the letter, they bought Betty Tamisiea as well.
At stake is the most radical auto-insurance reform plan ever proposed in the nation.
"What's wrong with giving people a choice? People are allowed to buy Yugos, and that's stupid."
"There are bills to pay, and the insurance company is going to sneak out on the whole thing."
It's true there are only six insurance companies financially supporting no-fault. But they are a very special six.
The TV commercial features black-suited lawyers marching like automatons over victims, then enjoying the spoils over a drink by the pool.
