B: IA Governor's Latest Appointee Illustrates Biased Hiring Pattern

Governor Terry Branstad recently named Nick Gerhart to be Iowa's next insurance commissioner. Gerhart will take over the position from Susan Voss at the end of 2012.

The insurance commissioner's work next year will be important as Iowa implements the federal health insurance reform law or designs its own alternative. For this post, though, I'm more interested in what this appointment reveals about Branstad's governing style.
First, some background on Gerhart. The governor's office posted his resume here and summarized his qualifications in a June 14 press release.

 

Gerhart will begin work within the department this fall, and will fully assume responsibilities from current director Susan Voss at the end of this calendar year.

"I want to thank Susan Voss for her great service to the state of Iowa," said Branstad. "Nick Gerhart is a bright, talented executive who understands the vital importance of this industry in our state. Nick understands the challenges within the industry as well, and is a problem-solver who will excel in this position."

Gerhart currently serves as the vice president of compliance and regulatory affairs at the Sammons Financial Group. Previously, he served as the vice president of compliance communications and associate general counsel at American Equity Investment Life Insurance Company.

"I am excited to serve the people of Iowa in this new position," said Gerhart. "The insurance industry has become a pillar of our Iowa economy. I am thrilled to be leading a division that is not only recognized for their ability to protect the public, but also their ability to work with companies critical to our economic success."

Gerhart, 37, has a Bachelor of Arts in History, where he graduated cum laude from the University of Northern Iowa. Gerhart earned a juris doctor from the Saint Louis University School of Law in 2001, and went on to attain his Masters of Health Administration in 2002. His full resume can be viewed here.

"Susan Voss did fantastic work leading the Iowa Insurance Division," said Lt. Gov. Kim Reynolds. "I am excited to have Nick Gerhart continue that work, and bring fresh, new ideas in accomplishing the mission of the division."

Gerhart will have no trouble being confirmed by the Iowa Senate. He sounds qualified for the job, and he's acquainted with many legislators by virtue of his work as chair of the Greater Des Moines Partnership's Government Policy Council. In any event, the Senate has confirmed all but a handful of Branstad's many appointees.

Three things struck me about Branstad's choice. First, he showed yet again that he thinks regulators should come from the industries they are supposed to oversee. In general, Branstad doesn't like government regulations of business. Private entities have the leading role on the governor's informal group working on an alternative to the 2010 federal health care reform law. I don't expect the insurance commissioner's office to be a bulldog consumer advocate under Gerhart's leadership.

Second, Branstad stuck to his pattern of not advertising positions or interviewing multiple candidates before making a senior hire. Gerhart told the Des Moines Register that he was approached about replacing Voss.

 

A Branstad spokeswoman said the governor didn't seek other candidates for the job. "This appointment was a targeted process in which Nick was identified early, and specifically recruited for this position. The position was never advertised," she said. The salary range for the position is $84,240 to $128,890 annually.

I don't know of any large organizations that routinely hire senior staff without doing any kind of job search. Who knows how many other outstanding candidates might have applied to become the Iowa insurance commissioner? Gerhart is a lot more qualified for his new job than retiring Republican State Representative Steve Lukan is to run the Office of Drug Control Policy. Still, hand-picking almost every department and division head isn't a leadership style I would recommend to anyone, even a governor with good instincts.

Third, while announcing Gerhart's appointment, Branstad and Lieutenant Governor Kim Reynolds went out of their way to praise Voss. Governor Tom Vilsack named Voss insurance commissioner in 2005. Four years later, Governor Chet Culver kept her on for a second term. Branstad wasn't as favorably inclined toward any other holdovers from the Vilsack and Culver administrations. He kept on the Department of Transportation director temporarily during the 2011 legislative session, but he asked all the other department heads from the Culver era to resign.

Voss' job was a little different, in that Iowa law assigns a fixed term to the insurance commissioner. However, that didn't stop Branstad and his staff from trying to force Iowa Workers' Compensation Commissioner Chris Godfrey out the door years before the end of his fixed term. Godfrey has filed a pending defamation and discrimination lawsuit against the state, Branstad, and several other officials. He's still getting the cold shoulder, Cityview's Civic Skinny reported earlier this month.

 

As Workers' Compensation Commissioner, Godfrey has a budget of $2.26 million, which was set by the Legislature this year. The legislation says Godfrey had to spend $153,000 for salary, benefits and the costs of hiring a Chief Deputy Commissioner. Branstad item vetoed that requirement - even though in his last go-round as Governor his commissioner had three chief deputies - and said the $153,000 should revert to the state. Those who disagree with the governor, and that includes Godfrey, think the veto simply means Godfrey doesn't have to hire a chief deputy but gets to keep the budgeted money to use as he pleases.

Then last week the Department of Management called over to Iowa Workforce Development and began asking about some carryover funds, appropriations and miscellaneous receipts not used last fiscal year. They did not ask about similar funds in the office of the Labor Commissioner, whom Branstad appointed and likes.

"I'm not very happy about what's going on here," Kelly R. Taylor, the bureau chief for financial management at Iowa Workforce Development, said in an e-mail to Wahlert. "I do not believe I would be asked questions about Worker's Compensations carryover if there wasn't a pending lawsuit....I'm surprised that DOM would be involved in asking questions that could lead one to believe there's bias involved..." Taylor, incidentally, was the whistle-blower in the CIETC doings of 2006.

A few months ago, the Governor and Lieutenant Governor had a retreat for all state agency heads and division directors. Godfrey apparently was the only office holder not invited. "I asked Ms. Wahlert about the event and why I was not allowed to attend when other similarly, non-elected office holders were invited," Godfrey said in his complaint to the Civil Rights Commission. "Ms. Wahlert responded by informing me that I was not to attend the event."

Civic Skinny thinks the salient fact is that Godfrey is gay, while Voss and Labor Commissioner Michael Mauro (another fixed-term appointee) are straight. I doubt sexual orientation has anything to do with the contrast between Branstad's attitude toward Godfrey and the others. I see this as straightforward pro-corporate bias. The governor admitted last summer, "business groups in Iowa [...] told me in no uncertain terms that they were not happy with the direction [of the Workers Compensation office] under Mr. Godfrey." Therefore, he pursued a "new direction" and punished Godfrey for refusing to step aside.

In contrast, Voss has long had a reputation as a corporate-friendly regulator. Here's what she told the Des Moines Register about Gerhart's appointment:

 

"Nick is a great guy. I worked with him on issues affecting Iowa carriers during the Dodd-Frank legislative debate in Washington D.C. Our work was bipartisan. He is known by our office and I expect a very smooth transition."

If Voss hadn't lobbied Congress on behalf of Iowa insurance companies, I doubt she would have peacefully served out her fixed term. Anyone known as a thorn in the side of the insurance industry probably would have come under the same kind of pressure as Godfrey. Heavy-hitters in the business community clearly were not calling for Voss' head on a platter. Nor would they have any reason to oppose Mauro, who did a superb job as secretary of state.

Any relevant comments are welcome in this thread.

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