Groups led by insider trader, child abuser got Obamacare Co-Op loans
Millions of Americans may get their health insurance coverage through co-operatives being established under a $2 billion Obamacare program that has been shielded in secrecy and is now under investigation by the House Committee on Oversight and Government Reform. (AP Photo)Federal officials approved Obamacare loans totaling $127 million last year to groups led by individuals whose backgrounds included an insider trading conviction and another with a long history of child sexual abuse, The Washington Examiner has learned.
The loans -- which must be repaid at a future date -- are to fund health insurance co-operative startups in Louisiana and Maine. They will compete with private sector health insurance providers under a $2 billion Obamacare initiative to fund 24 co-op startups nationwide.
Both the Maine and Louisiana co-ops are among 13 under investigation by the House Oversight and Government Reform Committee headed by Rep. Darrell Issa, R-Calif.
In the Maine case, federal officials approved a $62 million loan to Maine Community Health Options even though its president had recently committed suicide after state police accused the co-op's president of molesting teenage boys for decades.
Despite extensive media coverage of the scandal, federal officials approved the loan five months before Maine State Police made public a 104-page report detailing the abuse allegations over a 36-year period.
The Louisiana case involves Louisiana Health Cooperative and CEO Terry Shilling. The Securities and Exchange Commission sanctioned Shilling in 1998 for "insider trading" as a health care executive.
The Department of Health and Human Services' Center for Consumer Information and Insurance Oversight manages the loan awards.
In the Maine case, the Rev. Bob Carlson took his life after state police confronted him with the sexual abuse allegations.
Carlson had been widely respected as a civic and religious leader in Maine for many years. He served as a senior pastor at a church, chaplain at a local university and deputy sheriff. He was president of the Maine Primary Care Association and the Maine Community Health Options co-op.
But that image was shattered by the state police report's description of how Carlson took advantage of his positions to approach young boys from ages 11 to 18.
Officials also discovered after his suicide that Carlson had lied on his resume about his credentials, falsely claiming a bachelor's degree from the University of Maryland, as well as being a New York Theological Seminary graduate and having taken theological training at the Episcopal Theological Seminary in Cambridge, Mass.
Kevin Lewis, CEO of the Maine co-op, told The Washington Examiner that he informed federal officials four days after Carlson's suicide. The Maine loan was approved by CCIIO in April 2012, but the police report on Carlson's long history of abusing teenage boys only became public in August of that year.
Lewis said CCIIO did not consider the scandal to be a problem. "It was not really an issue in terms of the standing of our application," he said.
Spokesmen for CCIIO declined to comment.
In the Louisiana case, Schilling was sanctioned for insider trading while working at Georgia-based HealthSource Inc., where he bought 1,900 shares of that company's stock shortly after receiving a "confidential briefing" about an impending merger with CIGNA, according to the SEC.
Schilling was sanctioned and fined $10,000. Shilling left HealthSource prior to the merger, according to a CIGNA spokesman.
Even so, Schilling's group received a $65 million loan.
Neither Schilling nor CCIIO responded to a reporter's multiple telephone calls and emails seeking comment.
Judy Nadler, a government ethics expert and former mayor of Santa Clara, Calif., said the Obamacare co-op loan program needs much more transparency.
"How can individuals who have some negative experiences and scrapes with the law, how is it they could come to the top of the order when it comes to handing out the money?" she asked.
Tom Miller, a federal health expert at the American Enterprise Institute, doubts CCIIO did due diligence reviews. "What is the screening criteria, if any, or on what basis are these awards based?" he asked.
The Washington Examiner's previous stories on the Obamacare co-ops are here, here, here, here and here.
Obamacare co-ops being created behind closed doors
Secrecy shrouds President Obama's $2 billion
program to launch 24 new co-ops designed to compete with private
insurance companies under the chief executive's landmark health care
An obscure agency in the U.S. Department of
Health and Human Services has awarded loans of all but $100 million of
the funds appropriated under President Obama's health care overhaul for
the new organizations, known as Consumer Operated and Oriented Plans.
That worries some in Congress, including Rep. Marsha Blackburn, R-Tenn., who told The Washington Examiner that
"we want to know, what's their due diligence, what's their process, how
are they arriving at these decisions? What are the protections in place
for policyholders? Where are the protections for the U.S. taxpayer?"
The Center for Consumer Information and
Insurance Oversight, or CCIIO, approved applicants for the federal money
even though few have any experience in providing health insurance to
consumers. Under the law, the loans must be repaid.
CCIIO officials have not made public their criteria for evaluating loan applicants. Those officials declined to be interviewed.
The co-ops were proposed during the health
care reform debate in Congress by then-Sen. Kent Conrad, D-N.D., as an
acceptable alternative to the single-payer public option preferred by
many Senate Democrats.
A 15-member panel set up by Obama's health
care reforms to oversee the loans held only three public meetings, then
disbanded 21 months ago. HHS paid consulting firm Deloitte $2.4 million
to review loan applications, according to USAspending.gov. A Deloitte
spokesman declined to comment.
The lack of openness became public last
December when CCIIO denied the loan application of Illinois-based
SimpleHx. "I really don't know why they choose one over the other," Coe
Schlicher, a SimpleHx principal, told The Washington Examiner. "We have not found a way to gain access to the review process notes or the results of their scoring system."
Congress also has been kept in the dark. In an
April 2012 letter, four leaders of the House Energy and Commerce
Committee demanded that HHS produce information about the eligibility
standards and decision-making process used for evaluating co-op loan
And in May 2012, Sens. Orrin Hatch, R-Utah,
and Michael Ezni, R-Wyo., asked for details about the program from HHS
Secretary Kathleen Sebelius. Sebelius has responded to neither request.
Congressional leaders point to a 2013 Office
of Management and Budget analysis that projected that as many as 43
percent of the co-ops could default. If that happens, taxpayers will
foot the bill, as they did with bankrupt companies like Solyndra under
Obama's clean energy subsidies.
Read More: The Washington Examiner
Failed Iowa entrepreneur awarded $112 million for Obamacare co-opsFederal officials awarded $112 million to fund new Obamacare health insurance cooperatives in Iowa and Nebraska to a group whose politically connected chief financial officer recorded at least three business flops since 2009.
CoOportunity Health, an Ames, Iowa, group founded by CFO Stephen Ringlee, received the federal funds as a tax-free loan from the Center for Consumer Information and Insurance Oversight in the U.S. Department of Health and Human Services.
The loans are part of an Obamacare initiative that includes $2 billion to fund groups selected behind closed doors by the CCIIO. Loans have been awarded to create co-ops to compete with private health insurers in 24 states so far.
The Washington Examiner recently exposed more than $500 million in CCIIO loans awarded to politically connected individuals to create co-ops in New York, New Jersey, Oregon, Illinois and Ohio.
The White House Office of Management and Budget has projected that as many as 43 percent of the startup co-ops will fail.
Ringlee appears at first glance to be a financial entrepreneur who could help emerging health insurance cooperatives. CoOportunity's website boasts that Ringlee "has more than 30 years of senior financial experience [and] 20 years of entrepreneurship and venture investing. ..."
But there is much more to the Ringlee story. He founded YourVive, an Amazon-style online green shopping club, in 2009, as well as American Food Venture Forum and International Venture Forum on Food, both in 2007.
YourVive was intended to be a high-profile "green" online shopping club, according to CoOportunity's website. A promotional brochure for the startup described YourVive as an "online marketplace that will offer green products at affordable prices."
Read More: http://washingtonexaminer.com/failed-iowa-entrepreneur-awarded-112-million-for-obamacare-co-ops/article/2525456