This is rich. White House smear merchants and their nutroots water-carriers are decrying “corporate lobbyists” funded by the evil health care industry. Referring to Rick Scott, chairman of Conservatives for Patients Rights and former Columbia/HCA executive, White House spokesman Robert Gibbs jeered: “I think you’ve got somebody who’s very involved, a leader of that group that’s very involved in the status quo, a CEO that used to run a health care company that was fined by the federal government $1.7 billion for fraud. I think that’s a lot of what you need to know about the motives of that group.”
Just to make the Gibbs’ moral equation clear:
1) Ties to the health care industry = suspect motives.
2) Ties to health care companies involved in government settlements = suspect motives.
Keep this in mind as you read two excerpts below from Culture of Corruption about the legal and financial work of Attorney General Eric Holder and health care czar Nancy DeParle. In Obama World, some health care industry ties are less suspect than others.
From Chapter 4: Meet the Mess: Inside the Crooked Cabinet…
Among the other eyebrow-raising cases [Attorney General Eric] Holder took on at Covington & Burling:
*Forging a massive settlement for Purdue Pharma, manufacturer of the addictive painkiller OxyContin, with the state of West Virginia in 2004. The state accused the drugmaker of deceptively marking OxyContin as safe and effective for minor pain. The firm’s marketing practices, the state maintained, led to West Virginia users becoming addicted to the drug. State attorney general Darrell McGraw Jr., a Democrat, filed suit. In an article entitled, “Why Eric Holder Represents What’s Wrong with Washington,” liberal columnist David Corn described Holder’s pivotal role in negotiating a settlement that spared executives a criminal trial:
This suit was a serious threat to the drugmaker, and it eventually called in Holder. And in November 2004, the morning that the case was about to go to trial, Holder helped negotiate a settlement. Working in the judge’s chambers in West Virginia, he forged an agreement under which the firm would have to pay $10 million over four years into drug abuse and education programs in West Virginia. Purdue would not have to admit any wrongdoing. (Days earlier, the firm had offered the state about $2 million to settle; McGraw had turned down Purdue and had not bothered to produce a counter-offer.)
The settlement was a big win for the company. Ten million dollars was a piddling amount compared to what Purdue was reaping from OxyContin sales. More important, this settlement helped keep the lid on the firm’s criminal activities. There would be no trial—and no public release of documents or testimony about the company’s actions, which were already being investigated by federal prosecutors. In late 2002, the feds had begun an investigation of Purdue, with the first of what would be nearly 600 subpoenas for corporate records related to the manufacturing, marketing, and distribution of OxyContin.
In May 2007, the company and its three top executives pleaded guilty to federal charges of fraudulently marketing OxyContin by claiming it was less addictive, less subject to abuse, and less likely to cause withdrawal symptoms. Purdue and the three execs agreed to pay fines of $634.5 million.
*Brokering a settlement for pharmaceutical kingpin Merck, which had been besieged by multiple state lawsuits over Medicaid overbilling and doctor kickbacks involving four popular drugs. Merck admitted no wrongdoing, paying $671 million to make whistleblowers, state probes over their pricing, and bribery charges go away.
From Chapter 5: Backroom Buddies: Dancing with the Czars…
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Despite President Obama’s loud denunciations of the revolving-door lobbyist culture in Washington, [health care czar Nancy] DeParle’s industry ties didn’t bother the White House in the least. DeParle served as an investment advisor at JP Morgan Partners, LLC, a private equity division of a private equity division of JP Morgan Chase & Co; sat on the board of directors at Boston Scientific Corporation and Cerner Corporation; and held directorships at Accredo Health Group Inc. (now owned by Medco Health Solutions Inc.), Triad Hospitals (now part of Community Health Systems), Guidant Corporation (now part of Boston Scientific), and DaVita Corporation, among others. In all, she sat on at least 10 ten boards while advising JP Morgan and working as managing director at a private equity firm, CCMP Capital. From 2002 to 2008, while holding all those titles, DeParle also served as a member of the government-chartered Medicare Payment Advisory Committee (MedPAC), an influential panel that advises Congress on what Medicare should cover and at what price.
In 2006 and 2007 alone, DeParle collected at least $3.5 million from fees and the sale and awards of stock from health-care businesses whose businesses will likely fall under her jurisdiction, according to the Chicago Tribune. That amount likely represents a small portion of DeParle’s corporate earnings since 2001.
Philip Klein of The American Spectator concluded: “”[DeParle’s] journey from the public sector to the private sector and back again would seem to represent the type of revolving-door relationship between Washington and corporate America that President Obama pledged to put an end to during the campaign and in an executive order.”” The point is not that administration officials should be barred if they have any ties to business or any past lobbying experience that might raise conflict-of-interest questions. Indeed, DeParle’s significant private-sector experience arguably is could be a strength. The point is that the Obama administration has taken a self-aggrandizing stand against hiring such players…while hiring them left and right.
As with previous czar questions, White House press secretary Robert Gibbs shrugged off concerns about DeParle’s industry ties:
Question: Robert, I just wanted to ask about Nancy DeParle and the fact that she sits on corporate boards that have health and medical-related interests. Is that— — does the administration view that as any potential conflict of interest? Are there any potential problems there?
MR. GIBBS: No. I mean, obviously, the White House has confidence in her and her abilities as part of the health care reform effort here.
DeParle, the White House announced, would not need a waiver to the president’s famous executive order requiring appointees to pledge not to participate “in any particular matter involving specific parties that is directly and substantially related to any my former employer or former clients, including regulations and contracts”” for a period of two years from the date of his or her appointment. The health czar will simply resign from all her corporate boards and directorships and recuse herself from any issue that “would directly impact in a significant way any of the companies for which she was a director,” according to an anonymous administration official quoted by Politico.
White House spokesman Tommy Vietor stated that “”Nancy will recuse from each and every particular matter involving a specific company on whose board she served.””
Unfortunately, it’s not so simple. It’s hard to imagine any health care reform-related issue that won’t involve one of DeParle’s vast array of former employers, clients, and corporate boards in the health care industry.
She earned at least $376,000 from Cerner Corporation., for example, which specializes in health information technology. As health czar, DeParle will have unmeasured clout in directing $19 billion of federal stimulus money earmarked for, yes, health information technology. GOP Rep. Congressman Darrell Issa of California stated the obvious: “There’’s no question that there will be a large presidential earmark for integrating a data system to try to reduce costs to try to put people’’s health records all into a single data base. A lot of these efficiencies, although merited, are going to lead to picking very large multibillion dollar winners, and she’’s going to be at the center of it all.” Financial writer Richard Gibbons notes that Cerner’s annual revenues are about $1.7 billion, “so even a fraction of the $19 billion can make a huge difference to Cerner’s bottom line.”
Nevertheless, liberal Beltway supporters see no reason for concern. An article in The Hill, quoting various ethics experts giving the health czar a pass, declared, “DeParle’s industry ties a non-issue.” Would these ethics experts have been equally sanguine if the Bush Administration had appointed a drug industry official to head up the Food and Drug Administration or an oil executive to head up the Department of Energy?
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