The Fourth Scandal

by Greg Scandlen NCPA, May 22, 2013

While most of the media are fixated on Benghazi, the IRS abuses, and the DOJ’s interest in reporters’ phone calls, the biggest scandal of all may be Kathleen Sebelius’ shakedown of health care companies to pay for activities Congress has refused to fund.

It is illegal for government officials to solicit money from companies they regulate, according to Sarah Kliff from The Washington Post. She writes –

Federal regulations do not allow department officials to fundraise in their professional capacity. They do, however, allow Cabinet members to solicit donations as private citizens “if you do not solicit funds from a subordinate or from someone who has or seeks business with the Department, and you do not use your official title,” according to Justice Department regulations.

That should be a no-brainer. But Ms. Sebelius has violated the law before. Michael Cannon of the Cato Institute reminds us that in 2012 –

…the U.S. Office of Special Counsel concluded that Sebelius violated the Hatch Act by campaigning for President Obama and other political candidates while traveling on official business, an offense for which other federal workers are fired.

Ms. Sebelius apparently suffered no penalty for this transgression. Instead she continued to exercise unprecedented power in handing out waivers for unions and select others to avoid the requirements of ObamaCare, with absolutely no standards or guidance. Obeying the health reform law is mandatory, unless she decides it isn’t.

Industry shakedowns are nothing new for this administration. Before Mr. Obama was elected in 2008, you may remember that the pharmaceutical industry was the Democrats’ favorite whipping boy. Hardly a week went by without one of them demanding price controls or “re-importing” drugs from Canada. The industry was constantly accused of killing sick people by overcharging for medications, and profiteering from government-funded research. PhRMA was terrified of what the new administration was planning.

But in one of the most amazing turnabouts ever in Washington, PhRMA went from full-throated opposition to ObamaCare to full-throated support ― in just a matter of months.

On November 14, 2008, just a week after the election, The Washington Times reportedthat, “The nation’s largest pharmaceutical lobbying group is preparing a multimillion-dollar public relations campaign to tout the importance of free-market health care and undercut an expected push by the Obama administration for price controls of prescription drugs.” The article went on, “The stakes are especially high for drug makers, which stand to lose as much as $30 billion in revenue if President-elect Barack Obama‘s plan to let the federal government negotiate Medicare drug prices is implemented.”

Just nine months later, in August 2009, the publication Medical Marketing & Media was reporting just the opposite ― “PhRMA will launch a big advertising push for healthcare reform later this week, with T.V. spots airing in key states and on cable channels nationally.” The story continues, “News outlets including The New York Times and the Associated Press put spending on the ads in the range of $150 million ― a figure that PhRMA SVP Ken Johnson called speculative.”

What happened? The story quotes PhRMA president Bill Tauzin, “We were assured (by the White House): ‘We need somebody to come in first. If you come in first, you will have a rock-solid deal.’”

Apparently, PhRMA agreed to $80 billion in cuts aimed at filling the Medicare drug program’s “donut hole” and to spend $150 million in advertising to support Obama in exchange for a pledge that the White House would oppose price controls and re-importing drugs. And we haven’t heard a word of criticism of the pharmaceutical industry since then.

This time around it is the insurance industry that is being asked for favors ― to donate to Secretary Sibelius’ favorite “charity.” This is the very industry she directly or indirectly regulates.

The Ways and Means Committee is pretty concerned about this latest scam. It wrote a letter to the secretary which reminds her of the federal Anti-Deficiency Act, which reads in part –

From 5 CFR 2635.101 ― Basic obligation of public service.

(4) An employee shall not, except as permitted by subpart B of this part, solicit or accept any gift or other item of monetary value from any person or entity seeking official action from, doing business with, or conducting activities regulated by the employee’s agency, or whose interests may be substantially affected by the performance or nonperformance of the employee’s duties.

(14) Employees shall endeavor to avoid any actions creating the appearance that they are violating the law of the ethical standards set forth in this part. Whether particular circumstances create an appearance that the law or these standards have been violated shall be determined from the perspective of a reasonable person with knowledge of the relevant facts.

The letter goes on to demand answers to a series of questions about who exactly was solicited, by whom, and for what.

Looks bad for the secretary. Can she issue herself a waiver?