Archives for July 2013

FOIA Follies: HUD Flags Sensitive Freedom of Information Act Requests for Extra Scrutiny; Political Appointees Involved

Field offices of the Department of Housing and Urban Development (HUD) may not release records in response to FOIA requests deemed “sensitive” without obtaining approval from three HUD offices, according to a policy document obtained by Cause of Action from HUD’s Office of Inspector General.

A “sensitive” FOIA request is defined by the policy document as one that involves any of the following:

  • National significance, serious injury, or loss of life;
  • Information that could subject HUD to substantial litigation;
  • Current or former senior HUD management officials; or
  • Questions about HUD’s policies or the performance of departmental responsibilities.

The policy document, which is labeled “current as of April 7, 2008” and confirmed by HUD Public Affairs as still in effect, provides that any field office receiving such a request must notify its “Regional Director” and “Regional Field FOIA Liaison,” as well as “the Headquarters Division in the Office of Litigation.”  If a sensitive request is submitted by the media, the “Regional Public Affairs Officer” also must be notified.

After the above offices are notified, the field office handling the request must prepare a proposed response and obtain the “concurrence” of the Headquarters FOIA Division of the Office of Litigation, the Regional Director’s Office, and the “head of the relevant program office in Headquarters.”  If any of these offices disagree with the proposed response, the “Field FOIA Liaison must arrange a conference call with the FOIA division in Headquarters and the office(s) not approving of the response in order to resolve the outstanding issues and arrive at a consensus as to the appropriate response to the sensitive FOIA request.”

Notably, HUD Regional Directors and at least eight of twenty-two heads of HUD Program Offices, such as the General Counsel and Public and Indian Housing offices, are political appointees.

HUD’s policy concerning sensitive FOIA requests was initially revealed by the HUD IG to Congress on September 29, 2010 in response to an inquiry concerning the politicization of FOIA.  Neither the IG nor HUD has proactively disclosed this policy document to the public, nor is it referenced in HUD’s publicly available FOIA material.**  Perhaps worst of all, the IG’s report to Congress downplayed the policy’s significance.  Despite the fact that HUD’s FOIA policy allows political appointees to weigh in on sensitive requests, the IG accepted the agency’s assertion that “political appointees have a limited role in request reviews and no role in the decision-making regarding the documents to be released to the requester.”

HUD’s FOIA policy is similar to the secret policies that we uncovered at the Department of Defense and the Department of the Treasury, and its impact is equally harmful.   Specifically, it usurps the authority of career FOIA professionals, delays and/or prevents the release of requested records, and further erodes the public’s trust in government.


**HUD’s policy document for sensitive requests includes a URL and is dated “9/16/2010,” but that link does not work.  Nor were we able to locate the document on the HUD website or via the “Wayback Machine” or Google.




Washington Examiner: Cause of Action files IRS complaint against Obamacare advocate Enroll America

Cause of Action files IRS complaint against Obamacare advocate Enroll America

BY KELLY COHEN | JULY 29, 2013 AT 7:35 PM

Cause of Action, a Washington-based non-profit government accountability group asked the IRS Monday to withdraw the tax-exemption of Enroll America, which was formed explicitly for the purpose of encouraging Americans to enroll in the Obamacare health insurance exchanges.

Cause of Action believes Enroll America should have its nonprofit status revoked because it does not adhere to the requirements in the tax code for tax exempt 501(c)(3) educational foundations.

In its complaint to the federal tax agency, Cause of Action said Enroll America “is engaged in commercial, for-profit business activities” and the “directors/officers/persons are using income/assets for personal gains.”

In addition, Cause of Action said the group “is organized more like a trade association for the healthcare industry, employing marketing and political tactics to sell health insurance. Accordingly, Enroll America is not organized and operating exclusively for a charitable purpose.”

Dan Epstein, Cause of Action’s executive director, said “an organization that has been granted tax deductible status but is actually depriving the American people of taxable revenue warrants an investigation.”

Cause of Action also plans to contact Covered California, California’s state health exchange, “to alert them of liabilities under federal and state laws and guidelines.”

Go here for more information on the Cause of Action complaint.

The Daily Caller: Legal group requests IRS investigation into organization promoting Obamacare

Legal group requests IRS investigation into organization promoting Obamacare

Caroline May

Political Reporter
 A  government watchdog group has filed a complaint with the Internal Revenue Service calling for an investigation into the tax status of a group responsible for promoting Obamacare.

Enroll America is a nonprofit, with ties to the Obama administration, whose mission is to “maximize” the number of uninsured Americans enrolling in health care options under Obamacare.

According to the complaint, filed Monday by Cause of Action, Enroll America should not have been classified as a 501(c)(3) and is in violation of the tax code as it operates more like a trade association and benefits private companies represented by the members on its board of directors and advisory council.

Dan Epstein, executive director of Cause of Action, explained to The Daily Caller that the charitable distinction should not apply to Enroll America.

“If everything that the organization does can be done by a for-profit, it already frames the organization as not having a charitable purpose,” Epstein said.

The complaint names three board members with “significant ties to for-profit healthcare providers” and “extensive experience lobbying executive branch officials regarding the Affordable Care Act” as well as six organizations on Enroll America’s advisory council that “have a vested commercial interest in the sale of health insurance policies through the state health benefit exchanges, and which actively lobby the federal government on healthcare related issues.”

“In short, insiders with substantial control over the organization and for-profit healthcare providers are unlawfully receiving a private benefit from its activities, and the earnings and assets of the organization are therefore inuring to their benefit,” Epstein wrote in his complaint letter.

Health and Human Services Secretary Kathleen Sebelius has come under fire from Republican lawmakers in recent months for her fundraising efforts on behalf of the organization, soliciting donations from the healthcare companies HHS regulates.

Enroll America launched a multimillion dollar campaign, called “Get Covered America,” to educate about health insurance options available under Obamacare in June.


The Hill’s HealthWatch: Watchdog requests IRS review of group that is promoting ObamaCare

Watchdog requests IRS review of group that is promoting ObamaCare

By Sam Baker – 07/29/13 12:40 PM ET

A watchdog group is asking the IRS to review the tax-exempt status of a organization crucial in helping to promote ObamaCare.

Cause of Action has asked the IRS to investigate Enroll America, a nonprofit that is encouraging people to enroll in new coverage options under the healthcare law.

The watchdog group said Enroll America should not have received tax-exempt status because its work helps secure new customers for insurance companies.

“If Enroll America is designed to benefit insurance companies instead of the American public, then its charitable status no longer applies,” said Dan Epstein, executive director of Cause of Action. “An organization that has been granted tax deductible status but is actually depriving the American people of taxable revenue warrants an investigation.”

Enroll America is a known ally of the White House, and was established to help raise awareness of new insurance options available under ObamaCare. Health and Human Services Secretary Kathleen Sebelius has made fundraising calls for the organization.

Enroll America National Communications Director Jessica Barba Brown said the objections are baseless.

“This complaint is completely without merit,” she said. “Enroll America is focused solely on helping to educate American consumers about the new health insurance benefits created by the Affordable Care Act.  The IRS has reviewed both the mission of Enroll America and in most cases the exact statements that Cause for Action is citing, and found that Enroll America qualifies for 501(c)(3) status.”The request for additional IRS scrutiny comes after conservatives have taken aim at the agency over its treatment of certain advocacy organizations, including those affiliated with the Tea Party, during the 2012 elections.

Enroll America is classified as a 501(c)3 organization, citing a charitable and educational mission to “maximize the number of lower- and moderate-income people either enrolled in Medicaid or certified for exchange-based subsidies.”

Enroll America’s aim is not to promote the healthcare law politically, but to encourage people to sign up for the new insurance options the law provides. The group’s leader is a former White House official, but it has also partnered with insurance companies and other industry players to focus on enrollment.

Cause of Action said the organization should not have tax-exempt status because increased ObamaCare enrollment will benefit the healthcare industries that sit on Enroll America’s board.

“As Enroll America’s purpose is so closely aligned with the commercial interests of these for-profit entities, its activities thus far demonstrate that it is little more than a trade association for the healthcare industry, employing marketing tactics and its high-level access to executive branch officials as a means to increase the sale of healthcare services,” Cause of Action’s complaint states.

Cause of Action describes itself as a nonpartisan watchdog group that fights government regulation and spending. Its executive director is a former aide to Rep. Darrell Issa (R-Calif.). the powerful chairman of the House Oversight Committee, and has worked for the powerful conservative donors Charles and David Koch.

— This story was updated at 2:54 p.m. and 5:04 p.m.


IRS complaint against Enroll America

CoA sent a complaint to the IRS advising that Enroll America, a § 501(c)(3) organization, is in violation of several provisions of the Internal Revenue Code, and that an immediate investigation is warranted to determine whether its tax exemption should be revoked.  Enroll America is primarily organized to benefit the health insurers, pharmaceutical companies, and other for-profit commercial entities represented on its board of directors and advisory council, and is therefore not organized to achieve any of the lawful purposes listed under IRC § 501(c)(3).


13909 Complaint

13909 Complaint Cover Letter




National Law Journal: Group Wants Justices to Lift Limits on Political Giving

Group Wants Justices to Lift Limits on Political Giving

By Marcia Coyle      July 17, 2013

For its first brief in the U.S. Supreme Court, the Cause of Action Institute picked a controversial cause: an end to certain limits on individual contributions to federal candidates, political action committees and political party committees.

McCutcheon and Republican National Committee v. Federal Election Commission offers the Supreme Court an another opportunity to deregulate money in elections following its much criticized ruling in Citizens United v. Federal Election Commission in 2010. The justices will hear arguments in the case this fall.

The Cause of Action Institute, which describes itself as a nonprofit, nonpartisan government-accountability organization “that fights to protect economic opportunity when federal regulations, spending and cronyism threaten it,” has joined the legal fight with an amicus brief supporting challengers Shaun McCutcheon and the Republican National Committee (RNC).

“This is their first Supreme Court brief, but it’s right down their alley,” said Barnaby Zall of Weinberg, Jacobs & Tolani in Rockville, Md., counsel of record on the amicus brief. “They are an organization focused on government accountability and they work mainly with the [Freedom of Information Act]. They understand disclosure and rules. They looked at this issue as combining lots of issues that affected them.”

Under federal campaign finance laws, there are two types of limits on political contributions by individuals. Base limits restrict the amount an individual may contribute to a particular candidate committee ($2,600 per election); national party committee ($32,400 per calendar year); state, district and local party committee ($10,000 per calendar year (combined limit)); and political action committee (PAC) ($5,000 per calendar year). Aggregate limits restrict the total contributions that individuals may make in a biennial—two-year—election cycle.

McCutcheon and the RNC urge the justices to apply the most searching scrutiny—strict scrutiny—to those biennial limits and find that the limits violate the First Amendment. Under the aggregate limits, individuals may contribute $48,600 to candidate committees and $74,600 to non-candidate committees, of which no more than $48,600 may go to non-national party committees (state, district and local party committees (combined) and PACs).

The amicus brief by Cause of Action Institute walks the justices through the last 40 years of changes in the campaign spending and disclosure environment. Those changes, it argues, undercut the original rationale for the aggregate limits.

“In an era in which parties and campaigns compete not only with other like entities, but also with independent voices armed with the latest technology and an almost limitless ability to uncover, analyze and publish contributor information, does the rationale for the current aggregate limits survive?” the brief asks.

The rationale for the limits, according to Congress in 1974, was to prevent circumvention of the limits on individual contributions. As the Supreme Court said in its landmark campaign finance ruling, Buckley v. Valeo: “Congress was surely entitled to conclude that disclosure was only a partial measure, and that contribution ceilings were a necessary legislative concomitant to deal with the reality or appearance of corruption inherent in a system permitting unlimited financial contributions, even when the identities of the contributors and the amounts of their contributions are fully disclosed.”

But what was true of disclosure in 1974 is not true today, the institute posits in one of two key arguments.

“ ‘Fully disclosed,’ in 1974, meant buried in a mountain of paper filings” in a few offices, according to the institute, with little public access.

“Today, there are effective and efficient public and private alternatives, all designed to disclose and publicize any evasions of the contribution limit,” the brief argues. “The Justice Department, the media, and private organizations all use these technologies to monitor, in real-time, campaigns and donors, and release the results on the Internet free of charge, in formats expressly designed to be used by relatively unsophisticated analysts and observers.”

That difference between today and 40 years ago, the brief adds, demonstrates that the aggregate limits are no longer tailored to the problem that Congress was addressing.

And then there is Citizens United. That 5-4 decision lifting the ban on corporate and union independent spending, along with other court decisions, has created alternative methods for individuals to speak during campaigns, the institute says. That new freedom to speak has removed the major incentive to circumvent individual contribution limits.

“Those alternative means are readily available to cautious donors now,” the brief explains. “These lawful, compliant expenditures can be made by one speaker or in conjunction with others.”

The effect of the limits today is “to punish those few donors who want to support more candidates directly than the aggregate limits permit. Thus the aggregate limits are simply another attempt to prevent persons of wealth (or those who seek to promote challengers or innovative candidates) from associating in the manner they choose.”

Daniel Epstein, the institute’s executive director and former investigative counsel for the U.S. House Committee on Oversight and Government Reform, said the aggregate limits do not protect against the most serious type of political corruption today—so-called dark money contributions for which the identity of the donor does not have to be disclosed.

“We don’t usually write amicus briefs,” Epstein said. “Most of our litigation is directly representing clients. The reason we were motivated to work with Zall is he is obviously an election law expert and we tend to be free market. You want a marketplace of ideas not just in terms of economic transactions but in terms of speech as well. One of the things we basically argue is that the contribution limits are both over-inclusive and under-inclusive. It would have a potential limit on the kinds of discussions that we viewed as important. Minority groups, bloggers and others might be adversely affected by the limits.”

The ability of someone who wants to violate the law has diminished substantially, according to Zall. “That is recognized by the Department of Justice and others, but the interpretations of the law have not changed” he said, adding that the institute’s brief brings “a realization that the old interpretations don’t work in the new environment. What they end up doing is causing more problems than they would solve.”



The Hill: Dan Epstein: Who should be holding whom accountable?

Who should be holding whom accountable?

 By Dan Epstein  July 12, 2013

Inspectors General, who hold federal agencies accountable by conducting audits and, when needed, investigating alleged misconduct, are in place to provide oversight over how taxpayer funded federal agencies are operating. But what happens if the inspectors are allegedly conducting the misconduct?

A case in point is the recent investigation involving Department of Homeland Security (DHS) DeputyInspector General Charles Edwards and allegations of his misconduct and abuse. Senators McCaskill and Johnson share similar concerns to those of Cause of Action that have been brought forward by insiders at DHS. These concerns range from wasteful spending to the destruction of federal records, which is a criminal offense. We have already begun releasing documents we have obtained and are committed to exposing the truth about Edwards and his office.

But everyday Americans aren’t always afforded the time and resources to uncover the facts about government employees such as Edwards. That’s why, as a government watchdog group, Cause of Action is committed to exposing the overreach and cronyism fueling the federal government’s waste, fraud, and abuse of taxpayer dollars. As a result of our own investigation and information from insiders familiar with the DHS OIG office, Cause of Action sent a letter to President Obama on July 1 requesting that the President remove Edwards from his position. Edwards has failed to honestly and appropriately conduct investigations, manage subordinates, and has potentially misused public resources.

Cause of Action exposes these types of government accountability issues because Americans have the right to know how their government spends their hard earned money. We are rooted in the belief that regardless of party affiliation, we all deserve an efficient, effective government that protects our best interests rather than an ulterior political or personal agenda. Cause of Action concentrates on the decisions and rule making that may go unchecked at federal agencies.

Our staff of investigators, lawyers, and communications professionals frequently uses Freedom of Information Act (FOIA) requests to shed light on otherwise opaque facets of the federal government. We also seek to utilize valid tips from government employees who have noticed the misuse of taxpayer resources.

Our recent accountability work included a report on a Centers for Disease Control and Prevention’s (CDC) grant program revealing seven grant recipients who allegedly used federal funds to illegally lobby for tobacco taxes, clean air ordinances, and bans on sugar-sweetened drinks.

Our work doesn’t stop at exposing misuses of power; we fight to hold officials accountable through litigation and public education. Our litigation and investigations are tactical, covering a spectrum of issues and targets that are part of our greater mission to educate the public on how the government exercises its unchecked power.

By employing the checks and balances our government provides, whether through the courts or through Congressional investigations, our aim is to bring real public change through our investigations and litigation. We remain committed to shedding light on the discretionary power of unelected officials who spend our dollars and regulate our sources of livelihood.

Epstein is executive director of Cause of Action, a non-profit, nonpartisan government accountability organization.