Archives for March 2017

CoA Institute Files Lawsuit for ObamaCare Records

Washington, D.C. – Cause of Action Institute (“CoA Institute”) filed a lawsuit in the U.S. District Court for the District of Columbia after the Department of Health and Human Services (“HHS”) failed to disclose records about the potential misuse of taxpayer information to market the Affordable Care Act (“ACA”), as well as records on the funding of two controversial ACA programs.

The lawsuit follows three Freedom of Information Act (“FOIA”) requests to HHS and its subsidiary agency, the Centers for Medicare and Medicaid Services (“CMS”), seeking records relating to obligations under the transitional reinsurance program and the risk corridors program, as well as attempts to market ObamaCare to individuals who declined coverage by using information obtained from individual federal tax returns. The agencies failed to produce any responsive records well past the applicable FOIA time limits.

Cause of Action Institute President and CEO John Vecchione: “It appears that senior Obama administration officials acted against taxpayers’ interests and disregarded the law to make ObamaCare appear more successful. Under the law, Americans’ tax information may be used to determine eligibility for subsidies, but not to market ObamaCare to individuals who have already declined to enroll. Disclosures of taxpayer information by the IRS raises serious privacy concerns. As Congress continues its efforts to repeal and replace the ACA, it’s more important than ever for HHS to be transparent and forthcoming about ObamaCare’s failures and missteps in implementation.”


Taxpayer Information: To boost enrollment in ACA programs, it appears the Obama administration attempted to market the ACA to individuals who declined coverage by using information obtained from individual tax returns. A fact sheet released by CMS highlights its plan to “conduct outreach to individuals and families who paid the fee for being uninsured, or claimed an exemption from that fee, for 2015.” Under the ACA, however, tax information may only be used to determine ACA subsidy eligibility; it may not be used to market the ACA to individuals who have already declined to enroll. Taxpayer information disclosures by the IRS to an unknown number of individuals at CMS and throughout the government raises serious legal and privacy concerns.

Risk Corridors: Since its enactment, the ACA has faced considerable funding issues. The risk corridors program was supposed to collect payments from insurers with lower than expected losses and redirect the money to subsidize insurers with higher than expected losses. Because of low enrollment and monetary shortfalls, a CMS memorandum announced that funding for the risk corridors program would not be available to insurers in 2015. The memorandum, however, appears to invite insurers to sue CMS and then settle with the Department of Justice (“DOJ”) to obtain funding, which would constitute an end-run of a provision enacted by Congress in 2014 to prevent shifting funds into the risk corridors program and a violation of DOJ guidance regarding “backdoor bailouts.” Obtaining risk corridor funding through the DOJ Judgment Fund would be an illegal misuse of appropriated taxpayer money.

Reinsurance Program: Section 1341 of the ACA requires the HHS to return payments to taxpayers under the transitional reinsurance program. Under this program HHS collects reinsurance contributions from health insurance providers and third party administrators on behalf of group health plans. In 2014, HHS was supposed to collect $10 billion in payments to health insurers who enroll high-risk individuals and an additional $2 billion in contributions to be deposited directly to the U.S. Treasury. Unfortunately for taxpayers, it appears when HHS collected less money than required by the ACA, the agency violated the law by allocating all funding to health insurers, depriving taxpayers of billions of dollars.

The full complaint can be found here

For information regarding this press release, please contact Zachary Kurz, Director of Communications:





Government Obligated to Recover Colin Powell’s Emails

Washington, DC – Cause of Action Institute (“CoA Institute”) today filed its opposition to the government’s motion to dismiss a lawsuit to compel Secretary of State Rex Tillerson and U.S. Archivist David Ferriero to fulfill their statutory obligations to recover former Secretary of State Colin Powell’s work-related email records from a personal account hosted by AOL, Inc.  CoA Institute filed the lawsuit in October 2016 after then-Secretary John Kerry and Archivist Ferriero both failed to act on a CoA Institute Federal Records Act (“FRA”) notice and Freedom of Information Act (“FOIA”) request.

Cause of Action Institute President and CEO John Vecchione: “The law requires an agency or the Archivist to initiate action through the Attorney General to recover unlawfully removed records, especially when initial remedial efforts have failed.  This is a mandatory obligation that cannot be sidestepped.  Whether AOL no longer has Secretary Powell’s email records in its systems is unproven.  More importantly, the government cannot point to any evidence that more intensive, forensic recovery methods—like those employed in the case of Secretary Clinton—might lead to the recovery of these important and historically-vital State Department records.”

In September 2016, the House Oversight & Government Reform Committee held a hearing at which then-Under Secretary of State Patrick Kennedy testified that the State Department had undertaken minimal efforts to retrieve Powell’s work-related email.  After learning that Powell no longer had access to his AOL account or its contents, the State Department merely asked that Powell contact AOL to see if anything could be retrieved.  Despite a request from the National Archives and Records Administration (“NARA”) to contact AOL directly, the State Department never did so.

The government now argues the case should be dismissed because CoA Institute cannot show that involving the Attorney General will result in the recovery of Powell’s email.  That argument is faulty on both the law and the facts.  As to the law, the government confuses the nature of an agency head’s non-discretionary obligation under the FRA, which requires it to initiate action through the Attorney General to recover unlawfully removed records.  This requirement is all the more important when an agency’s or the Archivist’s remedial recovery efforts have proven fruitless.

Though the State Department and NARA exerted minimal effort to recover Powell’s email records, they failed.  Moreover, the government has yet to prove that the Attorney General could not achieve that recovery.  Many State Department officials believed that federal records that had been deleted from Secretary Hillary Clinton’s private email server were unrecoverable, for example, but the FBI retrieved many of those records using forensic techniques.  The same could be done here, assuming AOL cannot in fact access or recover Powell’s records through less intensive means.

Although the government argues that Powell’s email records are no longer in AOL’s system, that allegation depends on unreliable hearsay.  The State Department relies on the representations of Powell’s secretary, but an email uncovered by CoA Institute through FOIA shows that this representative received only vague details about an apparent phone conservation between someone at AOL and a staff member of the House Oversight Committee, during the course of which the unnamed AOL employee indicated that AOL no longer had Powell’s email.  The details of the phone call, the exact content of the representations made, and the reasons for why AOL reached the conclusion it did are all unclear, but even assuming the truth of the claim, it does not speak to the ability of the government to recover Powell’s email through other means.

Cause of Action Institute’s opposition brief can be accessed HERE.

John Vecchione Named President and CEO of Cause of Action Institute

Washington D.C. – John Vecchione has been tapped as the new President and CEO of Cause of Action Institute (“CoA Institute”), a non-profit government watchdog group and public interest law firm based in Washington, D.C.  Mr. Vecchione first joined CoA Institute as Vice President in March, 2016, bringing more than two decades of extensive litigation experience as both a trial lawyer and appellate advocate.

“As President of Cause of Action Institute, I will continue to advocate for a more transparent and accountable government free from waste, fraud, abuse, and cronyism,” Vecchione said. “It is an honor to lead a dedicated, talented team of attorneys here at CoA Institute who are committed to advancing the ideals of a free and open society. In our organization’s short five-year history, we have represented numerous individuals whose livelihoods have been threatened by federal government overreach, and pressed to know how the Government is making decisions.  CoA Institute was founded to promote individual and economic liberty by limiting the power of the administrative state to make decisions that are contrary to freedom and prosperity. These goals have never been more important.”

dsc06987Mr. Vecchione earned his J.D. from Georgetown University Law Center in Washington, D.C., and his Bachelor’s Degree from Hamilton College in Clinton, N.Y. He has tried cases and argued appeals across the country in private practice and is a member of the bars of the State of New York, the District of Columbia, and the Commonwealth of Virginia, as well as the Supreme Court of the United States and many federal courts. Mr. Vecchione’s cases have been reported in scores of published opinions. He has published numerous op-eds advancing the freedom agenda and constitutional order in the Wall Street Journal, the Washington Times and many other forums.

John Vecchione’s full biography is available here

Transparent Procedures about the President’s Tax Returns

As we explained earlier this week, post-Watergate reforms to the Internal Revenue Code declared taxpayer’s tax returns and related information confidential.  Disclosure of confidential taxpayer information is the exception and is prohibited except for enumerated, limited purposes and situations that are “authorized by statute.”  Even when disclosure is statutorily authorized, the Internal Revenue Code imposes additional procedures so that, absent prior consent, disclosure of confidential taxpayer information to the government for purposes other than administering or enforcing tax law becomes a matter of public record.

Recent debate about President Trump’s tax returns has provided a case study about how the confidentiality rule and limited disclosure exceptions operate, both legally and politically. Under 26 U.S.C. § 6103(f), the House Ways and Means Committee and the Senate Finance Committee can request access to examine any taxpayer’s information (including the president’s) without the taxpayer’s consent, but only subject to procedural safeguards designed to make the fact of Congress’s request publicly transparent.  Last week, the Ways and Means Committee considered but decided against invoking that authority to obtain the president’s returns.  On February 27, 2017, the Democrats forced the entire House to take a floor vote on whether the Committee should invoke the statute.  Again, along party lines, the decision was made not to seek the President’s returns (although two Republicans voted “present” rather than nay).

Thereafter, in a March 1, 2017 letter, Democratic members of the Senate Finance Committee requested that their Chairman, Orrin Hatch (R-UT), use the same statutory authority to obtain President Trump’s tax returns for the Committee’s review.  The Democrats argued that the information would help investigate suspicions about the President’s business and political relationships.  Senator Hatch, in a joint letter with House Ways and Means Committee Chairman Brady, rejected the Democratic members’ request.  The Senate and House Chairmen argued that their Committees’ authority to obtain taxpayer information should only be invoked when tax improprieties or abuse of taxpayer rights were suspected, and that broader uses to investigate business and political relationships would be an “abusive” and “dangerous precedent.”

The press has widely reported these events and arguments, as it should. As we wrote earlier this week, “by requiring that every congressional request for an American taxpayer’s confidential information is transparent, the Tax Reform Act of 1976 implicitly relies on the press and third-party watchdog groups to make that information known to the broader public, hopefully, in an accurate and user-friendly form.”  The public is indeed paying attention and some constituents are vigorously inquiring about their representatives’ and senators’ position about the President’s tax returns.  Engagement like that indicates that the statutory protections promoting transparency for congressional requests to see confidential taxpayer information are operating as they should.  Lawmakers must weigh the value of confidentiality whenever they consider seeking access to a taxpayer’s protected information and, when they choose disclosure over confidentiality (or when, as in this instance, they vote against disclosure), constituents will know and be able to use that information in evaluating the work of their representatives.

Mike Geske is counsel at Cause of Action Institute

DOJ IG Agrees to Review Conflict of Interest in FBI Hillary Clinton Investigation

Yesterday, Attorney General Jeff Sessions announced that he would recuse himself from any investigation into President Donald Trump’s election campaign.  That was the right decision to make.  The Department of Justice (“DOJ”) and Federal Bureau of Investigation (“FBI”) must remain clear of all appearances of impropriety.  All DOJ investigations should be, and be seen to be, fair and impartial.

Unfortunately, in the waning days of the Obama Administration, certain Justice officials refused to recuse themselves when facing circumstances similar to Mr. Sessions.  On October 25, 2016, we wrote to the DOJ Office of the Inspector General (“OIG”) requesting an investigation into the failure of FBI Deputy Director Andrew McCabe to recuse himself from investigations of Virginia Governor Terry McAuliffe and former Secretary of State Hillary Clinton, even though Mr. McCabe’s wife, Dr. Jill McCabe, received over $675,000 in money and in-kind contributions from Governor McAuliffe’s political action committee and the Democratic Party of Virginia.  Equally noteworthy, Governor McAuliffe met with Dr. McCabe to urge her to run for office as a Democrat on March 7, 2015, just five days after The New York Times broke the story on former Secretary Clinton’s use of a private email system.

Just this week, on February 23, the DOJ OIG wrote back, informing us that it has opened an investigation into Mr. McCabe’s failure to recuse himself.  This letter came on the heels of a public notice in late January announcing a broader investigation in response to inquiries from Congress and other outside groups.  We are pleased to hear that the DOJ OIG took our allegations seriously and look forward to the result of the investigation.