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Forbes: Dan Epstein: Obamacare’s Implementation Poses Grave, But Largely Unknown Risks For Beneficiaries

October 2, 2013 by

Obamacare’s Implementation Poses Grave, But Largely Unknown Risks For Beneficiaries

By Dan Epstein        September 30, 2013

Many of us are concerned and anxious because we don’t know what the Patient Protection and Affordable Care Act (ACA), also known as Obamacare, will mean for our personal health care, our families and our pocketbooks as enrollment commences October 1.  The American people are likely unaware of the risks they face in disclosing their personal medical and financial information to strangers through the enrollment programs and have not been well informed of the potential for state entities to violate federal laws during the implementation of the ACA.

In an aggressive effort to recruit Americans into the ACA, the federal government has implemented “Navigator” and “Assister” programs.  These programs lack not just training and oversight, but also background checks, fingerprinting or other screening that should be required prior to obtaining Americans’ social security numbers, addresses, and personal medical information.  Recognizing these security concerns, thirteen Attorneys General wrote to U.S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius on August 14, 2013 warning that “…this is a privacy disaster waiting to happen.”  On September 18, 2013, the House Oversight and Government Reform Committee issued a troubling report detailing how navigators and assisters not only threaten to harm consumer privacy and misuse consumer data but are also being carried out by individuals who have not been subject to background checks or other certifications.  Concerned about the potential liabilities associated with these navigator and assister programs, entities in Ohio, Florida, Oklahoma, Pennsylvania, Utah and West Virginia have already voluntarily returned federal navigator grant money.

But another area of concern that has not yet received much attention is the risk of waste, fraud and abuse of the hundreds of millions of taxpayer dollars states are receiving to run their exchanges or marketplaces.  For example, California has received $910 million; New York, $369 million; and Hawaii, $205 million.  And this is just the beginning.  Additional funds will likely be pumped into the system if the navigators and assisters are unable to meet their enrollment “quotas.”   Entities within states should be on high alert regarding their risk of violating laws as implementation of the ACA occurs.  For example, using any false writings or documents known to be materially fictitious, concealing a material fact, or making any fraudulent or fictitious statements to a government representative about the use of grant funds are violations of 18 U.S.C. § 1001.  Further, under OMB Circular A-87, state and local entities that receive federal funding are required to adequately document all costs associated with administering the grant funds. If a recipient falsely certifies that they are conforming to this regulation, or if they do not properly document federal grant funds that are being primarily utilized for state programs, they may be subject to liability under both the OMB Circular A-87 and the False Claims Act. An Inspector General found that the IRS largely failed to account for and report these costs associated with implementing ACA. If our federal agencies are failing at this oversight, it follows that states cannot be adequately equipped, aware, or prepared to conduct oversight over implementation of the ACA, setting these state exchanges up for failure.

Cause of Action (CoA) is concerned about the potential for waste, fraud and abuse of these funds given to state entities.  This is why we have sent liability alert letters to more than 35 Governors thus far, and the District of Columbia, alerting them to the risks involved with the unintended misuse and waste of the ACA grant funds.  Given the hundreds of millions of federal taxpayer dollars at stake, taxpayers should hold their elected representatives accountable for how their money is being spent.

The grim reality is that the Affordable Care Act is deceptively complex and non-transparent.  Americans need to be cautious about enrolling in Obamacare (i.e., providing personal, medical and financial information to unchecked strangers), and mindful of the potential for misuse of taxpayer funds given the myriad, untested liability pitfalls and the vast sums of taxpayer money at stake.  At a minimum, the American people deserve to have our elected representatives and federal government provide proper oversight of the implementation of the Affordable Care Act.

 

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

 

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Related Documents: Healthcare – The Patient Protection and Affordable Care Act

September 23, 2013 by

Letter to the Texas Attorney General

Letter (November 13, 2013)

IRS Complaints Against Enroll America For Violating the Internal Revenue Code

Complaint (November 22, 2013)

IRS Reply (August 5, 2013 )

Complaint (July 29, 2013)

Liability Alert Letters re: PPACA

The liability alert letter to the General Counsel of Covered California is here.

Cause of Action sent letters notifying Governors and state Attorneys General of legal liability should federal grant recipients in their states misuse the federal money they receive to run the state health exchanges and Navigator programs. Cause of Action explains how waste, fraud and abuse are potential consequences of federal funds given to states without accountability and proper oversight.

You can find each state letter below and the date on which the letter was sent:

Filed Under: Investigation Tagged With: ,

REPORT: GreenTech Automotive: A Venture Capitalized by Cronyism

September 23, 2013 by

Executive Summary

“It seemed like a win for everyone involved when a startup car company, backed by political heavyweights, wooed investors with plans to build a massive auto plant in the Mississippi Delta, hire thousands of people and pump out a brand new line of fuel-efficient vehicles…But today, the company is under a federal investigation and about the only thing on its land in Tunica County is a temporary construction office.”

–          Associated Press, August 12, 2013

Less than half of all businesses started between 1977 and 2000 survived to five years.  Market competition is cruel but it’s not unfair.  Unfair is when political heavyweights use their influence to skew the market and force taxpayers to underwrite the risk of speculative new business ventures; taxpayers suffer while crony companies reap the profits.  Such is the case with GreenTech Automotive, Inc. (GreenTech), a startup automobile manufacturer that promised jobs and economic growth in Virginia and Mississippi but has failed to deliver.  The following report is the latest from Cause of Action’s (CoA) investigations into companies that rely upon the politically powerful, not the competitive marketplace, to determine economic winners and losers.

The story of GreenTech and its principals, Terry McAuliffe and Charles Wang, weaves a tale of promises to invest billions of dollars and create thousands of jobs as a result of alleged technological breakthroughs.  What is becoming increasingly likely, however, is that taxpayers will instead bear the costs of broken promises by subsidizing a failed business that used political connections and pressure to profit from taxpayer dollars.

Terry McAuliffe has made a career of using politics to profit.

As far back as 1997, Business Week declared that “[m]any of Terry McAuliffe’s business deals are intertwined with his political interests.” According to Leaders Magazine in 2007, McAuliffe “started over two dozen companies in the fields of banking, insurance, marketing, and real estate.  McAuliffe served as Chairman of Federal City National Bank and, most recently, was an owner and Chairman of American Heritage Homes.” These companies and his political fundraising career earned him millions in personal profit, but also brought Department of Justice investigations, accusations of conspiracy and illegal donation schemes, and Department of Labor penalties. What is clear is that political fundraiser and businessman McAuliffe has made a habit of using his connections and favors to rake in profits, and he has continued that pattern with GreenTech. After receiving campaign contributions from Charles Wang in 2008 for his first gubernatorial bid, Terry McAuliffe made his deep political Rolodex available for GreenTech’s benefit.  As Amy Gardner from The Washington Post has observed, many of McAuliffe’s biggest business deals “came in partnership with prominent donors and politicians, creating a portrait over the years of a Washington insider who got rich as he rose to power in the Democratic Party.” He continued that pattern with GreenTech, benefitting the company through his own political connections.

  • In 2008, Charles Wang made a $50,000 donation to Terry McAuliffe’s gubernatorial campaign.  Shortly thereafter, Wang’s company merged with what is now GreenTech and McAuliffe was named Chairman.
  • As GreenTech Chairman, in an email to then-Governor Haley Barbour, McAuliffe cited efforts by U.S. Senators Thad Cochran (R-MS) and Roger Wicker (R-MS) to pressure the United States Citizenship and Immigration Services (USCIS) Director Alejandro Mayorkas into fast-tracking EB-5 visa applications that would provide Chinese investments for GreenTech.
  • McAuliffe sent numerous emails to Director Mayorkas and Douglas Smith, Department of Homeland Security’s assistant secretary for the Office of the Private Sector, expressing frustration with USCIS’ slow visa approval process. Smith attended GreenTech’s groundbreaking at its temporary Horn Lake facility, where McAuliffe also privately met with President Bill Clinton and Chinese investors.
  • Anthony Rodham, brother of former Secretary of State Hillary Clinton, is President and CEO of Gulf Coast Funds Management (Gulf Coast) the country’s largest Regional Center for processing EB-5 investments, and the manager of EB-5 investments for GreenTech.

GreenTech utilized the EB-5 visa program as a catalyst for favors and a prop for business deals.

In 2008, Gulf Coast, a sister company of GreenTech, used political pressure to position itself as a powerful Regional Center for managing two states’ EB-5 investments, yielding large profits. GreenTech was financed by Chinese investors with a strong interest in securing visas in exchange for millions of dollars in capital through EB-5.

  • Then-Mississippi Governor Haley Barbour, one of Terry McAuliffe’s current business partners, contacted Barbara Velarde, the head of the USCIS office that oversees the Regional Center program, urging the agency to designate Gulf Coast as the Regional Center for the entire state of Mississippi.
  • Kathleen Blanco, who was Governor of Louisiana at the time that USCIS approved Gulf Coast’s application, is currently a member of Gulf Coast’s board.
  • Between 2009 and 2012, GreenTech raised $67 million from more than one hundred EB-5 investors. Gulf Coast has collected a total of approximately $7.4 million in profits from GreenTech investors.

GreenTech is abusing taxpayer funds.

Under the leadership of Charles Wang and Terry McAuliffe, GreenTech submitted exaggerated projections about its manufacturing output and job creation prospects, convincing Mississippi state officials to award millions of taxpayer dollars in loans and tax incentives to develop a GreenTech plant within the state.

  • In exchange for a promise to build a manufacturing facility in Tunica County, the Mississippi Development Authority (MDA) agreed to provide a $3 million loan to GreenTech from the Mississippi Industry Incentive Financing Revolving Fund to construct an access road to the facility.
  • A $2 million loan was given to the Tunica County Economic Development Foundation to purchase the site on which the facility would be built.  GreenTech received a host of tax breaks and incentives including reduced state income, franchise, property, sales and use taxes and income tax rebates for company employees.
  • GreenTech has claimed that it will create 25,000 direct jobs that will each create 11.86 indirect and induced jobs, or 296,500 jobs in total.  This is problematic both in expectation and legality given that current law provides for no more than 10,000 EB-5 visas per year.

While it is unknown whether GreenTech will meet its own estimate of 25,000 full-time jobs in Mississippi by 2014, according to NBC12 News in Richmond, Va., a former GreenTech employee claims that GreenTech’s “lofty goals were nowhere near reality.”

What follows in this report are these and additional findings from a six-month investigation of the relationships and political deals that allowed GreenTech to entice Mississippi into a misbegotten experiment in green automotive technology. As this report reveals, the real engine driving GreenTech’s business plan appears to be its management’s extraordinary talent for exploiting taxpayers to advance their own interests.

 

PDF: GreenTech Automotive: A Venture Capitalized by Cronyism

Exhibits:Exhibits 1-32

Wang Emails: 1 & 2

GTA Exhibit 6 (here) was the Document used in a Washington Post story

Filed Under: Investigation Tagged With: ,

HARDI: Court Denies Latest APGA Motion In Regional Standards Case

August 21, 2013 by

The United States Court of Appeals for the District of Columbia  has agreed to hear the case of  HARDI, which challenges a Department of Energy rule that would raise energy costs for consumers around the country. Below is HARDI’s press release which can be found here.

FOR IMMEDIATE RELEASE
August 20, 2013 
Contact: Jmelchi@hardinet.org 

Court Denies Latest APGA Motion In Regional Standards Case  

Columbus, OH– On Monday, August 19, the United States Court of Appeals for the District of Columbia again issued an order requesting all parties involved in the Regional Standards lawsuit agree to a briefing schedule within the next 30 days. Additionally, the Court denied efforts by other parties in the lawsuit to deny HARDI’s opportunity to present its case before the Court.

“HARDI has consistently worked to expedite these proceedings as much as possible while fighting for what our members believe is right,” said Jon Melchi, HARDI’s Government Affairs Director.  “We could have completed this portion of the process by now absent the now-denied motion so now we just have to focus on doing everything we can to help the court move as expeditiously as possible.”

  • The proposed APGA/DOE settlement on the furnace standard. HARDI was the only party in the lawsuit to support this settlement when it was proposed to the Court.
  •  HARDI’s motion to continue on with the lawsuit to address procedural issues which developed the A/C standard.
  • The merits of the case in its entirety.

“This is another affirmation by the court of HARDI’s standing in this case and the merits of our arguments,” said Brian Cobble, G.W. Berkheimer Co. and HARDI’s 2013 president.  “It is regrettable that other parties chose to delay the court proceedings by attempting to reverse the court’s earlier decision but now the path is cleared for the court to hopefully conclude this issue well in advance of the next 2015 implementation deadline in the favor of those who are likely to be most harmed by these unprecedented regionalized efficiency standards.”

 

 

 

Heating, Air-Conditioning and Refrigeration Distributors International (HARDI) represents more than 460 wholesale companies and 300 manufacturing associates as well as nearly 140 manufacturer representatives. HARDI members represent an estimated 85 percent of the dollar value of the HVACR products sold through distribution.

Filed Under: Press Release

Cause of Action Sues TIGTA over Release of Taxpayer Info

August 9, 2013 by

Cause of Action filed a lawsuit against the Treasury Inspector General for Tax Administration (TIGTA) for potentially violating the Freedom of Information Act (FOIA).

TIGTA told Cause of Action in March of this year, in response to a FOIA request, that it could “neither confirm nor deny the existence of records” of communication between the White House and IRS concerning taxpayer information, particularly interactions that were not made pursuant to 6103(g) of the tax code, which authorizes the President to request any individual’s tax return information from the IRS.

Yet, the media reported that TIGTA sent a letter to Senator Charles Grassley July 3, 2013, acknowledging eight instances involving potential unauthorized access or disclosure of tax records belonging to political donors or candidates since 2006.

By revealing to Senator Grassley the existence of these communications, TIGTA has potentially violated FOIA with Cause of Action, therefore we are filing a lawsuit against TIGTA in the U.S. District Court for the District of Columbia.

ECF No. 1_Complaint

ECF No. 1-1_Exhibits 1-10 to Complaint

ECF No. 1-2_Civil Cover Sheet

ECF No. 1-3_Summons

Filed Under: Filing Tagged With: , ,

Cause of Action Report Exposes Profiteering Scheme Using Taxpayer Funds

August 7, 2013 by

FOR IMMEDIATE RELEASE                                                                                                 

August 6, 2013

 

Cause of Action Report Exposes Profiteering Scheme Using Taxpayer Funds

 “Political Profiteering” Shows How Forest City Enterprises

Makes Private Profits at the Expense of American Taxpayers

 

WASHINGTON – Today, Cause of Action (CoA), a government accountability organization, released “Political Profiteering: How Forest City Enterprises Makes Private Profits at the Expense of American Taxpayers,” the first installment in a three-part investigation examining how real estate development giant Forest City Enterprises (FCE) uses politics for profit.  The report exposes how between 2002 and 2012, FCE secured more than $2.6 billion in direct and indirect government subsidies by spending millions of dollars on campaign contributions. Two of the most high-profile examples of FCE using politics for profit include the Atlantic Yards development in Brooklyn, NY and The Yards project in Washington, D.C.

“We are exposing an enterprise of corruption within one of the largest private real estate developers in the country,” said Dan Epstein, Cause of Action’s executive director.  “For far too long, Forest City Enterprises has operated on the model of political profiteering, essentially rigging the marketplace by paying off government officials with lavish campaign contributions and gambling with taxpayer funds for its private profit.”

“Unless there is effective oversight of how government subsidies are granted to companies like Forest City Enterprises, businesses will continue to use American taxpayer dollars to bolster their own private profits.”

CoA’s nearly two-year investigation uncovers how Forest City Enterprises, one of the largest publicly-traded real estate development companies in the United States, runs on the practice of using public money and government influence to reap millions in profit and finance its net worth of nearly $10.6 billion. In its pursuit of land development projects, FCE regularly uses highly paid lobbyists, political connections, campaign contributions, and strategic hiring of government officials to obtain lavish public subsidies, tax-exempt financing and the seizure of private land from eminent domain condemnations.

 Among the most blatant examples of FCE’s political profiteering CoA uncovered:

  • From 2002 to 2012, FCE and its subsidiaries received or signed agreements for fifty-two direct and indirect subsidies or financial benefits with a total value of at least $2.6 billion.
  • FCE, its subsidiaries, and its employees spent $23 million on political spending such as campaign contributions and lobbying at the federal, state, and local level from 2002 to 2012.
  • In key election years, eighty-five percent of FCE’s eighty-one federal political contributions were given to candidates in areas where FCE had real estate projects.
  • Forest City Washington (FCW) in the District of Columbia (D.C.) used campaign contributions to extract favors from the politicians on the D.C. City Council, the D.C. Mayor, and D.C. Delegate Eleanor Holmes Norton for its Yards project. FCW also hired an employee from the Mayor’s office dealing with development to assist in pushing its project.

In the reports that follow, CoA will show how FCE took public benefits under the premise of providing jobs for minority workers but failed to deliver, as well as how FCE enriched itself through bribery and political graft, without ever being subjected to investigation or oversight.

About Cause of Action:

Cause of Action is a non-profit, nonpartisan government accountability organization that fights to protect economic opportunity when federal regulations, spending and cronyism threaten it. For more information, visit www.causeofaction.org.

To schedule an interview with Cause of Action’s Executive Director Dan Epstein, contact Mary Beth Hutchins,  202-400-2721 or Jamie Morris, jamie.morris@causeofaction.org.

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Filed Under: Press Release Tagged With: