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09/23/2013

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

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:

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09/4/2013

Statement: Cause of Action on Proposed Advertising Campaign for Affordable Care Act

Yesterday, Senator Rubio asked HHS Secretary Sebelius to cancel $8.7 million in planned advertisement buys made through the Centers for Medicare & Medicaid Services (CMS) to promote the Patient Protection and Affordable Care Act using taxpayer dollars.

Dan Epstein, executive director of Cause of Action, offered this response to the possible misuse of federal dollars through efforts to promote the Patient Protection and Affordable Care Act:

“HHS must take seriously the concerns that have arisen about use of taxpayer money for advertising campaigns promoting the Patient Protection and Affordable Care Act. We are already troubled by the fact that HHS has spent nearly $60 million in taxpayer funds to contract with huge PR companies to promote the implementation of the new law, while Secretary Sebelius has simultaneously asked executives from pharmaceutical and insurance companies to support Enroll America, an organization that has spent ‘at least seven figures’ on paid advertising.  Cause of Action’s warning about the high risk of misuse of taxpayer dollars has recently been expressed through letters to state health exchanges and we will continue to monitor any wasteful spending or abuse of federal funds as the law goes into effect.”

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06/4/2013

How HHS Secretary Sebelius Broke Federal Law and Avoided Punishment

We’ve written before about Secretary of Health and Human Services Kathleen Sebelius violating the Hatch Act.  By campaigning for Walter Dalton’s election as Governor of North Carolina and Barack Obama’s reelection as President at a Human Rights Campaign Gala, Sebelius used taxpayer funding for her own partisan priorities.  The precedent for presidentially-appointed and Senate-confirmed federal employees violating the Hatch Act is resignation.  Sebelius is the highest-level federal employee to break this law, but President Obama, the sole administration official with the authority to see that the penalty for this violation was paid, not only declined to ask Sebelius to resign, but opted to keep the Secretary on for his second term.  White House spokesman Eric Schultz contended that this administration holds itself “to the highest ethical standards[,]” but the facts of the Sebelius debacle would suggest otherwise.

Sebelius labeled her speech at the Human Rights Campaign Gala as an “official” event, meaning that not only would her travel and time be paid for by the taxpayer, but the time and travel of her aide, AJ Pearlman, would be covered as well.  The Hatch Act is a federal law which, according to OSC, “prohibits federal employees from using their official authority or influence to affect the outcome of an election.”  For instance, the Secretary of Health and Human Services, under the law, cannot campaign for a political candidate using her official title, because this would be an abuse of government authority; nor can she use taxpayer-funded travel or the work hours of taxpayer-funded employees and aides to support a political event, because this would be an abuse of taxpayer funding, furthering a personal and political end.  However, Secretary Sebelius committed each of these violations at the HRC Gala – then attempted to cover it up.

In the first half-hearted attempt to make up for this abuse, Sebelius quickly reclassified the event as “political” instead of “official.”  This retroactive attempt to erase the fact that she used her standing as a Cabinet member to influence two upcoming elections was insufficient, and OSC nevertheless concluded that Sebelius did in fact violate the Hatch Act.

The second part of the abuse was the taxpayer dollars spent on the event, and accordingly, Sebelius had an HHS assistant request that the Democratic National Committee reimburse the government for her own travel.  Even this first attempt was mishandled, however: in January 2013, we filed an FEC complaint explaining that the DNC failed to properly disclose this reimbursement.  In fact, the reimbursement was almost impossible to connect to Sebelius’ Hatch Act violation at all: the DNC sent a check marked only with the word “travel” – preventing accountability in determining whether Sebelius’ violation of the law was truly “repaired” by reimbursement for her travel.

But the missteps didn’t end there.  Cause of Action found, after sending Freedom of Information Act requests to four separate agencies, that the U.S. Treasury was not, in fact, reimbursed.  Cause of Action’s FOIA request to the U.S. Treasury’s Financial Management Service turned up no responsive records – even though our FOIA production from OSC proved that Sebelius was ordered multiple times to reimburse the U.S. Treasury.  In the production we received from our FOIA request to HHS, Cause of Action found the DNC’s check, sent to reimburse HHS, not the Treasury:

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While White House press secretary Jay Carney again assured reporters that “the U.S. Treasury has been reimbursed,” this has clearly not been the case.  OSC did, however, recognize that HHS was reimbursed instead of the U.S. Treasury, but failed to take action on it, as showed by Cause of Action’s FOIA production from OSC:

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The improper reimbursement raises the question of whether the cost of the trip was truly reimbursed, or whether HHS was simply free to use the funds as it wished.  Because OSC did not insist on the proper execution of its own requests for reimbursement, taxpayers dollars remain, in effect, unrecovered.

While the reimbursement for Sebelius’ costs was bungled many times over, Sebelius was not the only federal employee affected by her violation.  In her lengthy process of abdicating responsibility for campaigning on the taxpayer dime, Sebelius effectively threw her own aide under the bus.  AJ Pearlman provided background research in preparation for the HRC Gala where Sebelius promoted Democratic candidates, and attended the event to assist.  As Cause of Action showed in an OSC complaint, when Sebelius scrambled to save her own skin by retroactively reclassifying the event as political instead of official, she made Pearlman’s actions illegal as well.  OSC openly acknowledged that Pearlman’s efforts could not legally be funded by the federal government and ordered Sebelius to reimburse the Pearlman’s travel costs as well, as revealed in a letter from OSC to HHS:

sebeliusblog2 sebeliusblog3

As Cause of Action showed in its January 2013 OSC complaint, if Pearlman’s actions, after Sebelius’s campaigning on government time, could not be funded by taxpayer dollars, then Pearlman too would have committed a Hatch Act violation.  As the OSC wrote to HHS: “the Hatch Act would have prohibited” Pearlman’s work on the HRC event – and so the funding had to be reimbursed.  Cause of Action did its part, but OSC has thus far refused to uphold its own rules (read more about Cause of Action’s letter to Congressman Darrell Issa requesting for investigation into OSC’s failure to execute its duties here).

OSC made clear in the excerpts above that had Sebelius classified the event as political from the beginning, Pearlman’s work would have prohibited by the Hatch Act, but it still chose not to take action against Pearlman. Additionally, the President refused to take any action against Sebelius for her violation, claiming that Sebelius’ meeting with “ethics experts” solved the problem.  The White House won’t hold Sebelius accountable, the U.S. Treasury has not been reimbursed, and OSC’s selective enforcement of the Hatch Act hides Sebelius’s victim: the aide who did as requested.

Sebelius broke federal law but the White House chose not to do its job and ask for her resignation – it seems that its “ethical standards” could use some work.

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04/16/2013

REPORT: CPPW: Putting Politics to Work

Final CPPW Report

CPPW Final Exhibits PDF

 

I.                  Executive Summary

 

Since 2009, Congress has appropriated $373 million to the Centers for Disease Control and Prevention (CDC) for the Communities Putting Prevention to Work (CPPW) program.  The goal of CPPW is to educate the public about obesity prevention and the dangers of tobacco use.  Despite this noble goal, Cause of Action’s (CoA) nineteen month-long investigation shows that at least seven communities that received CPPW funds violated federal law, as well as CDC guidelines, by using taxpayer dollars to lobby for higher taxes and new local laws.

Although Congress conducted hearings in 2011 to question the CDC’s oversight of the program and followed up with letters to Department of Health and Human Services (HHS) Secretary Kathleen Sebelius in 2012, these questions only addressed one potential violation in one community in South Carolina.  CoA found seven other potential violations of the CPPW program that have not been public until now, and learned that the CDC’s one recorded violation was worse than disclosed.

The CPPW program was intended for public education and job creation as part of the American Recovery and Reinvestment Act of 2009 (ARRA).  CoA’s investigation revealed that CPPW money went to support lobbyists and public relations companies who used taxpayer dollars to push laws and agendas that would lead to tax increases on tobacco and high calorie products – essentially transforming the CPPW program into a conduit for lobbying for higher taxes and bans on otherwise legal consumer products.

CoA uncovered evidence of seven different communities around the country using CPPW money to lobby in violation of federal law and CDC policy.  These warrant investigation, review, and accountability, especially in light of the $2 billion in annual funding scheduled for disbursement in 2015 under the 2010 Patient Protection and Affordable Care Act’s Community Transformation Grants program to fight obesity and tobacco use at the local, state, and federal level.  The HHS, the federal agency that oversees the CDC, is also the largest grant-issuing agency in the federal government.

The following report reveals how the CDC permitted and even encouraged CPPW grantees in Arizona, Alabama, Florida, Georgia, and California to violate federal law and use CPPW funds to lobby state and local governments.   Internal emails, applications to the CDC outlining plans for the funds, and meeting notes blatantly show systemic corruption and use of taxpayer dollars for lobbying.

CoA found that lobbying by CPPW grant recipients violates the following four laws and guidelines:

  1. The Anti-Lobbying Act prohibits the use of money appropriated by Congress to influence, “an official of any government, to favor, adopt, or oppose, by vote or otherwise, any legislation, law, ratification, policy, or appropriation.”
  2. The CDC issued additional guidance prohibiting CPPW funds from lobbying use.  Known as Additional Requirement 12 (AR-12) in the CDC’s guidelines, this rule “specifically [applies] to lobbying related to any proposed, pending, or future Federal, state, or local tax increase, or any proposed, pending, or future requirement or restriction on any legal consumer product.”
  3. In 2012, Congress included language in an appropriations bill to clarify that CPPW funds were prohibited from “any activity to advocate or promote any proposed, pending, or future Federal, State, or local tax increase, or any proposed, pending, or future requirement or restriction on any legal consumer product.”
  4. Office of Management and Budget Circular A-122 prohibits the use of federal funds to attempt to influence federal or state legislation through “communication with any member or employee of the Congress or State legislature” or “by preparing, distributing, or using publicity or propaganda, or by urging members of the general public or any segment thereof to contribute to or participate in any mass demonstration, march, rally, fundraising drive, lobbying campaign, or letter writing or telephone campaign.”

South Carolina: A Case Study in Corruption

In addition to the previously mentioned five states, the CPPW pattern of corruption can most easily be traced through the example of South Carolina.

Direct use of federal funds to lobby

As revealed by communications between local officials and the CDC, funds from a CPPW grant to the South Carolina Department of Health and Environmental Control (DHEC) were used to illegally lobby city council members in support of a pending local smoke-free ordinance, proof of direct illegal lobbying with CPPW funds.

Stealth lobbying by coalitions to avoid legal oversight

The Smoke Free Florence (SFF) coalition is a group of like-minded organizations that formed to lobby for the causes outlined in DHEC’s CPPW grant application, and yet, by design, the SFF evades regulations that apply to lobbyists.  Known as stealth lobbying, this approach is one way to avoid lobbying rules but still, in effect, conduct lobbying while receiving federal dollars.

CDC failure to properly oversee the use of grant funds

In its review of South Carolina’s grant application from Florence County, which includes a proposal to hire a coordinator “to promote comprehensive smoke-free policies/ordinances throughout the county,” the CDC failed to prohibit lobbying activity, and in fact sent a CDC grants officer to local community meetings where this officer announced that securing a comprehensive smoke-free ordinance was “the number one priority with the [SFF] initiative and 100% adoption will be the determining factor” of success.  While the CDC later reprimanded the South Carolina recipients for their misuse of funds, they largely ignored that meeting minutes were scrubbed to change the appearance of impropriety, raising other potential legal issues outside of improper lobbying.

This report evidences a complete failure of an HHS grant program to adhere to the law, use taxpayer dollars responsibly, or secure jobs it was intended to create.  What follows are numerous examples of counties and states across the country advocating, planning, and supporting legislation in direct violation of federal law and CDC guidelines.  The clock is ticking toward 2015, when $2 billion more will be allocated to similar programs.  This report only begins to document the extent of waste, fraud, and abuse within CPPW, as CoA is still awaiting copious amounts of documents from both the CDC and HHS Office of Inspector General.  The systemic pattern of misfeasance among grantees will end only when the CDC acts responsibly on behalf of the American taxpayers who have become the biggest losers in the government’s campaign to end obesity.

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09/17/2012

Cause of Action Memo on Sec. Sebelius’ Hatch Act Violations

120914 Cause of Action Memo on Sebelius Hatch Act Violations

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09/12/2012

CoA Calls On Pres. Obama to Fire HHS Sec. Kathleen Sebelius

The Office of Special Counsel reported findings today that Health and Human Services Secretary Kathleen Sebelius violated the Hatch Act in February when she called for re-electing President Obama during an official department appearance. Cause of Action is calling on President Obama to fire Kathleen Sebelius for this clear violation of federal law.

Statement from Cause of Action Executive Director Dan Epstein:

“This is the most high profile example of a Hatch Act violation since the Act was passed in 1939.   Never before has a member of the President’s Cabinet been found to have committed a Hatch Act violation.  President Obama should immediately fire HHS Secretary Sebelius for her violation of federal law. Additionally, the Justice Department should begin an investigation into any potential election crimes the Secretary may have committed through her then-taxpayer funded comments on February 25, 2012. The American public deserves a President committed to the law and committed to a Cabinet that understands the difference between politics and public service.”

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07/11/2012

Inside Health Policy: OIG Claims ACA Prevention Fund Grantees May Be Violating Anti-Lobbying Statutes

insidehealthpolicy.com

 

OIG: ACA Prevention Fund Grantees May Be Violating Anti-Lobbying Statutes

By Amy Lotven

Updated Story

HHS’ Office of Inspector General is asking CDC to ensure that the grantees of a community prevention program funded with health reform law money are not violating anti-lobbying statutes, saying that grantees’ quarterly reports suggest some funding may have been used for “inappropriate lobbying activities.” OIG also raises concerns that the Centers for Disease Control and Prevention may have encouraged the behavior by posting confusing guidance on its website for the Communities Putting Prevention to Work (CPPW) grantees, echoing GOP congressional concerns that grant money may have been inappropriately used for lobbying on school beverage and public smoking issues.

CDC agrees with IG of the need to clarify this issue with its grantees and is moving aggressively to do so,” a CDC spokesperson tells Inside Health Policy in an email. “The agency has already refined and reinforced its guidance with grantees in light of recent legislation from Congress, conducted new project officer training, and has undertaken a broad education of CDC leadership and program staff on the issue.”

A GOP congressional aide tells Inside Health Policy that several staffers had raised concerns about the grant funding, and says that additional congressional oversight and other activities should be expected. The report calls into question not only the $120 million in CPPW grants, but larger amounts of funding that have been distributed, the aide says. The aide also says that the report highlights government management issues that should be of concern to both parties.
The OIG says in a June 29 letter to CDC Director Thomas Frieden that the review was initiated after OIG received allegations from congressional staff concerning potentially inappropriate use of funds by the certain grantees, and specifically that grantees may be violating anti-lobbying statutes. OIG subsequently reviewed the quarterly reports from the grantees and met with officials from CDC, the CPPW program and the Office of the General Counsel. “We are concerned that some statements in those reports may reflect inappropriate lobbying activities using CPPW grant funds,” OIG writes. “Our review also indicated that this may have originated from a lack of clear guidance — or even conflicting information — from CDC to CPPW grantees concerning the anti-lobbying restrictions.”

The OIG’s letter also comes in the wake of a May 2 letter from Sen. Susan Collins (R-ME) to HHS Secretary Kathleen Sebelius requesting information on the activities reported by various CPPW grantees that indicated funding was being used for policymaking even though the use of federal funding to lobby at the state or federal level has been prohibited since 2002.

For example, the letter notes that the California Department of Public Health, which received a $2.2 million grant, reported that funds would be used to advance policy making. She also raised concerns about funding that went toward analyzing state legislative proposals that would levy taxes and remove certain beverages from middle and elementary schools.

The letter also noted that King County, Washington reported as a description of its activities the fact that County Board of Health “adopted changes to code on smoking in public places and places of employment that closed loopholes in the existing code, and passed a resolution encouraging no-smoking policies in multi-family housing…”

Collins in her letter stressed that since she is a “ strong supporter of wellness and prevention effort…I am eager to ensure that these important programs are operating within the law and that any misuses of funds are quickly addressed.” “The actual or perceived misuse of wellness and prevention funding has the potential of eroding support for these programs,” she wrote.

Collins also found it especially troubling that CDC’s official guidance to grantees appears to include an expectation that the funds should be used for prevention and wellness strategies that result in changes state and local policies and law. “If true, without express authorization by Congress, CDC would be guiding its grantees to potentially violate federal law, exposing them to hefty civil penalties for each violation,” she writes.
The OIG also found that CDC’s information — as well as non-CDC resource material posted on the CDC website — “appear to authorize, or even encourage, grantees to use grant funds for impermissible lobbying.” Furthermore, OIG says, “grantee activity reports posted online make troubling assertion that, on their face, raise the possibility that these anti-lobbying provisions were violated.”

OIG notes, however, that it is possible that the grantees were describing activities accomplished before the grants were awarded, or that were achieved by other entities or with other, non-federal funds. However, OIG, adds, the fact that the grantees are reporting favorably about the lobbying is of concern, and may indicate a faulty understanding of the funding prohibitions.

OIG calls for CDC do the following: review its guidance and other materials posted on its Web site; clarify any misleading statements about lobbying activities; train CDC employers; and provide updated and more detailed guidance to grantees on how to avoid violating anti-lobbying provisions. OIG says guidance should also inform grantees about new lobbying restrictions included in the FY 2012 HHS Appropriations bill.

The group non-partisan group Cause of Action has also cited concerns about the potentially anti-lobbying violations by the CPPW grantees. On March 16, COA wrote a letter to Attorney General Eric Holder asking him to “launch a comprehensive investigation” into the use of taxpayer money to influence public officials in favor of “anti-soda” or “anti-tobacco” policies.

In an emailed response to Inside Health Policy, Cause of Action says: “While it is a positive step for the OIG to review and clarify CDC materials, the real issue here is that it has taken Congressional attention for the OIG to do their job. If the CDC had been properly overseeing its grant awards and the use of taxpayer dollars by their grantees, there would be no need for Congress to intervene.

“In terms of accountability, is it too little too late for the funds that have already been used for lobbying purposes? Moving forward, we expect the OIG to monitor the implementation of the proposals in its June 29 letter and bring proper oversight to HHS, as taxpayers deserve a government that ensures proper use of their money,” COA adds. — Amy Lotven (alotven@iwpnews.com)

Editor’s note: This updated version includes comment from the CDC.

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