The Next Big Obamacare Scandal

Meet the Obama funder illegally given millions to design the broken health care website.

244-sebelius-sized_AP-resize-380x300President Barack Obama is doubling down on his Obamacare lies. He is now trying to erase retroactively his point-blank assurance to the American people that “if you like your health-care plan, you will be able to keep your health-care plan, period.” Drawing on his golfing experience, he is insisting on a mulligan as millions of Americans are losing the health insurance policies they have chosen because of Obamacare mandates.

“What we said was you could keep it if it hasn’t changed since the law was passed,” he told Obamacare’s political beneficiaries and contractors this past Monday during a speech they applauded enthusiastically. The “if” clause never appeared in his public statements before now.

Obama did not just “misspeak,” as a recent New York Times editorial tried to characterize his deliberate deception. As confirmed by his own aides cited in aWall Street Journal article last Saturday, policy experts who wanted to include more truthful caveats in the president’s public pronouncements concerning retention of choice of patient insurance plans and doctors were overruled by the political spinmeisters.

Perhaps even more troubling than the Obama lies, however, is the political cronyism that has surfaced in the administration’s choice of the contractor to fix the Obamacare website and a legally indefensible interpretation of the Obamacare law by Health and Human Services Secretary Kathleen Sebelius that can protect this contractor and its insurance company parent, among other firms, from kickback claims.

Anthony Welters, a big donor to and campaign bundler for Obama, as well as a regular White House guest, is the Executive Vice President of the giant insurance company UnitedHealth Group. According to proxy statements filed for the 2012 fiscal year, Mr. Welters made $7,411,084 in total compensation. As part of his duties, he serves as the Chief Executive Officer and President of AmeriChoice Corporation, which he had led when the privately held Medicaid services provider was sold to UnitedHealth Group in 2002. As discussed below, AmeriChoice and its predecessor company under Welters’ leadership has had its share of legal challenges.

Welters and his wife have bundled hundreds of thousands of dollars of contributions for Obama’s campaign coffers and inauguration festivities, as well as making their own large donations to Obama and other Democrats. His company UnitedHealth Group spent millions of dollars lobbying for Obamacare. All these investments are paying off big-time.

United Health Group owns the software company that built a critical component of the Obamacare website, and which has now been called in to serve as the new general contractor in charge of fixing the beleaguered site. The UnitedHealth Group subsidiary, Quality Software Services Inc. (QSSI), has already been paid an estimated $150 million, with millions more to come as it bills the taxpayers for remedial and general contractor services.

Concerned about a potential conflict of interest arising from the corporate affiliation of QSSI and UnitedHealth Group, Chairman of the House Committee on Energy and Commerce Fred Upton, R-Michigan, and Sen. Charles Grassley, R-Iowa, ranking member on the  Senate Judiciary Committee, wrote to UnitedHealth Group CEO Stephen J. Hemsley that QSSI’s role in finalizing technical and system requirements to develop and deliver plan management services, including certifying health plans and monitoring compliance “creates a situation whereby the exchange’s ultimate designer, QSSI, is in a position to tailor the system to favor the interests of its parent company, UnitedHealth Group, and further maintain a monopoly over information that is unavailable to competitors, potentially allowing such information to be exploited as invaluable market intelligence and used to gain an unfair advantage over competitors.”

Mr. Welters, UnitedHealth Group’s well-paid Executive Vice President and big Obama benefactor, has faced questions of his own during the course of his previous involvement in providing health insurance for the poor before he joined UnitedHealth Group. Here is what the Washington Post reported in an article about Mr. Welters in 2002, the year that one of his companies – AmeriChoice – was sold to UnitedHealth Group:

“Federal and state audits concluded in the early and mid-1990s that ineffective oversight by Pennsylvania officials had enabled Welters and his partners to make too much money from their taxpayer-supported business.

The audits said the Welters group had paid itself millions of dollars in management fees -- paid to other companies they controlled -- and millions more in bonuses.”

That’s not all. In New York, the Washington Post reported, Welters’ HMO, known then as Managed Healthcare Systems (MHS), came under investigation regarding clinics that MHS retained to serve Medicaid patients. Then New York State Attorney General Eliot Spitzer announced in May 2000 that state investigators concluded the clinics were inadequately staffed. Patients, he was quoted as saying, were "consistently complaining that they were having difficulty getting services or being seen by a doctor."

Welters’ HMO ended up agreeing to repay more than $2 million to the Medicaid program for services that its clinics reportedly never provided.

MHS, which operated in New York and New Jersey, changed its name to AmeriChoice, now a business segment of UnitedHealth Group. In 2011, the United States Court of Appeals for the Third Circuit allowed a claim to go forward alleging that AmeriChoice-NJ illegally provided kickbacks in violation of the federal Anti-Kickback Statute, 42 U.S.C. § 1320a-7b, to a New Jersey medical clinic to induce the clinic to switch its patients to AmeriChoice-NJ‟s Medicare and Medicaid programs (United States Ex Rel. Charles Wilkins; Daryl Willis, V. United Health Group, Incorporated; Americhoice; Americhoice Of New Jersey, Inc., 659 F.3d 295 (3rd Cir. 2011)).

The appeals court's opinion quoted Justice Oliver Wendell Holmes: “Men must turn square corners when they deal with the Government.” The court said its conclusion was consistent with Congress's intent to “reach all fraudulent attempts to cause the Government to pay out sums of money or to deliver property or services.”

This is where Health and Human Services Kathleen Sebelius comes in. She is not following Congress’s intent, as the federal appellate court described it, “to reach all fraudulent attempts to cause the Government to pay out sums of money.” To the contrary, the Health and Human Services Secretary has just rendered an interpretation of the Obamacare law that exempts the federal insurance exchange and the federal subsidies paid to the insurance companies on behalf of qualified people from the very anti-kickback law which AmeriChoice, run by Obama’s political donor Welters, is alleged to have violated. Sebelius’s rationale, which stretches credulity beyond the breaking point, is that neither the federal or state exchanges, built with taxpayer dollars, nor the subsidies, are “federal health programs,” to which the anti-kickback law applies. As reported by the New York Times on November 5th, Sebelius revealed this odd interpretation in a letter to Representative Jim McDermott, Democrat of Washington.

The New York Times article critiqued Ms. Sebelius’s conclusion, for which she gave no rationale and which followed what the Times described as a “spirited debate within the administration”:

“Lawyers and law enforcement officials said Ms. Sebelius’s decision was unexpected because the insurance exchanges and subsidy payments appeared to fit the definition of federal health care programs in the anti-kickback statute.

Generally, the law makes it a crime to pay or receive anything of value in return for the referral of patients or as an inducement for people to buy goods and services reimbursed by federal health care programs. Such programs are defined broadly as ‘any plan or program that provides health benefits, whether directly, through insurance, or otherwise, which is funded directly, in whole or in part, by the United States government.’”

A persuasive case can be made that Secretary Sebelius’s legally indefensible interpretation was a gift to Obama benefactor Welters and his employer UnitedHealth Group, including the subsidiary AmeriChoice which has found itself entangled in anti-kickback litigation and would undoubtedly want to avoid any further challenges in connection with Obamacare couple that with the Obama administration’s choice of another UnitedHealth Group subsidiary, Quality Software Services Inc., despite obvious conflict-of-interest concerns. The UnitedHealth Group software affiliate will be fattening its wallet further with a lucrative general contractor gig to fix the Obamacare website that it was involved with building in the first place.

In short, we have the makings of perhaps the biggest scandal yet among several that are fatally infecting Obamacare.

Don’t miss this week’s Glazov Gang, which exposes ObamaCare's Dirty Little Secret.

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