By: James Marc Leas, South Burlington
Dear Attorney General Sorrell:
I request reconsideration of the decision provided in the letter by Bill Griffin concerning the appointment of Jim Leddy to the commission on health care reform. Although Bill Griffin’s statement that AARP is not itself an insurer is correct, for Jim Leddy, the AARP’s Vermont President, to serve on the commission would still be a violation of several sections of the law.
First, I agree with Bill Griffin that Jim Leddy is not in the employ or part of the management of an insurer because AARP is not itself an insurer. But this satisfies only one of the two parts of provision A of the statute (full text of S.88 § 901 is attached). Bill Griffin did not address the other part of provision A, “holding any official relation to any health care insurer.” Nor did Bill Griffin address provision C of the statute. As to provision D, while Bill Griffin said that “AARP contracts with insurers,” he did not mention that the statute includes a provision D which prohibits any person serving on the commission to “make or perform any business contract with any health care provider or insurer if such service or contract relates to the business of the health care provider or insurer.” [1]
I respectfully ask that you consider whether or not Jim Leddy is in compliance with the remaining part of provision A, and with provisions C and D. I believe he is not in compliance with any of these sections. Here is why.
First, the Vermont law states in relevant section that the appointee to the commission shall not:
(A) be in the employ of or holding any official relation to any health care provider or insurer or be engaged in the management of a health care provider or insurer; . . .
(C) in any manner, be connected with the operation of a health care provider or insurer; or
(D) . . .make or perform any business contract with any health care provider or insurer if such service or contract relates to the business of the health care provider or insurer, except contracts made as an individual or family in the regular course of obtaining health care services.
The law makes explicit the common sense rules against conflict of interest.
Here are the facts:
1. Jim Leddy is President of Vermont AARP. Jim Leddy is also a member of the AARP National Policy Council where he serves on its Health and Long Term Care Committee.
2. AARP is not itself an insurer. However, as Chief Assistant Attorney General Bill Griffin pointed out in his letter, AARP’s website states that “AARP contracts with insurers.”
3. An AARP web site lists AARP involvement with its name on a long list of health care insurance products.
4. A letter from Thomas C. Nelson, Chief Operating Officer of the AARP (attached), to Congressman David G. Reichert states that AARP’s royalty income ‘averaged $339.7 million per year from 1999 to 2008,’ That means that AARP earns a lot of money from its contracts with health care insurers. Under those contracts AARP offers health care insurance to its members.
5. Entities cannot act on their own. They act through their officers and policy makers who have fiduciary responsibility for the organization. The official relation of the AARP with the insurers is through the officers of the AARP.
Does Jim Leddy’s appointment conform to the law? By taking responsibility as President of the Vermont AARP [2] and by taking responsibility on the National Policy Council Jim Leddy adopted the duty of having an official relation with health care insurers on behalf of AARP. In his capacity as President of the Vermont AARP, which has valuable contract relations with insurers, Jim Leddy also is “in any manner” connected with the sales operation of health care insurers. Through his position as President of the Vermont AARP Jim Leddy is also responsible to see to it that the business contracts the AARP holds with health care insurers are performed. Thus, Jim Leddy’s appointment does not confirm to several of the requirements of the law.
While Jim Leddy is a highly qualified individual and in no way do I disrespect him, he cannot be expected to fulfill both his specific fiduciary duty to the AARP to make, perform, and maintain its lucrative contract income from health insurers and the duty to the Vermont public as a whole he would have as member of the commission. Nor does the Vermont statue now in place qualify him to be on the commission while serving as Vermont AARP President. Allowing an individual to escape from being designated as having an official relation to a health care insurer if that individual is Vermont AARP President and is involved in establishing its policy while the AARP has massive contract relations with several health care insurers is illogical, contradicts the law as written, contradicts the intent of the law, and sets an example of blatant disregard of Vermont law.
The AARP is up to its neck in official relation to health care insurers, and officers of the AARP are responsible for participating, supervising, directing, changing, making and performing that relation with health care insurers in behalf of the AARP. The Vermont AARP President’s job is also one that “in any way” has a connection with the operation of the health care insurer, including: (1) facilitating, directing, and promoting sales of the health care insurer’s insurance; and (2) directly or indirectly ensuring that the AARP receives and continues to receive very substantial payments from health care insurers. Officers of the AARP are the ones who make or perform business contracts with health care insurers. Bill Griffin himself recognized the contracts AARP has with health care insurers in his recent letter. As Vermont AARP President Jim Leddy is responsible for the Vermont portion of making and performing these business contracts.
For each of these reasons the Vermont statute would be violated if a person who is President of the Vermont AARP is simultaneously serving on the Vermont commission on health care reform.
I would therefore respectfully request that you determine that Jim Leddy can serve as President of the Vermont AARP or he can serve on the commission on health care reform but he cannot legally serve on the commission if he continues to serve as AARP President. Thank you very much for your attention to this important matter.
[1] Provision A includes the word “or” four times, and the four provisions of the statute are separated by the word “or.” This means that violation of even one part of provision A or of either provision C or D is enough to be a violation. Therefore, all provisions and parts of provisions need to be considered by the Attorney General. Merely satisfying one provision–or in this case, part of one provision–is not enough. Each and every provision and each and every part of each provision must be satisfied for the appointment of Jim Leddy to be in compliance with the law.
[2] The fact that Jim Leddy takes no money while serving as volunteer President of the Vermont AARP and while serving on the AARP National Policy Council could mean he is even more committed to the programs of the AARP, including the royalty income derived from its contract relation with private health insurers. The fact that he takes no money suggests potential for a greater conflict of interest than if he merely did it for the money.
Sincerely,
James Marc Leas