Editor’s note: This oped is by James Marc Leas, a lawyer who lives in Burlington.
Here are some points about the appointment of Jim Leddy to the commission on health care reform that Vermonters might wish to consider:
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 and the appearance of a 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. Thus, Jim Leddy holds an official relation with the AARP both in Vermont and nationally. As such he is engaged in the management of the AARP. He is also connected with the operation of the AARP.
2. AARP is not itself an insurer. However, as Chief Assistant Attorney General Bill Griffin pointed out, 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 letter from Thomas C. Nelson, Chief Operating Officer of the AARP, 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 relationship 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 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 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.
Allowing an individual to escape from being designated as having a relationship if that individual is President and is involved in policy of an entity that has a contract relationship is illogical, contradicts the intent of the law, and permits serious abuse. A person should not be allowed to escape from being designated as having an official relationship with an insurer if he is Vermont President and serves on a national policy council of an entity that has contract relationship with the insurer to the tune of $339 million. This is a job that has an official relation with a health care insurer and it is a job that “in any way” has a connection with the operation of the health care insurer, and it is a job that has to make or perform business contracts with a health care insurer. Each of these places the individual in violation of the law.
Conflict of Interest:
As President of the Vermont AARP Jim Leddy owes a fiduciary duty to the AARP and to the success of its contracts with health care insurers.
As a member of the commission Jim Leddy would owe a duty to the public, including Vermonters of all ages.
The interest of the public could conflict with the interest of the health care insurance industry, including the AARP’s health care insurance licensing and royalty business and including the success of its contracts with health care insurers. In fact, the interest of the public sharply conflicts with the interest of health care insurers.
The fact that Jim Leddy takes no money while serving as President of the Vermont AARP and while serving on the AARP National Policy Council means he is even more committed to the programs and royalty income of the AARP, including the royalty income derived from its relationship with private health insurers. The fact that he takes no money suggests potential for a greater conflict of interest than if he did it for the money.
Conclusion:
Recognizing this conflict of interest, and recognizing the explicit requirements in the law, Jim Leddy should absolutely refuse the appointment.
Regardless, Shap Smith, should withdraw the appointment of Jim Leddy and appoint someone, as required by the law, with ‘experience in health care’ but without holding any official relation to a health insurer and without in any way a connection with the operation of a health insurer and without being responsible for making or performing business contracts with health insurers.
