Amid questions, commissioner won’t recuse herself from Anthem-Cigna proposal

Katharine L. Wade, during her confirmation hearing earlier this year.

Arielle Levin Becker / The CT Mirror

Katharine L. Wade, during her confirmation hearing earlier this year.

Connecticut Insurance Commissioner Katharine L. Wade, a former Cigna lobbyist whose husband still works for the company, said she does not intend to recuse herself from considering Anthem’s proposal to buy the Bloomfield insurer.

“I’m following the law,” Wade said Friday.

Asked about concerns raised by some critics about an appearance of conflict of interest, Wade said, “I can act fairly, objectively and in the public interest.”

One of those critics, Sen. Kevin Kelly, R-Stratford, questioned why Wade wouldn’t put the matter in the hands of an “independent public official.”

“In order to protect the public interest, we need to make sure that the individuals in the insurance department evaluating this merger and whether or not it’s in the public interest are not bridled by any conflict, whether real or perceived,” said Kelly, the top Republican Senator on the legislature’s Insurance and Real Estate Committee. “And the public needs to trust the transaction. They need to trust that the people that are reviewing this are doing it solely on their best interest.”

Kelly noted that Attorney General George Jepsen, whose wife works for Cigna, already recused himself from all matters involving both Cigna and Anthem.

Wade cited several reasons for her decision to review and take action on the proposal, several of which were outlined in a letter to Carol Carson, executive director of the Office of State Ethics.

Among them: The application was filed by Anthem, a company with which Wade has no association. The process for evaluating the application is “public, transparent, and permits comment from interested parties.”

“The insurance department staff is going to evaluate this. We are hiring an independent economist to evaluate the market competition issues,” Wade said. “They will go through a rigorous process, which will include a public hearing.”

Wade said she plans to appoint a hearing officer to oversee the hearing and make recommendations about an appropriate ruling, as is customary in the department.

In addition, Wade said, the factors the department must use in making the decision are spelled out in law.

And Wade wrote that she doesn’t have a “substantial conflict” under law, and is not associated with Cigna under the statutory definition.

And she has Gov. Dannel Malloy’s apparent support: “The bottom line is that the Commissioner is running everything through Ethics and following the law. Her letter speaks for itself,” Malloy’s spokesman Devon Puglia said.

Carson said attorneys from her office and Wade plan to meet to discuss the commissioner’s written statement.  “It would be premature to comment concerning any further action,” Carson said.

Under state ethics law, a public official cannot take official action on a matter in which he or she has a “substantial conflict” of interest. That’s defined as a situation in which the official has reason to believe that her official activity could lead to direct monetary gain or loss for herself, her spouse or dependent child, or a business she is associated with. State law defines business the official is associated with as one in which the official or an immediate family member is, among other things, an officer – limited to the president, executive, senior vice president or treasurer – or holds a certain percentage of stock.

Wade worked at Cigna from 1992 to 2013, serving as vice president of public policy, government affairs and U.S. compliance. Her husband is an associate chief counsel, litigation, in the law department.

Wade wrote in her letter to Carson that she divested her Cigna stock and transferred the balances of her Cigna retirement plans to another company last year. Her husband participates in the company’s retirement plans on the same terms offered to other employees, she wrote. Wade’s husband also holds unvested shares in Cigna stock granted as part of an employee compensation plan, and those will be put in a blind trust when they are vested, she wrote.

In addition, Wade wrote, she took steps to ensure that her connections with Cigna would not be considered a substantial conflict of interest, including seeking guidance from the Office of State Ethics before she was nominated for the position and stating that she would recuse herself from any matter involving Cigna that she was actively involved with while at the company. Wade and her husband have put their assets in a blind trust, she wrote, and the company “firewalled/recused” her husband from matters involving the Connecticut Insurance Department.

Asked about the difference between her decision and Jepsen’s, Wade pointed to the law governing her department’s review of the proposal. “It’s quite clear what this agency has to do,” she said.

In an editorial last month, The Hartford Courant urged Wade to recuse herself, “to ensure that there are no questions involving a conflict.”

The Courant reported that Matthew G. Whitaker, executive director of the Foundation for Accountability and Civic Trust in Washington D.C., filed a complaint about Wade. He told the Courant he believed she should recuse herself to avoid “this appearance of impropriety.”

Connecticut is one of 23 states that will be evaluating the application, along with the U.S. Department of Justice and the Federal Trade Commission.

The insurance department will also play a role in coordinating role in the other major insurance acquisition that is pending, Aetna’s plan to buy Humana, because Aetna is based in the state and Connecticut is considered its lead regulator. But the company will not file the same type of application Anthem did because Humana does not currently have an entity in Connecticut. Instead, Aetna is expected to file a confidential competitive impact analysis on the Connecticut market, which the department will issue a decision on.

Correction: An earlier version of this story incorrectly described the department’s expected role in handling the Aetna proposal, based on outdated information.

 

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