“That depends on what the meaning of the word ‘is’ is.”
— Bill Clinton
“Presently, there are no Cigna matters before me.”
— Katharine L. Wade
One of those lines is an infamous example of a president trying to parse a statement to justify a false denial of a sexual relationship with a White House intern. The other is an insurance commissioner’s statement that may be contrary to the common usage of English, yet accurate under the meaning of the Connecticut ethics code.
Commissioner Katharine L. Wade’s controversial refusal to recuse herself from ruling on the Anthem-Cigna insurance merger has provoked a reappraisal of ethics regulators, who heavily rely on the self-reporting of public officials, and an ethics code that may be clearer to lawyers than lovers of English.
No one from the Office of State Ethics challenged Wade when she sought approval on Feb. 26 for her husband, Michael T. Wade, the associate chief counsel for litigation at Cigna, to sell company stock as his options vested from Feb. 25 to March 5 – something he would be barred from doing if the commissioner was considering a matter involving Cigna.
Wade, a former Cigna vice president of government affairs, did not try to hide the fact that her staff, at that very moment, was reviewing Anthem’s 5-month-old “Form A application” to acquire Cigna for $54 billion, a massive transaction involving the second- and fourth-largest health insurers in the United States.
“The application is currently under review by Department staff,” Wade wrote in an email to the Office of State Ethics. “On behalf of the Department, I signed a contract with an independent economist to assist Department staff in their review of the Anthem Form A application. Presently, there are no Cigna matters before me.”
Wade declined to say Friday on what basis she concluded there were no Cigna matters before her under the meaning the state ethics code, given that she already has asserted her intention to rule on the merger.
“In light of the ongoing process currently before the Office of State Ethics, it would be inappropriate to comment at this time,” said Donna Tommelleo, a spokeswoman for Wade. In response to a complaint, an ethics panel is now reviewing whether Wade should recuse herself.
In her latest financial disclosure statement, Wade did not list Cigna as a company with which she or her spouse are “associated,” an accurate assessment. State law defines “associated” as being a senior official or holding a five-percent ownership interest, which in Cigna’s case would mean owning stock worth about $1.4 billion.
Carol Carson, the executive director of the Office of State Ethics, said Wade’s assertion of “no Cigna matters before me” could be accurate under state ethics laws if there was no Cigna-related action awaiting her consideration at the moment. Carson’s staff accepted Wade’s assertion and posed no question about the precise status of the merger review.
Cheri Quickmire, the executive director of Common Cause, which has intervened in the case, said Wade’s ability to say without being challenged there was no Cigna business before her beggars belief.
“I don’t know how she can say business is not before her just because it wasn’t in a pile on her desk,” Quickmire said. “It’s in the office next to her?”
Actually, it is upstairs.
The Insurance Department staff is reviewing Anthem’s voluminous application. Once the application is deemed complete, it will be up to Wade to call a public hearing and then reject or approve the application, with or without conditions. She will be guided by a prescriptive state law that tilts toward approval.
State law creates a rebuttable presumption that Wade will approve the merger. It says the commissioner “shall approve any merger or other acquisition of control” unless one of a half-dozen factors are present – a key one being that the transaction would “substantially lessen competition of insurance in this state or tend to create a monopoly herein.”
Anthem asserts in its application that its “proposed acquisition of control of Cigna will not substantially lessen competition in insurance or tend to create a monopoly in the State of Connecticut with respect to any line of business. In fact, much of Cigna’s and Anthem’s product portfolios in the state are complementary.”
Tommello said that assertion will be tested at the public hearing and in a review by staff.
The Citizen’s Ethics Advisory Board voted unanimously two weeks ago to grant a petition by Common Cause, one of the advocacy groups that have questioned the impact of the merger on consumers and the propriety of Wade’s role, to review her status and issue a declaratory ruling on whether she must recuse herself.
Neither Wade nor the administration of Gov. Dannel P. Malloy saw the need to seek a formal ruling. Instead, Wade sent the Office of State Ethics a six-page letter in September advising it of her decision to review and take action on the Anthem application.
“The arrogance of the commissioner and the governor’s office is appalling,” said Tom Swan, the executive director of the Connecticut Citizen Action Group. ‘The fact that this even is in question points to the need to tighten ethics legislation or revisit the interpretation. How is it not considered a conflict when someone is compensated in stock options? It is ridiculous.”
Connecticut ethics laws appear to give little or no guidance on whether the appearance of a conflict should be sufficient to consider recusal, unlike in neighboring Rhode Island:
“The people of the State of Rhode Island believe that public officials and employees must adhere to the highest standards of ethical conduct, respect the public trust and the rights of all persons, be open, accountable and responsive, avoid the appearance of impropriety, and not use their position for private gain or advantage.”
Neither Connecticut law nor a guidebook published by the Office of State Ethics deals with appearances.
Comptroller Kevin P. Lembo, who last Thursday called on Wade to recuse herself, said the questions around Wade are sufficient to undermine public confidence, regardless of whether she has an actual conflict under state law.
“I’m not in a position to parse the ethics law on this,” Lembo said. “It’s not helpful to dig in, even if you are right on the letter of the law.”
Most of the residents who have availed themselves of the opportunity to file statements during a public comment period on the Common Cause request for a declaratory ruling by the ethics advisory board seem to agree, even if they give Wade benefit of the doubt.
“I have no reason to believe that Commissioner Wade is not a person of the highest integrity,” wrote John D. Lobrano. “However, appearances matter.”