Insurance Commissioner Katharine Wade, a former Cigna in-house lobbyist, has said she won’t recuse herself from involvement in the $54-billion merger between Cigna and Anthem, but the issue has not been settled by the Connecticut Office of State Ethics, which is still in discussions with her about the situation.
There has been no final disposition on Wade’s decision to keep herself in a high-profile and influential role concerning the merger, said Carol Carson, executive director of the Connecticut Office of Ethics. The dialogue is continuing about the commissioner’s six-page letter to the state ethics office in which she explains that decision.
“The conversation is ongoing,” Carson said.
In the Sept. 23 letter, Wade said she has divested herself of all Cigna stock; and that her husband Michael, a top company attorney, would not benefit financially from the proposed merger.
She also said that the Anthem “Form A” application, a disclosure form that must be filed in the course of a merger, “requires the insurance commissioner to make conclusions about Anthem, a Fortune 100 company with which I have never been employed and have never been ‘associated’…”
But Wade was employed by Cigna — the company that would merge with Anthem — from 1992 to 2013, serving as vice president of public policy, government affairs and U.S. compliance.
Before she was tapped by Gov. Dannel Malloy for the job last year, the governor’s administration asked the Connecticut Office of Ethics if there were any conflicts in naming an unnamed person in Wade’s exact circumstance as insurance commissioner.
Karen Buffkin, a top attorney for the governor, wrote that the potential nominee had promised to put any Cigna assets in a blind trust, recuse herself from an issue regarding Cigna when the law required her to do so, and set up a “firewall” to make sure her husband was kept in the dark about any issue considering Cigna that was before the insurance department.
The Connecticut Office of Ethics determined the steps outlined by the potential nominee “are in conformance with the Code of Ethics for Public Officials.”
But Wade’s situation has raised questions, and at least one ethics complaint, by the Washington-based Foundation for Accountability and Public Trust. It has also put the state’s ethic code for non-judicial officials under question.
Unlike other states, the Connecticut ethics code does not address the issue of an “appearance” of a conflict of interest, Carson said.
The ethics code for federal officials bars “participation in such a matter that would cause a reasonable person to question the employee’s impartiality” and disqualifies a federal employee, for two years, “from (involvement in) any particular matter in which the individual’s former employer is a party or represents a party.”
Not so Connecticut’s code of conduct. It limits conflicts of interest to dealings with businesses a government official used to own, not businesses that simply once employed the official.
Yet Connecticut Attorney General George Jepsen has recused himself from anything to do with the Cigna–Anthem merger because his wife works for Cigna.
And despite the narrowness of Connecticut’s ethics code, Matthew Whitaker, the executive director of the Foundation for Accountability and Public Trust, a group with GOP ties, says there’s still grounds for his complaint based on the ties Wade and her husband have to Cigna.
“Bottom line, both of their deep connections to the company raise serious and irreconcilable concerns about the Commissioner and her motivation for considering this proposed merger,” Whitaker said.
The Connecticut Office of Ethics would not disclose anything about ethics complaints against the commissioner.
But there may be more. Tom Swan, executive director of the Connecticut Citizen Action Group, said his organization wants to speak with Wade before deciding whether to file a complaint.
“I think we want to have more of an explanation from her,” Swan said. “After that, we’ll weigh our options.”
Swan said he’s “perplexed as to why she thinks this is okay.”
“The attorney general recused himself right away,” he said.
Compared to Wade, Jepsen would have had a limited role in the review of the merger, helping the U.S. Department of Justice’s anti-trust division weigh its impact on competitiveness in the insurance market. The DOJ is also reviewing a proposed merger between Aetna and Humana.
Wade has a high-profile role in the Cigna-Anthem deal, since Cigna is headquartered in Connecticut.
She will co-ordinate information about the proposed merger with 26 states in which the merged companies would do business. Some state insurance departments, including those in New York and California, have already expressed concerns that a marriage between Cigna and Anthem will limit consumer choices.
Connecticut Insurance Department spokeswoman Donna Tommelleo said Wade will make her decision on the merger “based on the recommendations of the [insurance] department’s professional staff of financial analysts, examiners, accountants, actuaries and attorneys.”
“The department is also hiring an independent economist to review market competition,” Tommelleo said.
She said the commissioner’s letter to the state ethics office is the answer to other questions regarding Wade’s decision not to recuse herself from oversight of the Cigna-Anthem merger.
In any event, the Justice Department is likely to have the final say on the merger issue if it decides to block the it.
A Justice Department official said, “unless some sort of resolution is reached, the Justice Department would file suit to block a merger, and that would then be litigated in court.”
Merger plans would then be halted pending judicial action, which could take years.
Earlier this year, cable giant Comcast and Time Warner Cable decided to scrap plans to merge after federal regulators threatened judicial action to block the deal.