Vermont AG should reopen investigation into AARP's connections with health insurers, lawyer says

Leas: Vermont Attorney General Bill Sorrell fumbles–twice

By James Marc
July 12, 2010

Vermont Attorney General Bill Sorrell twice fumbled in addressing whether Jim Leddy can legally serve on the Vermont Commission on Health Care Reform while simultaneously serving as President of the Vermont AARP.

The Vermont law that set up the Commission provides that the appointee shall not hold “any official relation to,” “in any manner, be connected with the operation of,” or “make or perform any business contract with” any health care insurer [1].

In its first fumble, the AG’s office issued an opinion letter on June 14, 2010 that failed to address each of these provisions of the law. The letter erroneously concluded that since the AARP is not itself an insurer the appointment of its Vermont President did not violate the law. However, the letter quotes from the AARP website that “AARP contracts with insurers.” The contracts allow insurers to use the AARP name in sales operations in exchange for paying AARP royalty fees. The AARP reports those royalty fees exceed $330 million per year [2]. The AG letter omitted mention of the business contract provision of the law.

The contracts place the AARP in the role of paid public face of health care insurers in their sales operation. This means the AARP has ongoing relation, connection, and contracts with health care insurers. Since organizations are not alive, it is the people who run the organization who are responsible for the relating, connection, and making and performing the organization’s contracts. An AARP news release [3] announcing the appointment of Jim Leddy as AARP President in 2008 included his responsibility “to help AARP achieve its mission in Vermont.” The AARP mission statement provided on the organization’s web site includes provision of “a wide range of special products,” [4] and those special products include “health care insurance products” [5].

The AG opinion letter did not address these facts.

In response to a letter from Professor Frank Nicosia and a letter from myself [6] the AG’s office issued a second opinion letter prepared and signed by Deputy Attorney General Janet C. Murnane [7]. The issuance of the second opinion letter, dated June 25, 2010, implicitly recognized the inadequacy of the first opinion letter.

Distressingly, in its second fumble, the second letter glossed over the role of the Vermont AARP President in AARP’s relations, connections and contracts with health care insurers [7]. Even more shockingly, Ms. Murnane herself has a substantial connection with the subject of her investigation, Jim Leddy.

Here are the facts about this connection:

∙ Deputy Attorney General Janet C. Murnane is a former member of the law firm, McNeil, Leddy & Sheahan, P.C.[8]

∙ John T Leddy, a named partner of that law firm, is the brother of Jim Leddy.

∙ Ms. Murnane did not disclose her former association with the law firm in which Jim Leddy’s brother John is a named partner.

∙ Nor did Ms. Murnane address whether a brother relationship could be, or appear to be, even closer and much more long term than many client relationships.

The people of Vermont have a right to have opinions of our Attorney General’s office deserving the highest level of respect and admiration. The investigation of the Jim Leddy conflict of interest issue did not meet that standard.

To its credit the Attorney General’s office appears to have issued its second letter in recognition of the flaws in the first letter. In that same spirit the AG’s office should start over again and replace the second letter with a thorough, independent, and impartial review of facts and law about whether Jim Leddy can legally serve on the Vermont Commission on Health Care Reform while retaining his position as AARP Vermont President. So far the AG’s office has refused to do so.

In the meantime, neither of the letters issued by the AG’s office should be considered to be the final word on the issue of whether Jim Leddy can legally serve on the Commission while simultaneously serving as President of the Vermont AARP.

James Marc Leas is an attorney who works in South Burlington.

[7] scroll down at to see the letter from Janet C. Murnane