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Vermont attorney general’s office must reconsider Leddy decision

Editor’s note: What follows is an open letter from James Marc Leas, an attorney in Burlington to the Vermont Attorney General’s office. The letter is followed by the AG office’s original response.

June 27, 2010

Dear Attorney General Sorrell and Deputy Attorney General Janet C. Murnane:

Thank you for the letter dated June 25, 2010 from Deputy Attorney General Janet C. Murnane. I was very concerned when I submitted my June 21, 2010 letter to you. But now I am far more concerned about violation of the Vermont Commission on Health Care Reform statute than I was then. I request further reconsideration based on the following points.

1. Deputy Attorney General Murnane’s letter admits that “the AARP itself appears to have substantial financial arrangements or relations with several insurance companies; however, we are not aware of any information which shows that Mr. Leddy himself has any relation to any insurance company, official or otherwise.”

I would also respectfully ask you to consider that Ms. Murnane’s letter admits that Mr. Leddy serves as President of the Vermont AARP and servers on an advisory council of the national AARP. That role is what gives him the relation to the insurers.

Since organizations are not alive, it is the people who run organizations who carry out the official relations for the organization. In his role as top officer of the Vermont AARP Mr. Leddy has the responsibility for official relations of the Vermont AARP with the insurers with which the AARP holds lucrative contracts. In fact, the AARP itself admits that the AARP mission includes providing the health care products and that the Vermont AARP President’s job includes achieving this mission [1].

2. Subsection 901(b)(2)C recognizes that a person can have a connection with the operation of a health care insurer without being an employee of a health care insurer. Ms. Murnane’s letter does not address this possibility though she correctly quotes its terms: “the two nonvoting members with experience in health care shall not … in any manner, be connected with the operation of a health care provider or insurer…”

I would respectfully ask you to consider that facilitating sales of health care insurers connects AARP with the operation of health care insurers. While the AARP states that it does not itself sell health insurance, the AARP does offer health insurance products and license its trademark for the sale of health insurance products by the insurers. By offering itself as the public face that facilitates sales of insurance company products AARP is connected with the operation of health care insurers and is performing an operation of the health care insurers.

The President of the Vermont AARP is responsible for achieving the caring and trustworthy public face the insurers require to sell their wares and for achieving the mission of the AARP, which includes offering these health insurance products for health insurers and licensing the AARP name to health insurers in exchange for hundreds of millions of dollars of licensing revenue from the insurers.

AARP portrays itself as so caring and trustworthy that, not just Jim Leddy, but all of AARP’s state presidents, its entire national board of directors, and all its national officers serve as unpaid volunteers. Where, as here, hundreds of millions of dollars are at stake for the organization, such volunteering appears to be a strategic policy to maintain the needed kind, caring, trustworthy public face that makes the AARP name valuable for its lucrative trademark licensing and its extensive lobbying.

One cannot be a top official of the AARP and not in at least some manner be connected with its offering, licensing and public face operations. The AARP receives half its income from insurers for these operations so this is a substantial part of its efforts. The issue is whether the President of the Vermont AARP is connected with the real and substantial AARP operation of being the public face for the insurers.

Instead of addressing whether the President of the Vermont AARP is “in any manner” involved in the high dollar connection of AARP with health insurers in his role as top official of the Vermont AARP and a member of the AARP national policy council, Ms. Murnane’s letter goes elsewhere. Her letter states, “his unpaid positions with the AARP do not include the authority or responsibility to operate a health care provider or insurer, and the audited records of the AARP make it reasonably clear that the AARP itself is neither a health care provider nor an insurer.”

Her letter does not address the statutory issue of how the President of the Vermont AARP can possibly avoid any connection with the AARP offering, licensing, and public face operation of health care insurers with whom the AARP has hundreds of millions of dollars of revenue from licensing contracts. I would respectfully ask you to consider that it is the fundamental job of the President to act vigorously to ensure the success of the lucrative AARP offering, licensing, and public face operation.

3. Ms. Murnane’s letter admits that the AARP holds contracts with health care insurers. Top officers, including the President of an organization, are responsible for making and performing contracts of the organization. The President of the Vermont AARP is the top responsible person in Vermont [2].

Not only would he be responsible for making or performing business contract with health care insurers, he would also have a fiduciary responsibility to the AARP to keep such lucrative contracts going while offering advice to the commission. This is not a matter of integrity. This is a matter of fiduciary responsibility in his role as AARP President.

Nothing in Ms. Murnane’s letter recognizes or addresses how a President of the Vermont AARP can be said to be free of all such relations, connections, and responsibility for making and performing the lucrative contracts that AARP has with heath care insurers. And how the President can avoid his fiduciary responsibility to AARP to maintain those contracts for that organization while serving on the Commission.

Finally, Ms. Murnane’s letter includes a point that raises a very troubling question about the rule of law in our state. I am shocked by her statement that the level of observance of the law by government officials is determined by what a court would allow, and that in this case a court would allow a substantial level of violation, as long as it is not “a gross departure.” I believe that the public demands the highest level of respect for the rule of law and the highest standard of observing each and every one of the requirements of the law by government officials. Government officials have a duty to set an example for the rest of us. Particularly where political considerations may apply or where the individual has a good reputation for service to the community, the temptation to depart from the requirements of law may be strongest and should be more firmly resisted. The office of the Attorney General weakens his case by resorting to putting on the public record the view that government officials need only observe the absolute lowest possible standard that a court would enforce. Resort to this argument is acknowledgment that Vermont has a problem in the participation of an individual on the commission while he simultaneously serves as the President of the Vermont AARP.

I would ask you to reconsider. I urge you to issue an opinion that an individual cannot serve as the top official of the AARP while serving on the Commission, and that if Jim Leddy wishes to serve on the Commission he should step down as President of the Vermont AARP. Thank you very much for your reconsideration of this important matter.
_________________________________

[1] When Jim Leddy was named AARP Vermont State President in 2008 a news release stated that it was “a volunteer position working closely with both staff and volunteers throughout the state to help AARP achieve its mission in Vermont.”

The “AARP mission statement” states, “What Is the Mission of AARP? AARP is a nonprofit, nonpartisan membership organization for people age 50 and over. AARP is dedicated to enhancing quality of life for all as we age. We lead positive social change and deliver value to members through information, advocacy and service. AARP also provides a wide range of unique benefits, special products, and services for our members.”

The “wide range of unique benefits, special products, and services” includes health care insurance products.

[2] No one disputes that the President of BP has an official relation with, a connection with, and is responsible for the contract with the actual drilling company. And not just because he is paid.

Sincerely,
James Marc Leas

Law Office of James Marc Leas

37 Butler Drive, South Burlington, Vermont 05403

The letter from Jane Murmane, deputy attorney general follows:

June 25, 2010

Dear Mr. Leas and Professor Nicosia:

This is in reply to your recent messages to the Attorney General’s Office about the appointment of James Leddy to the Vermont Commission on Health Care Reform. I have reviewed your concerns with Attorney General Sorrell.

As you are aware, Act 128 created this Commission to monitor health care reform initiatives and to make recommendations to the General Assembly. The Act authorized the Speaker of the House to fill one of the nonvoting positions on the Commission. Absent a gross departure from the appointment standards established by the Legislature — something very remote from the circumstances here — the Speaker’s appointment would not be disturbed by the courts.

Nor is the Speaker’s decision subject to approval by the Attorney General. The Attorney General’s Office reviewed Act 128 and the Leddy appointment in response to a citizen complaint. We responded in a public way to the original complaint because the complaint itself was widely publicized. Your messages repeat concerns raised in the prior complaint and add to them by citing other subsections of the appointment statute. The purpose of this message is to respond to your concerns and to confirm our view that there is nothing in any subsection of the statute that would prohibit Mr. Leddy’s appointment to the Commission. The statutory prohibitions and our comments are as follows:

2 V.S.A. § 901(b)(2)(A) provides that “the two nonvoting members with experience in health care shall not … 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…”

Comment: Mr. Leddy is not employed by an insurance company because the AARP is not an insurance company, nor is he “employed” by the AARP. We are informed that he holds an official relation to the AARP in the sense that he is the unpaid president of the Vermont AARP entity and serves as an unpaid member of an AARP advisory council. But, again, the AARP is not an insurance company. The AARP itself appears to have substantial financial arrangements or relations with several insurance companies; however, we are not aware of any information which shows that Mr. Leddy himself has any relation to any insurance company, official or otherwise. Nor are we aware of any information which shows that Mr. Leddy is employed by or holds any official relation to any health care provider.

2 V.S.A. § 901(b)(2)(B) provides that “the two nonvoting members with experience in health care shall not …own stock, bonds, or other securities of a health care provider or insurer, unless the stock, bond, or other security is purchased by or through a mutual fund, blind trust, or other mechanism where a person other than the member chooses the stock, bond, or security …”

Comment: We are not aware of any information which shows that Mr. Leddy owns any securities as described in this subsection.

2 V.S.A. § 901(b)(2)(C) provides that “the two nonvoting members with experience in health care shall not … in any manner, be connected with the operation of a health care provider or insurer…”

Comment: We are not aware of any information which shows that Mr. Leddy is connected with the operation of a health care provider or insurer. His unpaid positions with the AARP do not include the authority or responsibility to operate a health care provider or insurer, and the audited records of the AARP make it reasonably clear that the AARP itself is neither a health care provider nor an insurer.

2 V.S.A. § 901(b)(2)(D) provides that “the two nonvoting members with experience in health care shall not … render professional health care services or 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.”

Comment: We are not aware of any information which shows that Mr. Leddy renders health care services or makes or performs contracts with health care providers or insurers. Mr. Leddy holds volunteer positions with the AARP and the AARP makes contracts with health insurers. However, by its terms the subdivision (D) prohibition applies only to persons who themselves provide health care services or perform tasks fairly described as making (negotiating, drafting, signing) business contracts with care providers and insurers, or performing those contracts. It does not apply to every person “holding any official relation to” any entity that renders the services or makes or performs the contracts described in subsection (D). That broad prohibition applies only to persons having an official relation to health care providers and insurance companies, see 2 V.S.A. § 901(b)(2)(A) above, and Mr. Leddy is not such a person.

In summary, we are not aware of any information that would disqualify Mr. Leddy for service on the Vermont Commission on Health Care Reform.

You do note Jim Leddy’s long history of dedicated and honorable public service. We have little doubt that Speaker Smith weighed Mr. Leddy’s considerable experience and expertise in deciding to make the appointment that, again, was his alone to make.

We have opined and reopined that the Leddy appointment did not violate the letter of the law. You remain free to disapprove of and be disappointed by the appointment. You also remain free to express such feelings directly to the Speaker.

Sincerely, Janet Murnane

cc: Speaker Shapleigh Smith (by mail)
Janet C. Murnane
Deputy Attorney General
Vermont Attorney General’s Office
109 State Street
Montpelier, VT 05609-1001

http://vtdigger.org/2010/06/29/leas-attorney-generals-office-must-recons...