Failed Co-Op Under Investigation Used $280K in Taxpayer Dollars For Lobbying

Federal rule: No portion of the loans given to co-ops could be used for ‘propaganda purposes, attempts to influence legislation, marketing’

• November 12, 2015 12:45 pm


A failed co-op currently under investigation for underreporting its financial situation used hundreds of thousands in taxpayer dollars for lobbying, according to Senate lobbying disclosure records.

Health Republic Insurance of New York, a Consumer Operated and Oriented Plans marketplace created under the Affordable Care Act, began paying Alston & Bird, LLP in the second quarter of 2014 and continued through the third quarter of 2015, around the time the co-op announced that it was going out of business, according to the lobbying database.

Earl Pomeroy, a former Democratic Congressman from North Dakota’s at-large congressional district from 1993 until 2011, and Bob Siggins, the longtime Chief of Staff to Pomeroy, were deployed by the K-Street firm to lobby the U.S. Senate, the U.S. House of Representatives, and the Center for Medicare and Medicaid Services on behalf of the co-op. Between April 2014 and September 30, 2015, Alston & Bird were paid $280,000 in taxpayer dollars for its lobbying services.

According to a final rule issued by the Department of Health and Human Services on Dec. 13, 2011, no portion of the loans given to co-ops could be used for "propaganda purposes, attempts to influence legislation, or marketing."

Federal law additionally states, "No appropriated funds may be expended by the recipient of a Federal contract, grant, loan, or cooperative agreement to pay any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer or employee of Congress, or an employee of a Member of Congress in connection with any of the following covered Federal actions:  the awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative agreement."

A spokesperson for the Center for Medicare and Medicaid Services did not directly answer a question regarding the group’s lobbying activities, but instead sent a link back to the rule.

On Sept. 25, 2015, New York financial regulators announced that the co-op would cease issuing new insurance policies.

"Given Health Republic’s financial situation, commencing an orderly wind down process before the upcoming open enrollment period is the best course of action to protect consumers," said Anthony Albanese, an acting regulatory official.

In the third quarter of 2015, beginning in July and lasting through the end of September, the co-op used $50,000 in a last ditch effort to lobby for more solvency dollars as the co-op was nearing its end.

New York financial regulators are now investigating Health Republic Insurance of New York after finding that the co-op had "inaccurate representations" of their financial condition and "substantial underreporting." The investigators ordered the co-op to stop issuing health insurance policies at the end of November.

The New York co-op was the largest of the 23 created under Obamacare and had more than 150,000 members. It received $265 million in federal loans in 2012 and engaged lobbyists to secure an additional $90 million in solvency funds in 2014, which was approved by the Centers for Medicare and Medicaid.

When the Washington Free Beacon reached out to Pomeroy and Siggins about their lobbying activities on behalf of the failed co-op, a member of Alston & Bird’s communications department responded saying they could not discuss client matters.

Health Republic Insurance of New York declined to comment.

A spokesman for government watchdog Citizens Against Government Waste said that the hundreds of thousands put into lobbying efforts using taxpayer dollars is unacceptable.

"The recent financial death spiral of the Obamacare CO-OPs has already left millions of Americans scrambling to find new health insurance next year," spokesman Curtis Kalin said. "The revelation that a state program improperly used taxpayer funds on lobbying instead of ensuring the program's financial stability is unacceptable and outrageous. It is salt in the wound for American taxpayers."

Published under: Obamacare, Obamacare Exchanges