Sebelius Solicitation of Foundation May Have Violated Ethics Rules

Fmr. White House ethics counsel suggests current HHS secretary broke rules

Kathleen Sebelius / AP
June 10, 2013

Health and Human Services Secretary Kathleen Sebelius solicited funding from a foundation that holds a significant share of its assets in Johnson & Johnson stock, a move that appears to run afoul of ethics rules, according to a former chief White House ethics counsel.

Sebelius told Congress on Tuesday that she asked the Robert Wood Johnson Foundation (RWJF) to contribute to a nonprofit organization that is working to implement President Barack Obama’s healthcare law. The Robert Wood Johnson Foundation holds 13 million shares of Johnson & Johnson stock valued upwards of $1 billion, making the foundation one of the pharmaceutical company’s largest shareholders.

Sebelius testified that she had asked RWJF and H&R Block for funds and had talked to Johnson & Johnson, Ascension Health, and Kaiser Permanente about the program but had not asked them for funds. She said she did not solicit funds from any entities under her regulatory authority.

However, former White House chief ethics counsel Richard Painter said RWJF’s large investment in Johnson & Johnson, a company under Sebelius’ regulatory purview, makes the foundation a "prohibited source" that she cannot solicit money from under government ethics rules.

"[The Robert Wood Johnson Foundation] might as well be Johnson & Johnson so far as the ethics rules on solicitation are concerned," Painter, who served as President George W. Bush’s ethics counsel from 2005 to 2007, told the Washington Free Beacon. "The HHS secretary can't ask them for money."

HHS, Johnson & Johnson, and RWJF did not respond to requests for comment. A Johnson & Johnson spokesperson told the Free Beacon on Tuesday that the foundation has no affiliation with the company.

According to Office of Government Ethics rules, federal employees cannot solicit money from a source that "does business or seeks to do business with the employee’s agency," "conducts activities regulated by the employee’s agency," "has interests that may be substantially affected by performance or nonperformance of the employee’s official duties," or is "an organization a majority of whose members are described" by the preceding criteria.

Many current and former RWJF board members were previously Johnson & Johnson executives or work in the healthcare industry.

The Robert Wood Johnson Foundation was established in 1972 after the death of former Johnson & Johnson chairman Robert Wood Johnson II, "with a generous bequest of shares of Johnson & Johnson," according to the foundation’s website.

Sebelius said Tuesday that she contacted a total of five entities, including Johnson & Johnson, to promote Enroll America, a nonprofit that seeks to register Americans under the Patient Protection and Affordable Care Act. She said she did not directly solicit funds from Johnson & Johnson or other companies regulated by HHS, but that such fundraising would still have been legally protected under the Public Health Service Act.

"I could legally solicit funds from anybody regulated by our office," she added. "I chose not to do that, but promoting a public-private partnership, you bet."

Painter objected to that interpretation of the statute.

"The statute is ambiguous, but I don't think it is best interpreted to allow one-on-one solicitations where specific companies are asked to give to specific organizations, as opposed to more general appeals to support the types of initiatives described in the statute," said Painter.

Republicans on the Senate Finance Committee, the House Energy and Commerce Committee, and the House Ways and Means Committee have written letters to Sebelius requesting more information and called on the Government Accountability Office to investigate.

The House Energy and Commerce Committee requested information from multiple health care companies about any contact they have had with Sebelius, including Aetna, BlueCross and BlueShield Association, and Kaiser Permanente.

This is not the first time Sebelius has come under scrutiny for alleged ethics violations.

The Office of Special Counsel concluded in 2012 that Sebelius violated the Hatch Act, which prohibits federal employees from engaging in political activity in their official capacity, after she gave a speech supporting President Obama’s reelection at an official event.