PROVIDENCE – Blue Cross & Blue Shield of Rhode Island has entered into a $20 million agreement with the U.S. Attorney’s Office for the District of Rhode Island to settle possible charges in the ongoing influence-peddling investigation known as Operation Dollar Bill.
The agreement was announced in an 11 a.m. news conference by U.S. Attorney Robert Clark Corrente. He said the federal investigation has focused on the dealings between BCBSRI and former R.I. Sen. John Celona, who pleaded guilty in August 2005 to federal mail fraud charges and was sentenced to 30 months in prison; former House Majority Leader Gerard M. Martineau, who pleaded guilty last month to federal corruption charges (READ MORE); and “a former president of the R.I. Senate,” whom the U.S. attorney declined to name. William V. Irons, the Senate president during that period, has been named in connection with the probe as far back as January 2004.
“Between 2002 and 2003, Blue Cross executives were lobbying former Senator Celona on a variety of matters,” Corrente said, reading from a written statement. “Some Blue Cross executives, at Celona’s request, caused the company to pay roughly $75,000 to a communication company to produce a cable TV program, which Celona hosted. The communications company paid Celona more than $13,000.
“From 1998 to 2003, while Blue Cross executives were lobbying former Representative Martineau on a variety of matters, some Blue Cross executives caused Blue Cross to pay $175,500 to The Upland Group, which was Mr. Martineau’s sole proprietorship, to purchase paper bags.
“With respect to the former Senate president, from 1997 to 2003, while Blue Cross executives were lobbying him on a variety of matters, some Blue Cross executives caused him to be paid monthly commissions in excess of $400,000 as an insurance broker for one of Blue Cross’ pharmacy clients.”
In its agreement with the U.S. Attorney’s Office, Corrente said, “Blue Cross acknowledges and accepts responsibility for the conduct of its executives.” The names of those executives were not released, so it was not immediately clear whether today’s announcement was related to the earlier news that four senior executives had left BCBSRI on Tuesday. (READ MORE)
BCBSRI also agrees to pay the U.S. Attorney’s office $20 million out of company reserves, and to not take any rate increase to recoup that payment, the U.S. attorney said. The money will be used to establish a trust fund at The Rhode Island Foundation, the earnings and interest from which will be used yearly to fund projects “geared to improving the quality and afforibility of health care for everyone in Rhode Island,” Corrente said.
In addition, he said, the insurer agrees to submit to the oversight of an ethics monitor for a two-year period.
If BCBSRI complies fully with the terms of the agreement, it will not face criminal charges for the conduct of the executives, Corrente said, noting that the agreement covers only the insurer, not any individuals.
(A similar agreement between Corrente’s office and Rogers Williams Medical Center, signed in January 2006, will be terminated by mutual agreement at the end of this year. READ MORE)
In conclusion, Corrente said, “Let me emphasize that the investigation continues actively and on a number of fronts.”
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“It’s been a long, difficult process. By this agreement, we’re accepting responsibility for what our former employees have done,” James E. Purcell, president and CEO of BCBSRI, said in a telephone interview this afternoon. “We’re cooperating fully with the ongoing investigation and now we’re focused on the future.”
“In a sense, we’ve been working with the U.S. Attorney’s Office from the very beginning,” Purcell said, something that is noted in the agreement itself. “The actual negotiations have been over the past several months and we concluded them just the other day.”
He declined to identify the former employees or say when they had left the company, saying: “One of our policies, and for good reasons, is that we do not comment on the departure of former employees in one way or another.”
Asked whether BCBSRI has anyone in mind for the position of ethics monitor, Purcell replied: “Not yet – we are looking at possible candidates, and have talked to some people, but no selection has been made.”
The BCBSRI CEO had two main points he wanted to convey:
“The $20 million item – in some respects, I’m pleased with that,” he said. “This money will go to a foundation that will be used to improve health care for all Rhode Islanders … a resolution that will help everyone,” and one that “is in line with the company’s mission.”
The other thing, Purcell said, is that “I can’t change the past, but we are responsible for what we do today and what we do in the future … and we are very proud of the progress Blue Cross has made in ethics since 2004.”
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Christopher F. Koller, the state health insurance commissioner was less pleased with the insurance company’s progress. His office issued a statement this afternoon applauding Corrente “for bringing to light Blue Cross senior executives’ bribing of public officials.”
“The illegal activities of Blue Cross executives were a gross betrayal of the company’s mission and the public trust,” Koller said in the statement. “I remain concerned that Blue Cross has not sufficiently addressed the culture of intifference to the public interest that led to today’s settlement.”
But the health commissioner did agree that the settlement “charts a path to better governance, public accountability and community investment.”
Additional information is available from the Office of the U.S. Attorney, District of Rhode Island, at www.usdoj.gov/usao/ri/.
