Georgia legislators’ business interests, duties often get tangled, State & Regional
Govt & Politics,By Aaron Gould Sheinin and James Salzer - The Atlanta Journal-Constitution 3/12/16, AJC
When
freshman state Rep. Shaw Blackmon presented the first bill he’d ever filed to the House
Insurance Committee this session, he had a powerful ally sitting next to him at
the table.House Rules Committee Chairman John Meadows, whose panel decides what bills live or die in the General Assembly, sat beside Blackmon, explaining to colleagues why they needed to pass legislation setting a 5 percent minimum commission when insurance agents sell health coverage to small businesses.
Meadows said the measure — House Bill 838 — was his idea and he’s never hidden the fact that he, like several committee members, is a licensed agent. He also knows most colleagues wouldn’t consider voting against legislation he co-sponsored, and few did as it breezed through the committee and the House. It may get a vote Monday in the Senate Insurance Committee.
“The attempt really was to get my insurance companies to the table,” Meadows said after describing how commissions have declined. “All this does is it ensures the agent gets compensated for the work he does.”
Ethics watchdogs, and some lobbyists, called it an in-your-face example of what’s gone on at the Capitol for decades. “There is a line, and that line is crossed when you sponsor or co-sponsor legislation that directly benefits you,” said Clint Murphy, a Savannah Realtor and former Republican operative who briefly headed Common Cause Georgia. “To me, this is an obvious conflict. It blows my mind.”
The General Assembly is made up of part-time politicians, people who otherwise are lawyers, pharmacists, engineers, insurance agents, funeral home directors, consultants, retirees and community activists who frequently bring their own agenda to the chambers of the House and Senate.
It’s a place where attorneys run committees deciding court issues, where insurance agents often dominate committees regulating their own industry, where the chairwoman of the Senate committee that dictates health policy is an executive of one of the state’s biggest health care contractors, and where legislators seldom worry about carrying legislation or seeking funding for their own industry.
Billions of dollars are at stake. The budget lawmakers approve each year tops $40 billion when state and federal funds are included. Thousands of businesses and professions are regulated, directly or indirectly, by the state and by what legislators decide on issues such as insurance agents’ commissions.
Overlaps ‘impossible’ to avoid
Supporters of the idea of part-time legislatures say they inject real-world experience into the lawmaking process and avoid the formation of a legislative class filled with full-time politicians and career hangers-on.
“Have you ever noticed that the people who come down here, they know a whole lot about what they do?” Meadows said in an interview. “And you wonder why other representatives get involved? They sometimes know the shortcomings of whatever the law happens to be. Whether it’s personal or done for any group, they know what they’re doing.”
Georgia’s conflict-of-interest laws are weak. Some would say nonexistent. Members can recuse themselves from voting on issues when they have a conflict. Some do. Many don’t. And members don’t publicly investigate such conflicts. They generally only play out in the media.
State Rep. Mike Cheokas, R-Americus, who owns a liquor store, recuses himself any time a bill dealing with liquor sales reaches the House floor. That happens often enough that such recusals are commonly referred to as invoking the “Cheokas Rule.”
“I really don’t have to do this because there is nothing that will specifically address my business directly,” Cheokas said. “My position has always been, though, the perception of my constituents, and if they would feel it would be a conflict, then that’s what I do.”
The rules basically dictate that unless a bill solely benefits a member’s business, recusal isn’t necessary. House members recused themselves 18 times during the 2015 session, the most recent data available. In the Senate, members asked to be excused from a vote on seven occasions.
Senate Insurance Chairman Charlie Bethel, R-Dalton, whose committee is considering the agents’ bill, said it’s “impossible” not to have some overlap.
“The nature of having a citizen legislature, a part-time legislature, is that most of us have to provide for our families outside of the legislative process,” said Bethel, an attorney who owns a mediation practice. “My job as a senator, as a chairman, is to look at each bill on its merit.”
A Center for Public Integrity report in 2013 said about 40 states have rules or laws limiting what lawmakers can vote on. As in Georgia, the report found many are hazy or loosely enforced.
State Rep. Joe Wilkinson, R-Sandy Springs, the chairman of the House Ethics Committee, said he tells freshman lawmakers a story to explain the conflict rule. Back in 2003 or 2004, he said, when Democrat Terry Coleman was speaker of the House, there was a bill to waive the state license plate fee for retired military. Wilkinson, a former naval officer, recused himself.
Coleman called him to the dais and told Wilkinson: “Unless the bill said the waiver only applies to retired naval officers whose last name ends with a ‘W,’ then it’s not a conflict.”
“It has to be specific,” Wilkinson said.
‘Complete separation’ of duties, jobs
State politicians have long been accused of mixing their personal business with their state responsibility.
In the mid-1980s, then-Senate Majority Leader Tom Allgood, an Augusta Democrat, and state Attorney General Mike Bowers clashed over whether Georgia law prohibited legislators and their spouses from owning nursing homes or pharmacies because they received state- and federally funded Medicaid payments.
Allgood’s family had a business empire that included a number of nursing homes, as well as a farm and vineyard, a trucking company, a pharmacy, and a development and mortgage company.
In 1984, the General Assembly passed a bill specifically exempting Medicaid providers from conflict-of-interest laws. Allgood and three other legislators sued Bowers and won.
Wilkinson last year reminded lawmakers not to use their elected position for personal gain after state Rep. Mike Glanton, D-Jonesboro, tried to set up a meeting with Atlanta Schools Superintendent Meria Carstarphen in a bid to save a $1.1 million teacher recruiting contract between the school system and the company he helps lead. In an email to the superintendent, Glanton pointed out that he serves on the Education Committee and the education subcommittee of the Budget Committee, which helps decide school funding.
WXIA recently did a story on Senate Health & Human Services Chairwoman Renee Unterman, R-Buford, whose committee makes health policy. Unterman is also an executive with Anthem, the parent company of Blue Cross and Blue Shield of Georgia. The companies have long run a state Medicaid managed-care program and provided coverage through the State Health Benefit Plan to teachers, state employees, retirees and their dependents.
Unterman also serves as vice chairwoman of the Senate Appropriations Committee. Over the past five years, the company has received more than $7 billion in payments from the state, but Unterman said she is able to separate her duties as a legislator from her job.
That is how lawmakers typically respond to conflict questions.
For instance, state Rep. Micah Gravley, R-Douglasville, said the fact that he works for one of the most influential organizations at the Capitol, the Georgia Trial Lawyers Association, is no conflict.
“I don’t (sponsor) any of their bills,” said Gravley, the group’s grass-roots director and a former aide to Gov. Sonny Perdue. “There’s a complete separation. I’m not different than any other citizen legislator that works for a membership organization.”
Gravley sits on the House Judiciary Non-Civil Committee, which considers bills involving criminal law, measures of obvious interest to many trial lawyers. About two-thirds of the committee’s members are lawyers. Gravley’s employer doled out more than $700,000 in campaign contributions over the past two years, according to records reviewed by The Atlanta Journal-Constitution, making it one of the top donors in statehouse politics.
Gravley, who registered as a lobbyist for the trial lawyers before being elected to the House in 2012, does not recuse himself from votes on bills important to the association.
“I don’t benefit financially,” he said. “I have a set salary. I’m not an attorney. I’m not going to gain anything. It literally has nothing to do with my work with the association.”
‘Judge and jury’ and legislator
The House Insurance Committee plays a key role in the heavily regulated insurance industry. About a dozen members are either in the industry or have inactive insurance sales licenses. Industry lobbyists pack committee meetings. The industry typically is a big donor to campaigns, and top state officials and lawmakers typically get invited to beachfront insurance conventions over the summer.
When he sat before the House committee, Blackmon, the president of a company that provides financial services supplies, promotional products and regulatory support to companies, spoke for about a minute. He then quickly deferred questions to Meadows, noting, “I am not an agent.”
For most of next 20 minutes, Meadows answered questions. “The reason for the bill is I have been doing this for 38 years, and over that period of time, the commissions have decreased by almost 50 percent,” he said.
The two had little trouble selling the panel on the legislation, which guarantees a minimum 5 percent commission for agents who sell group health policies. The bill also sets a 4 percent minimum commission for individual health benefit plans.
Meadows told the AJC he does not have a big personal stake in the bill. “I’m a part-time legislator, as everybody else is down here,” he said. “I do make a living selling insurance — temporarily, because I’m 71 and I can go to the house. But there are probably 5,200 businesses and Lord knows how many agents that can’t quit. They’ve got to make a living, and the insurance companies have made it harder and harder to make a living.”
Meadows said he offered insurance companies a chance to help craft the bill but that they declined. Health insurers said they offered a nonlegislative fix as well, but that didn’t work out.
Brad Carver, a lobbyist for the National Association of Insurance and Financial Advisors, urged a Senate committee Thursday to pass the bill, saying falling commissions are a problem for agents throughout the country. “We are very excited about this legislation,” he said. Considering the bill’s patron, health insurance companies have been publicly cautious about it.
“The Georgia Association of Health Plans appreciates the work the bill sponsor has put into the bill, the ability to offer industry perspective, and we look forward to continuing the conversation as the bill moves through the legislative process,” said Graham Thompson, the executive director of the association, which represents major health insurance carriers in the state.
Meadows said the bill protects independent agents who sell policies on behalf of large insurance carriers. Meadows is vice president for group sales for his company, and for two decades he has been licensed to sell Blue Cross and Blue Shield coverage.
Meadows said he isn’t the bill’s primary sponsor because he believes that would be unfair to other lawmakers who must decide whether to support or oppose hundreds of bills a year.
In his role as the House Rules Committee chairman, Meadows said, “I’m pretty much judge and jury” on legislation.“I don’t want to be executioner,” he said. “I think it puts them in a bad spot.” But Meadows also acknowledged that many of his colleagues know that if his name is second on a piece of legislation, “it’s probably my bill.”
Critics say it smacks of the government telling businesses how much they have to pay for a service. Murphy, formerly of Common Cause, said: “It would be like if the Realtors got together and got legislation passed saying from now on, the minimum commission for a Realtor would be X or L. It’s preposterous.”
Former state Rep. Tom Bordeaux, until recently a city alderman in Savannah, was on the end of such conflict-of-interest criticism in the 2000s when he was chairman of the House Judiciary Committee. Bordeaux was accused of holding up bills aimed at limiting awards in malpractice lawsuits on behalf of trial lawyers like himself. He called Meadows’ proposal “disgusting.”
“The difference is, being a lawyer is a profession. It doesn’t say which side of the law you are defending,” Bordeaux said. “An insurance agent is passing legislation to protect insurance agents. That is different. That is writing his own contract into law. That says, ‘I am writing a bill, and this legislation is saying that I am going to get paid.’ ”
· A law quietly pushed by House Ways & Means Chairman Larry O’Neal,
R-Warner Robins, providing a tax break on land sold by his Houston County
neighbor, Gov. Sonny Perdue, wound up being an issue in the governor’s 2006
re-election campaign.
· In 2009, The Atlanta Journal-Constitution reported that one House leader in
the mobile home business was sponsoring legislation to prohibit communities
from putting restrictions on modular homes, while another lawmaker who was CEO
of a private probation company filed legislation to limit oversight of the
private probation business. The bills stalled or were withdrawn.
· That same year, U.S. Rep. Nathan Deal got unwanted headlines as he began
his race for governor when the AJC reported that he personally intervened with state
leaders to preserve an obscure state program that granted him a regional
monopoly. Deal and his business partner provided a location for
rebuilt salvaged vehicles to be inspected, a 20-year business arrangement that
earned them a reported $300,000 a year.
· In 2014, the AJC reported that a lawmaker whose family is in the auction business
sponsored legislation that may have forced cities, counties, sheriffs and
businesses to hire licensed auctioneers when they sold inventory or property. The bill stalled.
Five workdays left in session
Georgia’s General Assembly is closing in on the end of the 2016 legislative session on March 24. With the largest team of journalists under the Gold Dome, The Atlanta Journal-Constitution can help you keep track of the work that’s getting done. You can follow the action at myAJC.com/georgialegislature. To see where particular bills and resolutions stand, go to the Georgia Legislative Navigator at http://legislativenavigator.myajc.com/. You can also check the proceedings on Twitter at twitter.com/GAPoliticsNews or on Facebook at facebook.com/gapoliticsnewsnow.
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Comments
I recommend passage of HB 838 despite the fact
that I would ultimately remove government from this industry. In this case, the
State is acting because of damage done by the US Congress in passing Obamacare.
Watch the video.
Insurance Brokers (Independent Agents) can bill
the client company directly. This enables the companies who need Agents to
outsource the gathering of quotes, analysis of coverage and the judgement of a
professional.
Over the past decades, large “Benefit Admin”
companies have taken over this “family business” for medical insurance. Also, organizations like Kaiser will give
quotes to companies for individual policies for employees and will sign them up
individually.
Obamacare has destroyed the health insurance
businesses nation-wide. Premiums and deductibles are sky high.
Health Insurance Underwriters are broke and
have eliminated commissions for Independent Agents. These are the only businesses
operating in rural counties.
Norb Leahy, Dunwoody GA Tea Party Leader
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