Prescription drugs sit on a pharmacist’s counter. Photo by John Moore/Getty Images.
The Ohio Department of Medicaid and the governor’s office last week insisted that Medicaid Director Maureen Corcoran complied with state ethics laws as her department entered into massive contracts earlier this year.
However, they so far have refused to produce copies of affidavits that seem to be required by state law, and Corcoran is refusing to disclose the size of her holdings in companies with which her department does vast amounts of business.
The refusal might add to the ethics headaches of Gov. Mike DeWine, whose appointee to the public utility commission has been implicated in a historic bribery and money-laundering scandal. And Corcoran, also a DeWine appointee, in August restarted a billion-dollar contract with a company that Attorney General Dave Yost five months earlier accused of ripping off tens of millions of taxpayer dollars.
The Medicaid department this year re-bid its managed-care business and contracted with six companies that combined will be paid an estimated $22 billion over five years. A disappointed bidder called it “the largest public contract in Ohio government history” in a lawsuit.
The Medicaid department in April also signed a contract to administer OhioRISE, a $1 billion program to provide a continuum of services to 60,000 children with complex behavioral health needs.
At least as of last year, Corcoran owned stock in two of the six companies hired as part of the managed-care program and in the company that will be handling OhioRISE.
In other words, Corcoran signed contracts worth at least $1 billion to each of three companies that she, at least until recently, held a financial interest. It’s plausible that the value of her stocks would rise on the news that she signed such big contracts with them.
But Corcoran is refusing to say how much of an interest she held in those and other businesses with massive contracts with Medicaid.
Corcoran also won’t say whether she filed an affidavit saying exactly how much of an interest she held in the companies as their contracts were negotiated and signed, although such disclosure seems to be required under Section 2921.42 of the Ohio Revised Code.
The law says that it’s OK for state officials like Corcoran to hold stock in companies with which their departments do business, but only if they meet several requirements. One is that they can own no more than 5% of the contracting company’s outstanding stock.
Another is if “that person, prior to the time the public contract is entered into, files with the political subdivision or governmental agency or instrumentality involved, an affidavit giving that person’s exact status in connection with the corporation or other organization.”
The law says violations can result in voiding contracts.
In this case, that would be a huge setback for state officials who — through interlocking managed-care providers, the OhioRISE program and a new, single pharmacy middleman — are trying to fundamentally reshape how Medicaid serves 3 million Ohioans.
ORC 2921.42 also says violators could face criminal charges.
The Medicaid department first was asked on Oct. 1 whether Corcoran filed affidavits disclosing ownership in managed-care contractor UnitedHealth or in CVS, which owns OhioRISE contractor Aetna. Her filings with the Ohio Ethics Commission said she owned at least $1,000 worth of the stocks throughout 2019, when she became director, and 2020. They also say that for part of 2020, Corcoran owned stock in Humana, another of the six companies Medicaid hired to handle managed care.
The Medicaid department waited six days to answer questions about Corcoran’s holdings and what she did to disclose them. Then on Thursday, after the Capital Journal first reported on the matter, spokeswoman Lindsey Brigano said in an email, “Director Corcoran has followed all applicable laws and the fact that you were even able to write this story, shows that she is complying with disclosure laws.”
Brigano didn’t answer follow-up questions, but she seemed to be saying that so long as Corcoran complies with a law requiring that she retrospectively report what stocks she owned $1,000 or more of, she doesn’t have to comply with the one requiring the director to declare her exact holdings as she awards vast sums of taxpayer dollars to the same companies.
In other words, Brigano seemed to be saying, as long as Corcoran made a far less-specific, backward-looking disclosure, she didn’t have to say just how much of a financial interest she had in a company as she handed it billions of taxpayer dollars.
Catherine Turcer, executive director of the watchdog group Common Cause, said the law that only requires officials to disclose whether they own $1,000 or more worth of stock is woefully outdated. If those holdings are just $1,000, a conflict could be only nominal, she said. But if they’re much larger, it could amount to serious corruption, she added.
Under that disclosure law, the public has no way of knowing.
Indeed, Corcoran has ignored repeated requests to specify how much stock she owns in companies with which her department contracts.
In addition to this year’s new contracts, Corcoran owns stock in those and other companies that have reaped huge revenue from the Medicaid program in the past.
Pharmacy middlemen owned by CVS and UnitedHealth have collected hundreds of millions from Ohio Medicaid since Corcoran has been director, as has Express Scripts, another pharmacy middleman in which Corcoran owned stock in 2019.
The Medicaid department also maintains a list of drugs that get preferred coverage, while in 2020 Corcoran disclosed that she owned at least $1,000 worth of stock in at least seven drugmakers, including Bristol Myers Squibb, Eli Lilly, Johnson & Johnson, Merck and Pfizer.
They were some of the 229 stocks and 28 mutual funds Corcoran owned at least $1,000 worth of last year, according to her filings. Thanks to the lack of specificity of the disclosures, we know they’re worth at least $257,000. But they could be worth $2.57 million, or far more.
It’s hard to see how a law requiring such semi-enlightening disclosures would trump one requiring that an official to say exactly how much he or she owns in companies as they negotiate and ink contracts with them. But that appears to be Corcoran’s position.
The Medicaid department declined to give further information.
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