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- 10/30/14--09:13: _Five-state study fi...
- 10/30/14--10:56: _NATO suddenly class...
- 10/31/14--09:19: _'Banking Caucus' me...
- 11/03/14--06:54: _Election 2014 by th...
- 11/03/14--06:09: _Surprise! No. 1 sup...
- 11/03/14--06:58: _More scrutiny comin...
- 11/03/14--02:00: _Insurers spending c...
- 11/03/14--12:03: _FEC hunts political...
- 11/03/14--13:18: _Meet Center reporte...
- 11/04/14--18:19: _The meanest U.S. Se...
- 11/05/14--04:02: _Ad war winners take...
- 11/05/14--01:51: _GOP rides cavalry t...
- 11/05/14--15:07: _Brand-name companie...
- 11/06/14--02:00: _Ballot measure back...
- 11/06/14--10:39: _Years after black l...
- 11/07/14--10:21: _Gillespie's rich fr...
- 11/10/14--05:37: _Juvenile facilities...
- 11/10/14--05:29: _Health insurers win...
- 11/10/14--15:31: _Koch-backed nonprof...
- 11/12/14--06:45: _Analysis shows wide...
- 10/31/14--09:19: 'Banking Caucus' member aims for Senate
- 11/03/14--06:54: Election 2014 by the numbers
- 11/03/14--06:09: Surprise! No. 1 super PAC backs Democrats
- 11/03/14--06:58: More scrutiny coming for Medicare Advantage, Obamacare
- 11/03/14--12:03: FEC hunts political ghosts on Halloween
- 11/03/14--13:18: Meet Center reporters at our Nov. 13 event in D.C.
- 11/04/14--18:19: The meanest U.S. Senate races of all
- 11/05/14--04:02: Ad war winners take governors' mansions
- 11/05/14--01:51: GOP rides cavalry to U.S. Senate majority
- 11/05/14--15:07: Brand-name companies' secret Luxembourg tax deals revealed
- Pepsi, IKEA, AIG, Coach, Deutsche Bank, Abbott Laboratories and nearly 340 other companies have secured secret deals from Luxembourg that allowed many of them to slash their global tax bills.
- Companies have channeled hundreds of billions of dollars through Luxembourg and saved billions of dollars in taxes. Some firms have enjoyed effective tax rates of less than 1 percent on the profits they’ve shuffled into Luxembourg.
- Many of the tax deals exploited international tax mismatches that allowed companies to avoid taxes both in Luxembourg and elsewhere through the use of so-called hybrid loans.
- In many cases Luxembourg subsidiaries handling hundreds of millions of dollars in business maintain little presence and conduct little economic activity in Luxembourg. One popular address – 5, rue Guillaume Kroll – is home to more than 1,600 companies.
- 11/06/14--02:00: Ballot measure backers spend big, win big
Planned Parenthood-backed organizations won on abortion-related issues in North Dakota and Colorado and lost in Tennessee, which passed a measure that declares that the Tennessee Constitution does not guarantee a right to abortion, reversing an earlier court ruling.
Measures that would have required labeling of genetically modified foods failed in Colorado and Oregon in the face of opposition from groups backed by big food companies such as Pepsi and Monsanto.
In Maui County, Hawaii, a ban on the growth of genetically modified plants passed, despite a Monsanto-backed group buying TV ads worth about $2.7 million — or about $30.42 per registered voter — to oppose it.
Coloradans voted against an expansion in gambling despite $7.8 million in ads arguing that it would put millions into the state’s schools. The ads were backed by an out-of-state casino company, Twin River Casino. A Colorado casino group spent about $6.7 million on TV airtime opposing it.
Washington voters approved a measure to require background checks for all gun purchases, a measure backed by Microsoft elites and Michael Bloomberg’s “Everytown for Gun Safety Fund.”
A San Francisco initiative to tax sugary drinks became the most expensive local measure in the nation in terms of TV ads when a soda-industry-backed group spent $3 million on ads. The soda lovers claimed victory, as the measure fell short of the two-thirds majority needed to pass.
- 11/07/14--10:21: Gillespie's rich friends leave him hanging
- 11/10/14--05:37: Juvenile facilities strive to foster ‘family engagement’
- Ohio juvenile authorities collaborated with the nonprofit, New York City-based Vera Institute of Justice on “Families as Partners: Supporting Youth Reentry” to encourage more frequent visitation and correspondence and increase family involvement in youths’ treatment and reentry plans. Working with two juvenile facilities for boys, Vera researchers found increased family visitation improved youths’ behavior and school performance. Vera highlighted the importance of visitation and suggested other juvenile facilities change visitation polices and take other steps to promote more frequent visitation.
- In a different twist on family engagement, the “Baby Elmo Program” being piloted in Santa Clara County, Calif., and elsewhere, focuses on strengthening relationships between incarcerated teen fathers and their infants. The project of the Early Learning Center at Georgetown University law school and the nonprofit, San Francisco-based Youth Law Center relies on a standardized curriculum for the 10-week course, and facility personnel use “Sesame Street” videos to teach the fathers ways to interact with their babies. Many of the incarcerated youths did not have a strong father figure in their lives. Arya, the UCLA law school researcher, says early results are promising, showing fathers the big role they can play in their children’s development and helping the babies develop bonds with their fathers.
- The New Jersey Juvenile Justice Commission has issued a request for proposals for an organization to assess the “family friendliness” of current visitation at the New Jersey Training School for Boys in Monroe Township; to provide staff training on the importance of family engagement and ways to encourage it, including peer family advocacy and support; and to help families navigate the juvenile justice system. The training school, which has come under criticism for extensive use of solitary confinement, is New Jersey’s largest juvenile facility, holding up to about 200 boys. Kevin M. Brown, JJC’s executive director, said in an email: “We need to challenge ourselves to view policies and practices through the eyes of family members, in order to assess whether they are family-friendly and actively promote and support family involvement.… If we can help families, we can help young people succeed.”
- 11/10/14--05:29: Health insurers win midterm election!
- 11/10/14--15:31: Koch-backed nonprofit raised $44 million in 2013
Dirk DeTurck had a years-old rash that wouldn’t go away, his wife’s hair came out in chunks and any time they lingered outside their house for more than an hour, splitting headaches set in.
They were certain the cause was simply breathing the air in Greenbrier, Arkansas, the rural community to which they'd retired a decade ago. They blamed the gas wells all around them. But state officials didn’t investigate.
So DeTurck leapt at the chance to help with research that posed a pressing question: What’s in the air near oil and gas production sites?
The answer — in many of the areas monitored for the peer-reviewed study, published today in the journal Environmental Health — is “potentially dangerous compounds and chemical mixtures” that can make people feel ill and raise their risk of cancer.
“The implications for health effects are just enormous,” said David O. Carpenter, the paper’s senior author and director of the University at Albany’s Institute for Health and the Environment.
In 40 percent of the air samples, laboratory tests found benzene, formaldehyde or other toxic substances associated with oil and gas production above levels the federal government considers safe for brief or longer-term exposure, according to the study. Far above, in some cases.
The Independent Petroleum Association of America referred questions about the study to Energy In Depth, an outreach campaign it launched in 2009. Energy In Depth spokeswoman Katie Brown criticized the involvement of Global Community Monitor, a nonprofit that trained DeTurck and other volunteers to gather the samples.
“It’s difficult to see how Global Community Monitor, a group that dubiously claims no amount of regulation will ever make fracking safe, could make a constructive contribution within the scientific community," Brown said by email.
The study monitored air at locations in Arkansas, Colorado, Ohio, Pennsylvania and Wyoming.
It comes amid a growing body of research suggesting that the country’s ballooning oil and gas production — cheek-by-jowl with homes and schools — could be endangering the health of people nearby. The Center for Public Integrity and InsideClimate News have been investigating this topic, mostly in the Eagle Ford Shale formation of South Texas, for the past 18 months.
A Yale University study released in September found that Pennsylvania residents living less than two-thirds of a mile from natural-gas wells were much more likely to report skin and upper-respiratory problems than people living farther away.
A Colorado School of Public Health analysis published in April found 30 percent more congenital heart defects in babies born to mothers in gas-well-intensive parts of that state than to mothers with no wells within 10 miles of their homes.
And a 2013 study for the state of West Virginia found benzene, a carcinogen, above levels considered safe by the federal Agency for Toxic Substances & Disease Registry near four of seven gas well pads where air was sampled.
The findings come after years of little information beyond citizen complaints and industry reassurances. Scientists say the research is far from complete and more is urgently needed.
Researchers associated with the Yale and Colorado studies, for instance, noted that their findings don’t prove that gas production caused the health problems, but instead flag a potential link that needs further investigation.
“Research is just now beginning, really, to be done,” said Michael McCawley, interim chair of West Virginia University’s Department of Occupational and Environmental Health Sciences and author of the study for that state.
“Part of the problem seems to be a concerted effort, up until recently, to avoid asking the question,” said environmental physician Bernard D. Goldstein, a faculty emeritus at the University of Pittsburgh who served as an U.S. Environmental Protection Agency official during the Reagan administration.
The beginning of a shift is under way.
The National Institutes of Health’s National Institute of Environmental Health Sciences says it is supporting nine studies in progress, from an analysis of asthma near shale gas sites to an examination of local residents’ health before, during and after a multi-well pad is developed. The agency is also conducting its own studies on chemical exposures that could be an issue for gas-extraction workers and people living near such sites.
The industry has been largely dismissive of the research already released.
“We have not seen credible studies showing natural gas production causes health effects,” Dan Whitten, a spokesman for trade group America’s Natural Gas Alliance, said by email. “Obviously, we are sympathetic to anyone with health concerns. Our members remain committed to the development of natural gas in a safe and responsible manner.”
The American Petroleum Institute did not respond to repeated requests for comment. But McCawley, with West Virginia University, said the industry group alerted researchers this summer that it would be funding a health-effects study.
Teaming scientists with citizens
For the new Environmental Health study, academics teamed with Global Community Monitor — a group founded 13 years ago that developed a method for residents in neglected neighborhoods to sample their own air — and volunteers it trained.
It’s an unusual setup for a peer-reviewed study, but that was by design, said Carpenter of the University at Albany. Deploying residents allowed for quick monitoring in places where they suspected something was wrong, based on bad odors, symptoms such as nausea or other problems.
Energy In Depth, which has criticized other studies looking at potential health effects near oil and gas production, focused on Global Community Monitor rather than the findings.
"Their founder has even admitted that, in their activism, science takes a back seat to ‘organizing,’" Brown said by email. "For groups financed by the same foundations that fund GCM, that all may be something to dismiss or ignore, but for those of us interested in actually understanding development better – and not just creative ways to undermine the safety record of hydraulic fracturing – it’s important that we focus on science, not activism.”
Denny Larson, Global Community Monitor's founder and executive director, said by email that he believes science "should be purpose driven to discover the truth."
"It's clear that the oil and gas industry wants to use the same tired strategies to discredit sound science just as the tobacco companies did in the past," he said.
The study's sampling was done as a snapshot — air at one moment in time, or in the case of formaldehyde, over the course of at least eight hours. Carpenter said that’s not how states have typically handled their own monitoring, the results of which have suggested little cause for alarm or weren’t detailed enough to determine whether a health risk existed.
By averaging the results over days, weeks or months, state monitors risk missing the sporadic emission spikes that can harm exposed people, he said.
“Our results indicate that the longer-term monitoring misses peak concentrations, which may be very important," Carpenter said.
Toxic substances in 20 percent of the 76 samples taken for the study exceeded safe levels for brief exposure while another 20 percent exceeded standards for longer-term exposure. The study authors said they thought both were appropriate comparisons in part because residents picked areas to sample where odors and health complaints were common.
Gregg P. Macey, one of the study’s co-authors, said he sees its value less in the specific findings — though he called them “troubling” — than in the roadmap the research offers.
“The key takeaway is we really need to start sampling at the scales dictated by community concerns, the same concerns that are sometimes lodged in county and state agencies as complaints but that are experienced daily,” said Macey, an associate law professor at Brooklyn Law School whose area of expertise includes environmental regulation.
The study sampled air near a mix of sites, including compressor stations, production pads and condensate tank farms. Some but not all of the sampling sites were associated with hydraulic fracturing.
The technique, known as fracking, has opened the floodgates on once-trapped oil and gas in recent years by pummeling rock with a high-pressure mixture of water, sand and chemicals.
Industry groups have pointed to the boom as an economic godsend: jobs, cheaper energy, payments to landowners and taxes for state coffers. Many public officials in those states — both Republicans and Democrats — see it that way, too.
When the EPA indicated to Wyoming officials in 2011 that fracking had likely contaminated groundwater near the tiny community of Pavillion, the reaction was horror — over the potential impact on fracking.
Thomas E. Doll, then the state’s oil and gas supervisor, testified on Capitol Hill several months later that Wyoming received about $2 billion in taxes and royalties during fiscal year 2010 from oil and natural gas work. Almost all of that was connected to fracking, and he blasted the EPA for what he called the “questionable” science of its nearly three-year review.
“The EPA conclusion that hydraulic fracturing caused ground water contamination is limited to the data found in a single sample detect from [a] single monitoring well,” said Doll, the governor’s representative at the hearing, in written testimony to the House subcommittees on energy and the environment. “Yet this fact is lost in the public reaction to EPA’s announcement and results in a worldwide damnation of hydraulic fracturing.”
Doll resigned in 2012 after saying Pavillion-area residents pressing for action on their water wells were largely motivated by “greed.” But after a year and a half of sustained political pressure over its draft review, EPA turned the investigation over to the state. That work is funded by Encana, the energy company residents accused of contaminating the water.
A spokesman for Encana said it provided the money because “there was no one else stepping forward to provide funding for a study that needed to be done.”
“We certainly have a stake in this in a sense that we firmly believe this was not due to our operations,” said the spokesman, Doug Hock. “This is an area that has had … naturally occurring, historically poor water quality.”
EPA spokesman Rich Mylott said the agency stands by the work it did in Pavillion “but recognized the state’s commitment to additional investigation to advance the understanding of groundwater quality in the area.”
A draft report of the first stage of the state’s examination, released in August, said there is no evidence tying gas wells to the fouled water. Two other avenues of investigation continue.
Jerimiah L. Rieman, Wyoming’s natural resource policy director, acknowledged that the state is highly dependent on oil and gas development for revenue, but he said officials truly want to know what caused problems in Pavillion. The state won kudos from the Environmental Defense Fund a year ago when it set new rules requiring oil and gas operators to collect water samples before and after drilling.
“Long after our minerals are gone, we’d better have water to survive,” Rieman said.
Pressing for air monitoring
What drove people to help with the five-state air emissions study — in Wyoming and elsewhere — was a deep suspicion that their state governments were failing to protect public health.
Deb Thomas, who spent years working as a community organizer on pollution matters in Wyoming, said concerns about air followed in the wake of water worries. People told her they’d lost their sense of smell and taste. She heard complaints of headaches and breathing problems, along with reports of miscarriages, neuropathy, unusual cancers and autoimmune diseases.
Starting in 2007, she pressed for state air monitoring in Pavillion. The state brought in a mobile monitor designed primarily to measure ozone, not the specific types and amounts of harmful volatile organic compounds that might be in the air.
Keith Guille, a spokesman for the Wyoming Department of Environmental Quality, said volatiles are a contributor to ozone. A year of monitoring found no ozone problems, he said.
Thomas, then at the conservation-focused Powder River Basin Resource Council, was not satisfied.
“We knew people were getting really sick, and more and more data started coming out about air issues, and the state refused to do any real testing,” said Thomas, 60, now director of ShaleTest, an environmental data-collection nonprofit based in Texas. “And so we decided we would start doing some testing ourselves.”
She called Global Community Monitor. The group told her about a study just getting under way. Would she like to participate?
Thomas rounded up people to collect samples in four areas and ended up as a co-author. The study found many of the Wyoming samples contained volatile organic compounds above safe levels — particularly hydrogen sulfide, a naturally occurring gas that can be unleashed by drilling and can cause headaches, dizziness, nausea and, in sufficient concentrations, death.
She expected to find problems in Pavillion. What startled her were the results around her own town, Clark, where tests on the air samples showed high levels of benzene, a chemical that can be emitted by oil and gas production.
The worst case was 110,000 micrograms per cubic meter of air, 12,000 times above the safe level for brief exposure set by the federal Agency for Toxic Substances & Disease Registry. Several other Wyoming samples also tested high for benzene, though far lower than the worst case.
A 2006 blowout at a gas well near Clark got her seriously concerned about air problems — Thomas ended up in the emergency room a few days later with her first and only asthmatic episode. But she said she didn’t expect much in the way of dangerous compounds there years later.
“In the area where I live, there’s only six wells producing right now … and they’re very low producers,” Thomas said. “I thought, ‘Oh, we’re not going to find anything here because there’s not much going on.’ And then it was off the charts.”
In desperate search of data
In Pennsylvania’s Susquehanna County, six of the air samples shipped off for testing contained high levels of formaldehyde, classified as a carcinogen by the World Health Organization. All were taken near compressor stations, which pressurize natural gas so it can flow through pipelines. Formaldehyde can be a byproduct of the facilities' engines.
Breathe Easy Susquehanna County coordinated the local sampling. Rebecca Roter founded the grassroots group last year to lobby gas companies for better pollution controls, and she knew data would be critical. Air sampling the state had done in her county struck her as woefully inadequate.
“It was too late for a baseline, because we’re seven years into shale development in Susquehanna County, so we were desperately trying to do what we could to document anything,” said Roter, 53, who lives in Brooklyn, Pennsylvania. “The best way to have a real discussion about what’s really happening is to have the facts.”
Three years ago, the first time she smelled a bad odor drifting from a compressor station several miles from her home, she filed a complaint with the Pennsylvania Department of Environmental Protection. When a field agent got back to her a week later, she said, the smell was gone and he wasn’t interested — an experience she said has proved typical in the state even though not all chemicals and gases have an odor.
“The field rep said, ‘Well, if it doesn’t smell, it’s a dead end,’” Roter said. “And he accused me of driving around to find smells.”
Colleen Connolly, a spokeswoman for the Pennsylvania Department of Environmental Protection, said agency employees recall an inspector going to Roter’s home and noticing no odor, but they haven’t been able to locate the complaint record.
The state has air monitoring units in two towns, one of which is in Roter’s county, that take air samples once a week near compressor stations, Connolly said. The agency doesn’t monitor near gas wells except after complaints.
“It is up to the individual gas company to monitor for VOC … emissions [and] report those findings to DEP,” she said by email.
Emily G. Lane, an Arkansas graduate student who helped with the air monitoring there, hopes the emissions study will spur her state to do its own monitoring at all oil and gas sites. A top official at the state Department of Environmental Quality agreed to meet with her about the findings if they were published in a scientific journal, she said.
She wishes the air-sample results themselves — available in March — were reason enough for the state to look more closely. They showed high levels of formaldehyde.
Katherine Benenati, a spokeswoman for the Arkansas Department of Environmental Quality, said the agency is happy to review outside data once completed — peer review included.
When the state agency did its own gas-site monitoring in 2010 and 2011, it measured total volatile organic compounds but not the individual types or amounts. That made it impossible for the researchers to say whether any posed a hazard.
“Future studies should monitor air quality with instruments that can detect lower concentrations of pollutants and identify individual VOC compounds to determine if the emissions from gas sites are potentially harmful to public health and welfare,” the report concluded.
No follow-up studies have been launched in the three years since, the environmental quality agency said, and none are planned.
“The statement in the executive summary is an indication of a limitation of the data that was gathered in the study,” Benenati said in an email. “It was not meant to suggest that additional data gathering was being recommended.”
DeTurck, the Arkansas retiree, has his own take on that: “There’s no problem if you never really look for it.”
He said he and other residents spent three years asking state officials to do something in Greenbrier. The state shut down injection wells blamed for setting off more than a thousand small earthquakes in his county, but that was it, he said.
“The state’s all-in on this industry,” said DeTurck, 59. “One legislator … told me to my face, ‘If you don’t like it, move, because that’s the future.’”
DeTurck followed that advice, though it took three years to find a buyer. He and wife Eva moved 12 miles south in December. Given the direction the winds blow there, they figured that was enough distance to get cleaner air.
Dirk DeTurck said his wife’s hair loss, ringing in the ears and headaches stopped within two weeks. His rash cleared up several months later, and his other symptoms dissipated, too, he said.
“I don’t miss those headaches and nosebleeds and the rash and the smell — the putrid smell,” he said. “Every morning, every night.”
A month before U.S. Marines and British military forces began their current withdrawal from Afghanistan’s Helmand province, the NATO-led International Security Assistance Force (ISAF) in Afghanistan abruptly classified its assessment of the fighting abilities of the Afghan army and police forces, which the U.S. has spent an estimated $61.5 billion to build up.
Portions of these assessments have been released to the public the past nine years. But on Oct. 3, ISAF’s Joint Command told independent federal auditors of the reconstruction effort that the office of the Special Inspector General for Afghanistan Reconstruction by email that the latest ratings now are classified in their entirety.
ISAF’s Joint Command decided that sections of the reports that discuss the capabilities of the Afghan army or police force should be classified at the “Restricted” level, while an overall tally of the number of units deemed capable of meeting leadership, combat, training, and other requirements was given the higher classification of “SECRET”, according to an email from the command, obtained by CPI.
ISAF’s press office in Kabul did not respond to requests for an explanation.
The change was flagged by Special Inspector General for Afghanistan Reconstruction John Sopko in his Oct. 2014 quarterly report released today. The classification “deprives the American people of an essential tool to measure the success or failure of the single most costly feature of the Afghanistan reconstruction effort,” Sopko wrote, adding that the decision was — to him — “inexplicable.”
ISAF’s assessments of the Afghan security forces already had become less detailed during this year, grading entire brigades at once rather than each composite unit.
Those monthly assessments, published on a quarterly basis in SIGAR’s reports, found improvements in the readiness of the Afghan army brigades but growing gaps in Afghan police units’ proficiency.
Most Afghan army brigades reviewed were rated as meeting requirements in five out of the six categories of assessment — leadership, sustainment, training, command and control, and joint operations. Many were plagued by high rates of attrition, but improved over the year. In the beginning of 2014, three-quarters of all army brigades had monthly attrition rates of 3 percent or more, but by July 2014 less than half of them did.
The specific attrition rates per brigade and the number of personnel in each brigade were not in the rating information published by SIGAR. A November 2013 Congressional report by the Defense Department noted that attrition in the Afghan National Army had been 34.4 percent over the preceding twelve months.
While attrition rates were rated as steadily improving in units of the Afghan national police, those units were rated as sliding in training, leadership, sustainment, and law enforcement operations capability, according to the ISAF data reported by SIGAR before the data was classified. Drastic jumps in the data — five of 18 regional components of the Afghan National Police were “fully capable” of training in April, for example, but only two were in July — raise a possibility that ISAF’s assessment methods themselves may have changed from report to report.
Quarterly reports on the readiness of Iraqi security forces sometimes showed similar fluctuations, according to Stuart Bowen, who served as the Special Inspector General for Iraqi Reconstruction between 2004 and 2013.
His April 2008 quarterly report noted that attrition rates for the Iraqi Army were around 3.6 percent per month — but he also cited Defense Department information that AWOL reporting rates tended to lag by more than a month. “Changing methodologies” accounted for data variances about Iraqi Security Forces personnel, he wrote.
Still, the U.S.-led military command in Iraq never classified its assessments of the Iraqi security forces, according to Bowen. He said he hopes that Sopko can get the Afghan forces’ assessments declassified again.
“Kudos to John Sopko for pursuing rigorous oversight,” Bowen said.
Sopko, in a Feb. 2014 report, warned that the NATO command will have to rely increasingly on self-assessments from the Afghan National Security Forces of their capabilities as Western forces withdraw from the country in the next two years. He also urged ISAF to develop a plan for ensuring the validity of those self-reported assessments.
In response, the United States Forces – Afghanistan wrote that ISAF would work to create an “overarching road map” for how ISAF will retain the ability to assess the Afghan police and army.
The U.S. plans to have just 9,800 service members in Afghanistan at the start of 2015, and to halve that over the year. By the end of 2016, the U.S. plans to draw down to just an embassy presence and security component, as it ultimately did in Iraq.
U.S. Rep. Shelley Moore Capito wants West Virginians to know she’s a defender of community banks. From her seat on the House Financial Services Committee, Capito argues, she has protected small local financial institutions from the overreach of aggressive regulators.
Among her biggest supporters, however, are the biggest banks in the world.
Capito, a Republican, is running for West Virginia’s U.S. Senate seat that’s being vacated by Jay Rockefeller after 30 years.
She counts Citigroup and Goldman Sachs among her most generous campaign donors.
“She’s a reliable vote for all things Wall Street,” said Dennis Kelleher, president and CEO of Better Markets, a non-partisan group that advocates for increased market oversight of financial institutions.
Capito is part of the “Congressional Banking Caucus,” a group of lawmakers identified by the Center for Public Integrity as especially solicitous to the banking industry. They are all members of the House Financial Services Committee and have been the recipients of generous campaign support from financial services company employees and political action committees.
The other members of the group are Financial Services Committee Chairman Jeb Hensarling, R-Texas, and Reps. Scott Garrett, R-N.J.; Sean Duffy, R-Wis.; Jim Himes, D-Conn.; Blaine Luetkemeyer, R-Mo.; Gregory Meeks, D-N.Y.; Ed Royce, R-Calif.; David Scott, D-Ga.; Steve Stivers, R-Ohio; and Ann Wagner, R-Mo.
The group has been central to efforts led by Hensarling to undo many of the financial reforms enacted in the Dodd-Frank law of 2010. At least 30 bills have been proposed to the House during the 113th Congress, aimed at chipping away at aspects of Dodd-Frank. Members of the banking caucus sponsored or co-sponsored 20 of those laws. At least 21 have been referred to the House Financial Services Committee and three have been passed to the Senate.
Since the Center for Public Integrity published a report on these lawmakers in April, their efforts to reshape the regulatory landscape have continued.
Luetkemeyer has proposed several bills to limit the power of the Consumer Financial Protection Bureau, the new consumer regulator created by Dodd-Frank, which he blames for raising costs to consumers and driving small banks out of business.
“There’s a consolidation going on out there right now and it’s a result not necessarily of the market but a result of regulation,” he said in a June event, sponsored by Politico and the Independent Community Bankers of America. “This is having the reverse effect of what actually was the intention of Dodd-Frank, which was to protect the consumers.”
Himes, who spent 12 years at Goldman Sachs before running for office, is often at odds with Hensarling while still looking to protect Wall Street firms from regulatory overreach.
"He will continue to push back against attempts to undermine key protections established by Dodd-Frank while reviewing the law's unintended consequences," said Kevin Garrahan, his spokesman.
None of the other members or their representatives responded to requests for comment on the committee's work.
Capito is the only member of the caucus who is leaving her house seat to try for the Senate and is the only one in a competitive race. All the other members of the group are rated by the Cook Political Report as having safe seats, except for Duffy, whose district “leans Republican” according to the non-partisan political analyst. Voters will go to the polls Nov. 4.
That means their financial benefactors — from megabanks to mortgage bankers to payday lenders — can continue to count on these lawmakers to push through their agendas and protect them from excessive regulation.
Capito has defended herself against criticism by her opponent, West Virginia Secretary of State Natalie Tennant, that she’s too cozy with the banking industry. In an October 7 debate, Capito acknowledged that she voted against limiting bonuses for executives of banks that had received taxpayer bailouts. But, she said she also voted against the $700 billion bank bailout approved by Congress in 2008.
She said her support of the banking industry is meant to help small, local banks.
“I’m going to defend the West Virginia community banks and the West Virginia credit unions. We need to have a full financial system here in the state that doesn’t include big banks, that includes the ability to get a car, to get a mortgage.” she said.
Still, some of her most ardent supporters are the biggest financial institutions on Wall Street. The employees and political action committees of Citigroup, Goldman Sachs, Wells Fargo and Bank of New York Mellon are among the top 20 donors to Capito’s Senate run, according to data compiled by the Center for Responsive Politics. She also has the support of many energy companies.
Capito is not among the top recipients of contributions from the Independent Community Bankers of America, the lobbying group that represents small banks across the country. The group contributed $5,000 to her Senate effort, just a quarter of what it donated to her fellow “Banking Caucus” member, Rep. Blaine Luetkemeyer, R.-Mo.
Capito has been an ally of community banks. Late last year, she led the House opposition to a proposed regulation that would have required community banks to get rid of certain investments, a move that would have cost several of the banks’ profits. She and Hensarling first wrote a letter to regulators asking them to reconsider the rule, and followed up by filing legislation that would reverse it.
Regulators responded and announced Jan. 15 that the new regulation would not apply to smaller banks.
But Capito’s activism also benefits the banking giants who have been among her greatest supporters. Capito, who chairs the subcommittee that oversees consumer lending and finance companies, is married to a banker who has worked for Wells Fargo and Citigroup.
“One characteristic of her bills is that they do include community banks but they would also help much larger banks,” said Marcus Stanley, policy director at Americans for Financial Reform, a coalition of groups that advocate financial reforms that help consumers.
Stanley cites, as an example, a Capito proposal to limit regulators’ powers in bank examinations and create an ombudsman where banks can take complaints about their regulators examinations. The American Bankers Association, which represents all banks including community banks and megabanks, has lobbied for this bill.
“This is definitely something that community banks are asking for but it’s not limited to community banks. It would greatly benefit Wall Street banks,” Stanley said.
Amy Graham, a spokeswoman for Capito’s campaign, declined to respond to questions for this story.
While Capito is the only member of the banking caucus facing a competitive election this fall, Hensarling, who chairs the Financial Services Committee, may be seeing his leadership challenged.
Congressman Frank Lucas, R-Okla., said earlier this month that he’s considering trying to win the chairman’s gavel, because members of the Republican leadership are unhappy with Hensarling’s approach to the committee.
“[Congressman] Lucas has been approached by members who are concerned about the direction of the House Financial Services Committee,” Tamara Hinton, a spokeswoman for Lucas, said in a statement to Bloomberg Businessweek. “They have expressed a desire to see things change. Chairman Lucas is listening to his colleagues and taking their frustrations into consideration.”
Estimated number of TV ads aired through late October targeting U.S. Senate elections: 908,000
Number of states where a Senate-focused TV ad in late October appeared, on average, at least once every two minutes: 8
Number of Senate-focused TV ads aired this cycle on KTUU-TV 2 in Anchorage, Alaska: 12,300
Stations that have aired more: 0
Percentage of all Senate-focused TV ads, on average, sponsored by outside spending groups: 38
Percentage in North Carolina’s Senate race: 55
Chance that a Senate-focused TV ad sponsored by a candidate is positive: 1 in 2
Chance that a Senate-focused TV ad sponsored by an outside group is positive: 1 in 5
Percentage of positive TV ads aired in South Dakota’s Senate race: 61
Percentage of positive TV ads aired in North Carolina’s Senate race: 18
Number of seats Republicans must wrest from Democrats to control the Senate: 6
Pivotal Senate races where Democratic-aligned dark money groups have aired more ads than GOP ones: 0
Amount North Carolina’s two major Senate candidates have raised as of mid-October: $32 million
Amount all outside groups have told the Federal Election Commission they’ve spent on North Carolina’s Senate race: $76 million
Ratio by which Sen. Kay Hagan, D-N.C., has out-raised Republican Thom Tillis: 2.5-to-1
Hagan’s average lead in recent polls: 0.9 percent
Estimated percentage of U.S. adults who contributed at least $200 to a politician or political group: 0.28
Number of Americans who have given at least $1 million to super PACs: 42
Total amount raised by super PACs this election cycle: $600 million
Amount raised by Democratic-aligned super PAC NextGen Climate Action: $76 million
Percentage of that total attributable to billionaire environmentalist Tom Steyer: 94
Amount Koch-backed nonprofit Americans for Prosperity reportedly plans to spend: $125 million
Number of states with gubernatorial elections on Nov. 4: 36
Number with competitive ones: 17
Portion of the estimated $486 million spent on TV ads in all gubernatorial races spent in those 17 contests: 2/3
Estimated amount spent in Florida’s governor race alone: $81 million
Ratio of positive-to-negative TV ads in Florida that mention Democratic gubernatorial candidate Charlie Crist: 1-to-7
Estimated amount spent on TV ads related to statewide ballot measures in California: $75 million
Estimated time it would take to watch every TV ad for all statewide ballot measures back-to-back: 60 days
Minimum number of TV ads in state-level and U.S. Senate races that have mentioned President Barack Obama or the Obamacare health care reform law: 445,000
Minimum number of pro-Hillary Clinton super PACs registered to date with the FEC: 7
Amount raised so far by the largest of them: $10 million
Amount raised by a super PAC supporting a 2016 presidential bid by Republican neurosurgeon and Obamacare critic Ben Carson: $11 million
Portion of vote winner of Georgia’s Senate race must earn to avoid a runoff: 50
Date of the potential Georgia Senate runoff: Jan. 6, 2015
Editor’s note: The Center for Public Integrity is tracking political advertising in races for the U.S. Senate, state-level offices and state ballot measures, analyzing data from Kantar Media/CMAG, an advertising tracking firm. Many of the facts above are a result of that analysis. Other sources include the Cook Political Report, Federal Election Commission, Center for Responsive Politics and Sunlight Foundation.
Rachel Baye, Carrie Levine, Dave Levinthal, Reity O’Brien, Kytja Weir and Ben Wieder contributed to this report.
If Democrats lose control of the U.S. Senate, it won’t be because they didn’t fully unleash the powers available to them in a post-Citizens United v. Federal Election Commission era of politicking.
Senate Majority PAC, the Democratic super PAC dedicated to holding the Senate, has blasted out about 45,000 Senate-focused television ads this election cycle — more than any other outside spending group.
For context: Senate Majority PAC alone is responsible for roughly one out of every 20 Senate race ads, including those sponsored by candidates and political party committees. In the hotly contested North Carolina Senate race, the super PAC has run more ads than the Republican candidate Thom Tillis, who’s locked in a statistical dead heat with incumbent Democratic Sen. Kay Hagan.
Senate Majority PAC’s dominance this cycle shows Democrats have largely moved past their initial qualms regarding the outside spending frenzy enabled by Citizens United, which empowered corporations, unions and other special interests to raise and spend unlimited amounts of money to directly advocate for and against political candidates.
They are now playing the super PAC game to win. The group’s core contributors are a cross-section of Democratic stalwarts, dominated by billionaires and labor unions with reasons for making sure Democrats continue to control the Senate.
Led by seasoned political disciples of Senate Majority Leader Harry Reid, D-Nev., Senate Majority PAC has raised more than $53 million this cycle. As of Friday, it had made $47 million worth of independent expenditures — most in the form of TV ads skewering Republican candidates.
Nearly two-thirds of the money — about $34 million — came from contributors giving half a million dollars or more, according to a Center for Public Integrity analysis of contribution records filed with the Federal Election Commission. That’s roughly the same percentage as marquee Republican super PAC American Crossroads, though that group has reported raising just more than $28 million so far this cycle, far less than Senate Majority PAC.
Senate Majority PAC’s spending is a fraction of the close to $700 million the Center for Responsive Politics predicts outside groups will spend on the midterm elections. Overall, CRP expects combined spending by Republican candidates, party committees, and conservative-leaning outside groups to outstrip spending on the Democratic side this cycle.
Senate Majority PAC declined to comment for this story, but those facts may explain why Senate Majority PAC contributors are still talking as if they’re big-money underdogs.
“[W]e can’t compete in terms of money,” Randi Weingarten, president of the American Federation of Teachers, said in an e-mailed response to questions about the union’s support of Senate Majority PAC. “So, our strategy is to leverage long-standing relationships with groups like the Senate Majority PAC to play big in high-priority races.”
The American Federation of Teachers has contributed $1.95 million to Senate Majority PAC so far this cycle, making it one of the group’s largest benefactors.
All the money and all the ads still may not add up to enough for Democrats to hold the Senate. Several of the Senate races that will decide control of the chamber are still far too close to call. Whatever the result, Senate Majority PAC has been credited with keeping the races close and Democrats competitive.
The results and the lessons of the election are certain to reverberate into the 2016 election cycle, when the White House will also be up for grabs.
Senate Majority PAC’s contributors each have their own reasons for spending to keep Senate Democrats in charge. Take Sealaska Corp., a southeast-Alaska based corporation created by a federal act and owned by thousands of native shareholders. The company contributed $10,000 to Senate Majority PAC in September.
Jaeleen Araujo, the company’s general counsel and corporate secretary, said Sealaska’s board wanted to support the re-election bid of Sen. Mary Landrieu, D-La., the current chairwoman of the Senate Energy and Natural Resources Committee, because Landrieu has supported the land legislation that is Sealaska’s top priority.
Senate Majority PAC has spent more than $2.4 million against Rep. Bill Cassidy, R-La., Landrieu’s main challenger.
Sealaska is owed lands under the 1971 Alaska Native Claims Settlement Act, and Sen. Lisa Murkowski, R-Alaska, has sponsored a bill that would allow the company to acquire lands outside of those originally designated under the act. Sen. Landrieu is listed as a co-sponsor on an earlier version of the bill. The current version is now awaiting floor votes in both the House and the Senate.
“If you could even understand the effort we’ve had to put into this land legislation over the past four congresses,” Araujo said, adding that Landrieu’s continued support “is just so important to us.”
Araujo explained that she and others called contacts in Washington, D.C., trying to find out which group was best positioned to take a contribution aimed at boosting Landrieu. Araujo said a Washington, D.C.-based board member heard Senate Majority PAC would be a good option. Sealaska said the money was to be used to benefit Landrieu. “We did specify the direction on the check,” Araujo said.
Senate Majority PAC spokesman Ty Matsdorf declined to discuss how it used Sealaska’s contribution, citing a policy of not commenting on fundraising.
Senate Majority PAC’s largest contributor is environmental activist and former hedge fund investor Thomas Steyer, who together with his super PAC, NextGen Climate Action, which is primarily funded by Steyer, gave $5.5 million.
Chicago media mogul Fred Eychaner, the top donor to Democratic super PACs during the 2012 election cycle, gave $5 million, the next largest amount. Former New York City Mayor Michael Bloomberg, an advocate for stronger gun laws who has spent millions of dollars on elections so far this cycle, contributed $2.5 million.
Unions and groups associated with unions have so far contributed about $12.5 million, with the single largest amount — $2.75 million — coming from Working for Working Americans, a political action committee affiliated with the United Brotherhood of Carpenters and Joiners of America. Trial lawyers, via the American Association for Justice PAC, contributed $925,000.
Senate Majority PAC touts itself as running a “transparent” operation. But the description, while valid in part, belies the seven-figure amounts of support it’s received from “dark money” operations that don’t generally reveal the root sources of their funds.
For example, Patriot Majority USA, a liberal “social welfare” nonprofit that heavily supports Democratic political causes and doesn’t reveal its donors, has provided it more than $483,000 to cover salaries and insurance, FEC records indicate. Patriot Majority USA is led by a longtime ally of Reid, the Senate majority leader.
Senate Majority PAC has also accepted money from Indian tribes and limited liability companies, including $1 million in September from an outfit called HFNWA LLC. It has addresses in Arkansas and Washington, D.C., and is managed, according to Arkansas Secretary of State records, by Franklin L. Haney, a Democratic political patron and real estate mogul.
It also accepted $500,000 from the Campion Advocacy Fund, a “social welfare” nonprofit group that advocates for wilderness protection and an end to homelessness. The group is affiliated with the Campion Foundation, a private, nonprofit foundation founded by Tom and Sonya Campion. Tom Campion is the founder of the Zumiez clothing store chain. The Campions were listed as cohosts on an invitation to a $25,000-per-person Senate Majority PAC fundraiser in July that featured a dinner with President Barack Obama.
Another LLC contributor is listed as Elmendorf Strategies LLC, whose namesake, Steve Elmendorf, is one of the nation’s top Democratic lobbyists. The entity gave $10,000. Elmendorf’s lobbying partner is Jimmy Ryan, a former senior adviser to Reid. Ryan gave Senate Majority PAC $50,000.
Senate Majority PAC is also the driving financial force behind a self-described “nonpartisan” super PAC called Put Alaska First that is supporting Democratic Sen. Mark Begich, D-Alaska.
Alaskans themselves have little to do with the funding of Put Alaska First: Senate Majority PAC has provided the super PAC with more than $8.6 million, 98 percent of the Alaska group’s total receipts — a fact that’s hardly obvious to Alaskans watching the thousands of TV ads the group has run to primarily bash Begich’s Republican opponent, Dan Sullivan.
Senate Majority PAC also describes itself as “independent.” But outside observers say the contributor list shows that even though Senate Majority PAC technically is an independent group, its establishment ties and ability to unite Democratic donors under a big-money tent show how closely it is connected to party leaders.
“Senate Majority PAC is run by a couple of Democratic aides, it has close ties to the leadership, to Harry Reid. It’s almost as if this is the return of ‘soft money,’” said Bill Allison, editorial director of the Sunlight Foundation, which monitors money in politics, referring to unlimited contributions to national parties that were banned in 2002. “What this looks like to me really is, if you go back and look at the soft money donors, this is who a lot of them are.”
In all, the Center for Public Integrity reached out to nearly three dozen of Senate Majority PAC’s contributors. Many declined to speak for the record, although others explained why they’re supporting the group.
Heather Podesta, a lobbyist and prominent Democratic fundraiser who said she is on Senate Majority PAC’s board, has herself given $25,000 this cycle. She pointed to the super PAC’s successful record from the 2012 elections as proof of its effectiveness and as something attractive to donors.
“I would say that one of the reasons why these races are as close as they are and we haven’t seen Republicans break out as expected is the hard diligent work of Senate Majority PAC,” she said.
Elizabeth Simons, president of the Heising-Simons Foundation and the daughter of James Simons, the founder and former CEO of hedge fund Renaissance Technologies, explained in an email why she gave Senate Majority PAC $900,000, her largest-ever political contribution. Her father, a prominent Democratic donor, gave $2 million.
“This year I felt I had no choice in light of Supreme Court decisions that have collectively had the effect of handing political power to the rich and disenfranchising large swathes of Americans, primarily Democrats,” she said. “I am now a player in this sad game, but the other side has deep pockets, and so I decided to dig into mine.”
Ads keep coming
More than 230 candidates, political committees and nonprofit organizations have combined to run about 908,000 U.S. Senate-focused TV ads through Oct. 27, according to a Center for Public Integrity analysis of data from Kantar Media/CMAG, an advertising tracking service.
With nearly 45,000 TV ads through Oct. 27, Senate Majority PAC easily bests all other individual super PACs and nonprofits.
The vast majority of Senate Majority PAC’s ads attack Republican candidates as opposed to promoting Democratic candidates. Only the Democratic Senatorial Campaign Committee — a national party committee founded in 1916 that, as its name implies, exists specifically to elect Democrats to the Senate — has aired more TV ads this cycle than Senate Majority PAC, with more than 51,000 and counting.
Compare Senate Majority PAC’s TV ad sponsorship to conservative nonprofit outfit Crossroads GPS, which has produced about 29,000 ads so far this election and ranks a distant second among super PACs and nonprofits. Conservative, Koch brothers-backed nonprofit Americans for Prosperity, with about 28,300 Senate-focused TV ads, ranks third.
Paul Lindsay, a spokesman for Crossroads GPS and sister super PAC American Crossroads, which has aired more than 16,000 TV ads, declined to comment on Senate Majority PAC.
In North Carolina alone, Senate Majority PAC has aired more than 13,600 ads.
That’s more than any single super PAC, nonprofit or political committee has run in any one U.S. Senate race this cycle. And almost all of the ads have attacked Tillis — and Tillis’ own campaign only days ago cracked the 10,000 TV ad mark.
For perspective: Only five other super PACs or nonprofit groups this cycle have produced as many Senate race TV ads — across all 36 races in play this year — as Senate Majority PAC has in North Carolina alone.
Among TV ad sponsorship in other top U.S. Senate races by super PACs and nonprofits, Senate Majority PAC ranks first in Michigan and second in Colorado, New Hampshire, Kentucky, Louisiana, Arkansas and West Virginia. It’s third in Iowa.
Put Alaska First, the Senate Majority PAC funded super PAC active in Alaska’s Senate race, has aired about 9,000 ads through Oct. 27.
Expect Senate Majority PAC to continue its ad barrage through Election Day.
In New Hampshire, for example, the super PAC was already girding in July for close race between incumbent Democratic Sen. Jeanne Shaheen and her Republican challenger, former Sen. Scott Brown of Massachusetts.
Even though Brown had yet to secure the GOP nomination at that point — he won the Republican primary in September — Senate Majority PAC was booking TV ad time for late October and early November, according to Federal Communications Commission filings.
That includes an around-the-clock presence on WMUR-TV 9, New Hampshire’s only in-state, network-affiliated station, through today, the day before Election Day, FCC documents show.
It's the same story in North Carolina, where Senate Majority PAC is slated to spend well into the six-figure range roughing up Tillis during the final days of the state’s U.S. Senate campaign.
At WSOC-TV 9 in Charlotte alone, Senate Majority PAC has reserved more than $218,300 worth of 11th-hour air time at all times day and night, during shows that range from “Good Morning America” and the local evening news to soap opera “General Hospital” and crime drama “Castle,” according to filings with the FCC.
And on Thursday, Senate Majority PAC reported spending another $700,000 on media buys and direct mailers targeting Republican U.S. Senate candidates Joni Ernst in Iowa, Brown in New Hampshire and McConnell in Kentucky.
In some ways, it makes sense that Senate Majority PAC has emerged as a dominant force in the world of super PACs.
Senate Majority PAC is descended from Commonsense Ten, one of the groups that originally prodded federal regulators to rule that corporations and labor unions could donate unlimited money to super PACs.
Big money, it turns out, is embedded in Senate Majority PAC’s DNA.
Federal officials are planning a wide range of audits into billing and government spending on managed health care in the new fiscal year, ranging from private Medicare Advantage groups that treat millions of elderly to health plans rapidly expanding under the Affordable Care Act.
The Health and Human Services Office of Inspector General, which investigates Medicare and Medicaid waste, fraud and abuse, said it would conduct “various reviews” of Medicare Advantage billing practices with an eye toward curbing overcharges. Results are due next year.
The Inspector General also announced from five to ten new audits into Obamacare, ranging from the accuracy of “financial assistance” payments for new enrollees to controls to prevent fraudulent sign ups.
The Inspector General’s office did not say if individual Medicare Advantage plans would be audited, but indicated it would focus on concerns that some health plans exaggerate how their sick patients are to overcharge the government— the subject of a recent Center investigation.
“Prior OIG reviews have shown that medical record documentation does not always support the diagnoses” (used to bill Medicare),” the Inspector General said. “Efforts for FY 2015 and beyond may include additional work examining the soundness of rates and risk and payment adjustments,” the Inspector General said.
The audits are among dozens of new projects spelled out in the Inspector General’s 2015 “work plan” posted on the agency’s website late last week. While much of the plan focuses on managed care, the Inspector General also plans to audit spending on other programs, such as one paying billions of dollars to doctors and hospitals that purchased electronic health records.
The OIG work plan serves as a blueprint for enforcement actions during the upcoming year and calls attention to medical initiatives officials believe are vulnerable to fraud and abuse. The FY2015 fiscal year began October 1 and runs through Sept. 30, 2015.
Many of the audits are described only briefly in the work plan or are couched in bureaucratic language that makes it difficult to judge their potential impact.
The Inspector General is continuing to pursue allegations of billing fraud and abuse by doctors, hospitals and medical suppliers, such as ambulance companies and sellers of diagnostic gear. But it appears to be placing more emphasis on managed care than in the past.
The agency also said it planned to look into what it described as “emerging vulnerabilities” in a wide range of Obamacare programs; the work plan noted that Medicaid, the health plan for low income people, is growing explosively under the health reform law.
“Protecting an expanding Medicaid program from fraud, waste, and abuse takes on a heightened urgency as the program continues to grow in spending and in the number of people it serves,” the Inspector General wrote.
Keeping tabs on managed care spending presents a particular challenge for fraud fighters, who are accustomed to bringing cases against companies that bill for services never rendered.
The abuses suspected in Medicare Advantage are more subtle and complex. Unlike standard Medicare, in which doctors and hospitals bill for each service they provide, private Medicare Advantage plans and other managed care organizations are often paid a flat monthly rate for each patient using a formula called a “risk score” that estimates the health challenges facing individual patients. Basically, Medicare pays higher rates for sicker patients and less for people in good health.
But federal officials concede that billions of tax dollars are misspent every year because some Medicare health plans exaggerate how sick their patients are, a practice known as “upcoding.” At least six whistleblower lawsuits alleging that Medicare health plans inflated risk scores to overbill the government are pending in federal courts.
The Center for Public Integrity’s “Medicare Advantage Money Grab” series, published in June, revealed that officials have struggled for years to prevent health plans from charging too much.
The Medicare Advantage program has grown rapidly under the risk-scoring formula, which Congress enacted in 2003. Officials expect Medicare Advantage to cost taxpayers as much as $160 billion this year, as enrollment nears 16 million, or about one in three elderly and disabled people on Medicare.
Federal officials have conducted audits of Medicare Advantage billing called Risk Adjustment Data Validation, or RADV, at least since 2008. But they have never imposed stiff financial penalties for overcharges, despite evidence that billing errors have been deeply rooted and waste billions of tax dollars.
OIG audits of six health plans completed in 2012 found that the companies couldn’t justify payments from the government for 40 percent or more of their patients. The resulting overpayments were pegged at nearly $650 million for 2007 alone — just for those six plans.
The Center for Public Integrity’s investigation confirmed that federal officials, after years of haggling with health plans, settled the six audits for pennies on the dollar. One New York state health plan that federal auditors said may have been overpaid by as much as $41 million in 2007, coughed up just $157,777 to settle the matter in December 2013, for instance.
Government officials aren’t sure how much of the suspected overpayments to Medicare Advantage plans are fraud and how much are due to health plans being thorough in documenting illness, according to Richard Kronick, director of the HHS Agency for Healthcare Research and Quality.
“I would not be surprised if there is some fraud involved, because this does occur in many areas of human behavior when a lot of money is at stake, but I suspect that much of the increase in risk scores is a result of health plan efforts to more fully document diagnoses that do exist,” he wrote in a blog post earlier this month.
Either way, however, Kronick said the Medicare Advantage is costing more than standard Medicare. He has advised CMS officials to consider cutting payments to health plans that report much higher-than-expected rates of patient illness.
As I predicted two months ago, California voters have been bombarded by a group with a consumer-friendly name warning that a vote for a ballot initiative tomorrow would allow “one politician” to “interfere” with their health care treatment options.
Proposition 45 would not do that, but California’s biggest health insurers have spent $57 million of their customers’ precious premium dollars trying to persuade voters into thinking that it would.
The insurers have been conducting a classic campaign of fear, uncertainty and doubt, but, as usual, doing so behind the scenes. They have funneled those millions to a front group called Californians Against Higher Health Care Costs, which they hope folks will believe is supported primarily by doctors and nurses and other providers. In reality, approximately 98% of the funding has come from five insurers that control the state’s insurance marketplace: Anthem Blue Cross, Blue Shield of California, Kaiser, Health Net, and UnitedHealthcare.
What Proposition 45 would actually do is give the state’s insurance department the power to reject unreasonable rate increases. California is one of only 15 states where insurance commissioners don’t have that authority.
Insurers want to keep it that way. They really hate it when a state official calls them out on excessive rate hike proposals — because they usually lose.
In 2011, for example, Maine’s commissioner, Mila Kofman, concluded that Anthem Health Plans of Maine’s proposed rate increase of 9.7 percent was excessive. She ruled that Anthem could not justify more than a 5.2 percent increase.
As the Bangor Daily News reported, Kofman found that the insurer’s proposed increase would have resulted in “built-in profits of close to $2 million in the individual market alone.”
Outraged by Kofman’s audacity, the insurer sued her. The case went all the way to the state supreme court, which ruled in February 2012 that Kofman’s decision was appropriate. Anthem had to comply.
It’s worth nothing that Anthem Blue Cross of California is part of the same for-profit company that owns the Anthem plan in Maine. If a majority of Californians vote no, as insurers hope they will, the profit margins of Anthem and the other companies behind Californians Against Higher Health Care Costs will not face the same scrutiny as they do in most other states.
The health insurers also despise Consumer Watchdog, the Santa Monica-based organization that was instrumental in getting the initiative on the ballot. Consumer Watchdog was also behind a successful ballot initiative in 1988 (Proposition 103) that gave the state insurance commissioner the authority to limit auto and home insurance rate increases.
I know from my days in the insurance business that Consumer Watchdog has long been a thorn in the side of HMOs. I remember how annoyed we all were whenever the media would quote Consumer Watchdog’s president, Jamie Court, when he attacked one of our companies for denying coverage for doctor-ordered procedures. We were even more annoyed when his book, “Making a Killing: HMOs and The Threat to Your Health,” was published in 1999.
As with Proposition 103, groups like Consumer Watchdog could challenge rate hikes on behalf of consumers in legal proceeding. If successful, they received “intervener” fees.
Critics of Prop 45 say that allowing such intervention would lead to frivolous lawsuits. (One of the insurers’ allies in the campaign is the Civil Justice Association of California, a group that advocates for tort reform on behalf of businesses.) Consumer Watchdog says in response that in the 12 years it has been able to intervene in auto and home cases, it has received only $8 million in intervener fees while policyholders have saved $3 billion as a result of their interventions.
Consumer Watchdog and its allies, which include the California Nurses Association, have raised and spent less than $4 million in support of Prop 45, which is just 7 percent of what insurers have spent. That’s not enough money to counter mailers Californians Against Higher Health Care Costs have sent to voters with scare headlines like this one: “Prop 45 gives one politician control over health care benefits and treatment options.” In the insurers’ most recent mailer, those words were accompanied by a photo of a woman in a hospital gown with her hands clasped as if in dread of something unpleasant about to happen.
The insurers’ campaign apparently has persuaded a lot of people to see things from their perspective. While previous polls have shown that most voters support the proposition, one poll last week showed opponents in the lead. Fifty-seven million dollars can spread a lot of fear, uncertainty and doubt.
Wendell Potter is the author of Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR is Killing Health Care and Deceiving Americans and Obamacare: What’s in It for Me? What Everyone Needs to Know About the Affordable Care Act.
The Federal Election Commission went ghost hunting on Halloween.
The agency on Friday blasted out hundreds of letters to campaign committees that failed to file campaign finance reports on time, including some tied to candidates who are dead, imprisoned, or who have long been out office.
Recipients of the Oct. 31-dated missives include the campaign committee of former Rep. Jesse Jackson Jr., which has missed every filing deadline since the Illinois Democrat pleaded guilty to a count of felony fraud in February 2013. He was later sentenced to 30 months in prison.
The campaign committee of the late Rep. Bill Janklow, a South Dakota Republican, received a letter, as did that of former Rep. Bill Jefferson (D-La.) — he of the bricks of bribery cash in his freezer — who a jury convicted of corruption in 2009.
The FEC, a small agency with a $65 million budget, is the primary watchdog in charge of overseeing elections — and has been dogged in recent years by ideological gridlock and internal inefficiencies. Campaign committees must regularly file reports with the FEC until they officially terminate, a process that takes some campaign committees years.
The agency sends out letters to active committees that miss a filing deadline. There’s no exception even if the candidate is, well, dead, or has a forwarding address of a federal prison.
An FEC press officer confirmed the agency sent out 372 such letters last Friday.
FEC Vice Chairwoman Ann Ravel explained that the FEC is required by law to post the names of committees that don’t file campaign finance disclosures on time. Therefore, the commission’s regulations require that the letters be sent to make sure no committee name is posted in error.
“With respect to issues of FEC priorities, obviously it would be so much better were we to be able to utilize our resources and also come to agreements on the commission itself to be able to enforce against the most serious violations that have an impact on public trust in the electoral system,” Ravel said, alluding to the commission’s frequent deadlocks on enforcement cases.
FEC Chairman Lee Goodman, a Republican, could not immediately be reached for comment.
The only way to save the FEC the trouble of going after such committees would be for Congress to give the agency permission to terminate campaign committees if they don’t respond over a certain period of time, says Brett Kappel, counsel with the political law practice at Arent Fox, though there would still be issues when campaign committees have unsettled debts.
“It’s a waste of scarce resources,” he said of many of the letters.
Debts can drag out for decades. Among the letter recipients: the campaign committee used by the Rev. Al Sharpton’s 2004 presidential bid, which still owes more than $900,000 a decade later — including $208,000 in unpaid civil penalties owed to the FEC itself.
It’s an important moment for us as we honor and reflect on the leadership and impact of outgoing Executive Director, Bill Buzenberg. His contributions to journalism over 40 years are immeasurable and during his eight years here at the Center for Public Integrity, we won our first Pulitzer Prize.
The theme of the evening is the power of one person, story, or organization to make a difference in this complex world. At the Center, we believe that every one of us has the power to create impact, including you!
Guest speakers will include:
Steve Kroft, Correspondent for 60 Minutes;
Ira Flatow, Host of Public Radio’s Science Friday;
Bill Siemering, Founder of NPR’s All Things Considered;
Charles Lewis, Founder, Center for Public Integrity;
Sal Giambanco, Partner, Omidyar Network;
Elizabeth Christopherson, President, Rita Allen Foundation.
When: November 13, 2014, at the National Press Club in Washington, DC from 6:00 to 8:00pm.
Come enjoy appetizers and drinks and meet our journalists and board members!
Please RSVP by emailing firstname.lastname@example.org or call 202-481-1248.
We hope you can attend!
Check out these pictures from our first Silver Symposium back in June, where we honored the Center’s founder, Charles Lewis as he read from his new book, 935 Lies, The Future of Truth and Decline of America’s Moral Integrity.
“If you can’t say anything nice, don’t say anything at all.”
It's hardly the motherly mantra to which politicians adhere.
As another bitter election season concludes, the airwaves will temporarily clear of the nasty political ads that have dominated them. In the 34 states with Senate seats up for grabs, candidates and political groups ran more than 1 million TV ads to influence those races, according to a Center for Public Integrity analysis of data from Kantar Media/CMAG, an advertising tracking firm.
About 46 percent of those U.S. Senate ads were straight-up attack ads, but in some states it was far more than half. Many more ads that didn't qualify as "negative" contained a mix of positive and negative messages.
The closest races had the most mudslinging. In North Carolina, where the U.S. Sen. Kay Hagan, a Democrat, and Thom Tillis, a Republican, have been locked in a dead heat, nearly seven out of 10 ads were overtly negative, the highest rate. Many more contained a mixture of positive and negative messages.
Kansas, Iowa, Michigan and Colorado are also notoriously bitter affairs, where about 60 percent of the attack ads that aired were political ads.
The following graphic, courtesy of Center for Public Integrity partner Slate, tells the story:
Editor’s note: The Center for Public Integrity tracked political advertising in races for the U.S. Senate, state-level offices and state ballot measures. Use these three interactive features to see who was calling the shots and where the money was spent.
Nearly all of the governors elected Tuesday dominated the airwaves in TV ads before voters went to the polls, bolstered by their campaign war chests and outside groups that advertised on their behalf.
Candidates outspent on TV ads won in only seven of the 32 races called as of early Wednesday. However, in six of those cases, the winners were incumbents, confident that they didn’t need the help of so many ads.
Of the nearly $550 million spent on ads targeting governors on the November ballot, more than 55 percent supported the winning candidates, according to a Center for Public Integrity analysis of preliminary data from media tracking firm Kantar Media/CMAG.
The spending also helped Republicans pick up four governorships, while Democrats flipped only one, leaving Republicans holding the reins in at least 30 states nationwide.
The country’s 36 governors’ races accounted for nearly 70 percent of the $832 million spent on television ads aimed at shaping the outcomes of state-level races this cycle, about $100 million more than was spent on the same number of U.S. Senate seats up for election. Only the Wyoming governorship did not have ads airing in markets captured by Kantar Media/CMAG.
The spending this cycle represents a 10 percent decline from 2010, when an estimated $921 million was spent on TV ads in state-level races, including $689 million on governors’ races.
At least 16 gubernatorial winners and supporting groups outspent their opponents by more than $1 million. In some states, such as Florida, the successful candidates and their supporters outspent their rivals by huge margins.
Republican Gov. Rick Scott and the groups backing him spent $61 million — the most spent supporting any single gubernatorial candidate this cycle — compared with the $34 million spent by Democratic candidate and former Gov. Charlie Crist and his allies. The heavy spending also made the Florida contest the most expensive TV ad war in the country this election.
Scott and his allies spent roughly $21.50 on TV ads for every vote the governor received, according to the Associated Press’s voting totals. Crist and his allies spent nearly $12.25 on TV ads per vote in the losing effort.
Other top spenders included Illinois Republican Bruce Rauner, who, along with his allies, spent almost $21 per vote on his way to unseating Democratic incumbent Gov. Pat Quinn. Quinn and his supporters spent about $22.75 per vote.
Rauner’s biggest backer was Rauner. The candidate donated at least $26 million to his campaign, the most of any self-funded candidate this election.
Meanwhile incumbent New York Democrat Andrew Cuomo spent $14.75 for each vote in his successful bid to retain the governorship.
In a race that attracted a lot of national attention, Texas Attorney General Greg Abbott, a Republican, beat Democratic state Sen. Wendy Davis handily after he outspent her on the Lone Star State’s airwaves $24 million to $15 million.
In Pennsylvania, Democrat gubernatorial candidate Tom Wolf unseated unpopular incumbent Gov. Tom Corbett, a Republican, after Wolf and his allies outspent Corbett and his supporters by nearly $10 million on the airwaves — the same margin that kitchen cabinet magnate Wolf donated to his own campaign. He was the sole Democrat to pick up a governor’s mansion.
However one of the biggest upsets of the night was in largely blue Maryland, where Republican challenger Larry Hogan beat Democratic Lt. Gov. Anthony Brown despite being outgunned on TV ads.
Up until even the last few weeks of the race, Brown was expected to cruise to an easy victory. What’s more, Brown and the groups supporting him spent $13.5 million on TV ads, compared with the $5.8 million spent by Hogan and his allies.
Todd Eberly, a political science professor at St. Mary’s College of Maryland, said the race boiled down to what the ads said, rather than how much was spent airing them.
“The economy and taxes were nearly paramount in the minds of Maryland voters this year," he said. "Hogan really talked about nothing but that issue and Brown avoided it."
Voters likely conflated independent groups’ ads — 86 percent of which attacked Hogan, according to the Center’s analysis — with those run by Brown himself, Eberly said.
“To the extent that advertising registered with anyone in this election, what registered was that Brown was running a very negative campaign, and I think that hurt him,” he said.
Such independent groups accounted for a quarter of the television spending in governors’ races, often providing the margin that helped boost the winning candidates to victory.
Not counting parties or candidates themselves, the top spending independent groups were the Republican Governors Association ($28.5 million) and the Democratic Governors Association ($17.2 million), national committees that spend and raise millions to elect governors from their parties. The groups also heavily contributed to other independent groups, that spent nearly $11 million on the Democratic side and more than $13 million on the Republican side.
All told, the Republican group was more successful than its Democratic counterpart; of the 21 states where the RGA or its affiliates spent money, Republicans won in 16 races.
By comparison, six out of the 11 Democrats backed on the airwaves by the Democratic group and its affiliates lost.
“It’s a Republican-leaning year, and it’s a good national trend for Republicans that is bleeding down the ballot to governors’ races,” said Kyle Kondik, a political analyst at the University of Virginia’s Center for Politics.
Two independent groups backed by billionaires had mixed results on Election Day. The environmental group NextGen Climate Action Committee, backed by billionaire Tom Steyer, helped knock out Corbett in Pennsylvania but didn’t find success in Florida or Maine where it supported Democrats.
Meanwhile former New York City Mayor Michael Bloomberg’s Independence USA PAC, which backed political moderates, found success in Michigan, where it backed incumbent Republican Gov. Rick Snyder. But it struck out in Maryland, where it backed Brown, the Democrat. The governorship of Connecticut, where the group backed Democratic Gov. Dan Malloy, had not been called as of early Wednesday.
In Florida, Scott won re-election with help from more than $10 million in ads sponsored by Let’s Get to Work, a political action committee with ties to Scott though not technically part of his campaign.
In fact, neither Scott nor Crist was responsible for much of the $94 million spent on airtime in the race, the most expensive in the nation. The state’s two major political parties accounted for a whopping 76 percent of the ad spending — $72 million. Another $17 million came from other independent groups, such as Steyer’s NextGen Climate Action Committee, the National Rifle Association and other Florida-specific political organizations.
In Illinois, such assistance from outside groups helped Democratic Gov. Pat Quinn nearly match Republican challenger Bruce Rauner, who tapped his wealth for his campaign.
Worth hundreds of millions of dollars, Rauner took advantage of a fortune made in the private equity industry to unseat the vulnerable incumbent, whose popularity was waning. Quinn fought back with help from the labor-funded Illinois Freedom PAC to almost match Rauner’s camp, yet still lost.
“When one candidate starts spending a lot of money on ads, the other side says, ‘We have to match them,’ and it becomes an arms race,” said Brian Gaines, a political science professor at the University of Illinois.
By the day before the election, both sides had each spent just over $36 million on TV ads, making the race the second-most expensive governor’s contest.
In Arizona, former ice cream executive Doug Ducey was buttressed by roughly $4 million in ads sponsored by outside actors, which added to the $5.7 million worth of airtime bought by his campaign. That helped the Republican dominate the airwaves and beat Democratic nominee Fred DuVal.
In Kansas, Sam Brownback was one of at least 15 incumbent Republican governors who won re-election. Aided by at least $5 million dollars in TV ads produced by outside groups, Brownback beat Democratic challenger and state legislator Paul Davis in a tight race. For his part, Davis was buoyed by more than $3.7 million in spending by outside sponsors.
So-called “outside spending” groups have gained significant traction since 2010, the last year in which a comparable number of governorships were in play and the first election cycle after the Supreme Court’s Citizens United v. FEC ruling, which removed limits on such political spending. Groups independent of candidates and parties sponsored 25 percent of all ads in gubernatorial races this cycle, while outside organizations made up less than 13 percent in 2010.
And the vast majority of these ads — more than 71 percent — attacked candidates, while campaign-endorsed messages were mostly positive.
“Outside groups are always going to do more negative spending than candidates,” said Justin Levitt, a professor at Loyola Law School in Los Angeles. “It diffuses the blame for a negative message."
Editor’s note: The Center for Public Integrity tracked political advertising in races for the U.S. Senate, state-level offices and state ballot measures. Use these three interactive features to see who was calling the shots and where the money was spent.
Republican candidates wagered that big bucks from outside political groups could overcome their own fundraising shortfalls ahead of the 2014 midterm elections.
They were right. On Tuesday night, Republicans won control of the U.S. Senate for the first time in eight years.
In many of the states the GOP won Tuesday, Republican candidates themselves didn’t primarily execute what proved to be a wildly successful strategy of linking Democratic candidates — from Colorado to North Carolina— to an increasingly unpopular President Barack Obama and his policies.
Instead, deep-pocketed conservative groups — including a cluster of groups tied to Republican strategist Karl Rove and a network of groups backed by billionaire industrialists Charles and David Koch — together sponsored hundreds of thousands of TV ads that relentlessly attacked Democrats for their ties to Obama.
The prominence in 2014 of non-party groups such as super PACs and politically active nonprofits underscores the way election funding has changed since the U.S. Supreme Court’s Citizens United v. Federal Election Commission ruling in 2010.
Democrats, who enjoyed a six-seat Senate majority going into Election Day, attempted to defend themselves from an expected Republican onslaught.
Numerous incumbent Democrats outraised their GOP rivals, and liberal donors dug deep to support a pro-Democratic super PAC — Senate Majority PAC — that became the top sponsor of Senate-focused campaign ads this election cycle. Democrats even dabbled in so-called “dark money” through secretive nonprofit groups, such as Patriot Majority USA, that don’t disclose their donors.
But it wasn’t enough. Republicans are now predicted to control at least 52 U.S. Senate seats next year.
“When the outside money comes in in substantial amounts, you don’t have to make any choices,” Norman Ornstein, a scholar at the conservative American Enterprise Institute, said about Republicans’ midterm resources.
Had Republican candidates been left to their own, Ornstein continued, “my guess is you would not have seen nearly as much money going into places like Colorado, Iowa, New Hampshire — even Alaska.”
Groups connected to Rove and the Koch brothers were among the biggest winners in Tuesday’s midterm elections.
Of the 10 U.S. Senate races where either the Rove-linked nonprofit Crossroads GPS or its sister super PAC, American Crossroads, was active, their favored candidates prevailed in at least six — with the Alaska Senate race still too close to call at this writing and a runoff election coming next month in Louisiana.
Similarly, of the nine U.S. Senate races where the Koch-backed Americans for Prosperity was active, its favored candidates also prevailed in at least five contests.
In the Granite State, incumbent Sen. Jeanne Shaheen kept Republican challenger Scott Brown, who previously represented Massachusetts in the U.S. Senate, at bay. And in Michigan, Rep. Gary Peters defeated former Sec. of State Terri Lynn Land to win an open seat race.
As of press time, incumbent Sen. Mark Begich, D-Alaska, was trailing GOP challenger Dan Sullivan, the state’s former attorney general and natural resources commissioner, by about five percentage points.
Ultimately, the current occupant of the White House decided the 2014 election, said Steven Law, president of American Crossroads.
“This election was about President Obama,” Law said in a statement.
Levi Russell, a spokesman for Americans for Prosperity, did not respond to requests for comment.
In a marked contrast from the 2010 midterm elections, Democrats, too, embraced the post-Citizens United world of big-money politics, even while they continued to bemoan it.
That high court decision allowed corporations, including certain classes of nonprofit corporations, to spend funds to expressly advocate for the election or defeat of federal candidates.
The decision also paved the way for super PACs, which may accept unlimited contributions but must disclose their funders.
During the 2014 election cycle, the pro-Democratic Senate Majority PAC—which is run by allies of Senate Majority Leader Harry Reid, D-Nev. — produced more than 50,000 ads—more than any other outside spending group, according to a Center for Public Integrity review of data provided by Kantar Media/CMAG, a firm that tracks political advertising.
And a pro-Democratic nonprofit called Patriot Majority USA — that is linked to Senate Majority PAC — played attack dog in the South, where several incumbent Democrats faced strong GOP challengers.
Just two of the candidates backed by Senate Majority PAC and Patriot Majority USA won on Tuesday — Peters in Michigan and Shaheen in New Hampshire.
Six of Senate Majority PAC’s favored candidates went down to defeat, while Patriot Majority USA saw four of the Democratic candidates it supported lose.
Both also backed incumbent Sen. Mary Landrieu in Louisiana, who is now headed to a Dec. 6 runoff with Republican rival Bill Cassidy.
Officials with Senate Majority PAC and Patriot Majority USA did not respond to requests for comment.
Overall, more than 1 million TV ads have aired since January 2013 as Democrats and Republicans battled for control of Congress’ upper chamber, according to Kantar Media/CMAG.
In many of the most pivotal Senate races, outside groups accounted for nearly one of every two ads.
Dark money groups that don’t disclose their funders accounted for at least one of every five ads in six of the hottest Senate races: Arkansas, North Carolina, Colorado, Kentucky, Louisiana and Michigan.
According to a Center for Public Integrity review of data provided by the Center for Responsive Politics, just two Senate contests saw outside groups spend more on elections than the candidates themselves in 2012 — Virginia and Indiana — and there were no such races in 2010.
This year, however, there could be more than half a dozen such contests when final numbers are tallied.
And the spending gap between candidates and outsiders has grown — dramatically.
In 2012, candidates in Virginia and Indiana nearly matched dollar for dollar what outside groups spent in those contests. This year, in some cases, the outsiders have spent more than double what the candidates had at their disposal.
Take Colorado, for instance, where Republican Rep. Cory Gardner — with the aid of the Crossroads network, Koch groups and the U.S. Chamber of Commerce — ousted incumbent Democratic Sen. Mark Udall. The two men had collectively raised about $30 million for their campaigns as of mid-October, according to a Center for Public Integrity review of filings with the Federal Election Commission.
Yet all outside groups active in Colorado had reported spending about $55 million to the FEC as of Tuesday, according to the Center for Responsive Politics. (Party committees also reported spending an additional $14 million.)
Similarly, in North Carolina, incumbent Democratic Sen. Kay Hagan and state House Speaker Thom Tillis, her Republican rival, collectively raised about $32 million as of mid-October.
Groups that were neither parties nor controlled by candidates reported spending about $58 million in that contest as of Tuesday — and parties spent an additional $19 million, according to the Center for Responsive Politics.
Hagan outraised Tillis by a ratio of more than 2-to-1 and liberals accounted for about 55 percent of all TV ads aired in the contest, yet Hagan still lost to Tillis on Tuesday night.
In the final days of North Carolina’s race, which will likely go down as the most expensive Senate contest in U.S. history, a Senate-focused TV ad ran once every 50 seconds somewhere in the state. Most of the ads were decidedly negative.
Meanwhile, in Virginia, incumbent Democratic Sen. Mark Warner found himself in an unexpectedly close race with Republican challenger Ed Gillespie, a former lobbyist and ex-chairman of the Republican National Committee.
The Virginia contest had been all but ignored by outside spending groups, and Warner himself ran more than half the approximately 26,000 TV ads aired in the race, according to a Center for Public Integrity analysis of data provided by Kantar Media/CMAG.
The Virginia Progress PAC, a single-candidate super PAC supporting Warner, aired about 3,400 ads, or about one of every eight TV ads. It told the FEC it spent about $1.8 million on ads, but it was silent since early October.
Only one conservative outside group appears to have run TV ads in Virginia: the 60 Plus Association, which ran fewer than 400 spots, according to Kantar Media. Meanwhile, the NRA Institute for Legislative Action, the lobbying wing of the gun rights powerhouse, reported spending about $410,000, much of it to promote Gillespie with phone calls and direct mail.
As of press time, Warner held a very narrow lead over Gillespie.
The increased use of big-money groups in politics — particularly those that do not reveal their funders — worries some political observers.
“The more undisclosed big money in elections, the poorer our democracy,” said Rick Hasen, a law professor at the University of California, Irvine.
Disclosure “helps to ferret out corruption,” Hasen continued. “When journalists and voters can follow the money, they can look for politicians acting in the interests of those who contribute or spend toward their election.”
But former FEC Chairman Brad Smith, a Republican, thinks fears of dark money influencing the election are overblown.
“I have never heard, nor heard of, any ordinary voter expressing alarm that any particular ad was produced by a dark, scary money group,” Smith said.
Organizations that raise concerns about dark money, Smith continued, are part of “an effort by people who really want to restrict political speech, to scare voters and whip up fears about nothing.”
The Internal Revenue Service plans to draft regulations in early 2015 that aim to crimp certain nonprofits’ ability to engage in politics.
Don McGahn, a former Republican chairman of the FEC and current attorney at law firm Jones Day, predicted such efforts may prove futile.
“If the IRS tries to change the rules, they’re in for one hell of a fight,” he said. “It will get a lot of people wound up, and you’ll see a lot of litigation.”
Pepsi, IKEA, FedEx and hundreds of other international companies have secured secret deals from Luxembourg, allowing many of them to slash their global tax bills while maintaining little presence in the tiny Western European duchy, leaked documents show.
These 343 companies appear to have channeled hundreds of billions of dollars through Luxembourg and saved billions of dollars in taxes, according to a review of nearly 28,000 pages of confidential documents conducted by the International Consortium of Investigative Journalists and a team of more than 80 journalists from 26 countries.
The European Union and Luxembourg have been fighting for months over Luxembourg’s reluctance to turn over information about its tax rulings to the EU, which is investigating whether the country’s tax deals with Amazon and Fiat Finance violate European law. Luxembourg officials have supplied some information to the EU but have refused, EU officials say, to provide a larger set of documents relating to its tax rulings.
Today ICIJ and its media partners are releasing a large cache of Luxembourg tax rulings– 548 comfort letters issued from 2002 to 2010 – at www.icij.org and reporting on their contents in stories that will be published or broadcast in dozens of countries. It’s unclear whether any of these documents are among those still being sought by EU investigators, but they are the kinds of documents that go to the heart of the EU’s investigation into Luxembourg’s tax rulings.
“This is the first time really that we’ve seen inside the workings of Luxembourg as a tax haven,” said Richard Brooks, a former U.K. tax inspector and author of the book The Great Tax Robbery, who was hired by ICIJ to help review some of the leaked documents. “The countries . . . that are losing money, they don't know about it, don’t know how it operates at all.”
Among the key findings of the project:
Read the stories and explore all the documents at ICIJ.org
Editor’s note: The Center for Public Integrity tracked political advertising in races for the U.S. Senate, state-level offices and state ballot measures. Use these three interactive features to see who was calling the shots and where the money was spent.
Big money was a boon to groups fighting for and against ballot measures across the states on Election Day.
In 21 of the top 25 most expensive state ballot measure races in terms of television ad spending, groups that won the war on the airwaves also won at the ballot box, according to a Center for Public Integrity analysis of unofficial election results and preliminary data from media tracking service Kantar Media/CMAG.
But surprising upsets also showed that in the wild world of direct democracy, money isn’t everything.
“The relationship is more complicated than just ‘spending more [means] having greater success.’ There are a lot of other factors in terms of the electoral environment,” said Daniel Smith, a University of Florida professor and expert on such initiatives. “Ballot measures generally are easier to defeat than to pass.”
More than $196 million was spent in 2014 on TV ads touting and trashing this year’s crop of 158 statewide ballot measures; another $19.7 million was spent on local measures. TV ads are well known as an effective way to get a message to voters, and this year, many corporations and national advocacy groups lined up to have their say on the airwaves about the initiatives.
Groups backed by doctors and health insurers spent nearly $60 million to air TV ads to oppose Propositions 45 and 46 in California, putting them at the top of the TV spending pile. They got their way, as voters rejected the two measures, which would have required drug testing for doctors and special approval for insurers to raise rates.
The health care industry outspent Consumer Watchdog, an advocacy group, and trial lawyers, who backed the measures, by 7-1 on the airwaves.
Examples where big ad spending paid off for groups working to pass or block initiatives at the polls were plentiful. Some of the winning groups appeared not to face any opposition on the airwaves at all: Of the 21 groups that won both ad and ballot wars, 13 faced no ads aired on the other side of the issue.
In Massachusetts, voters chose not to ban gambling after a casino-backed group ran about $5.7 million worth of ads claiming gaming was good for the economy. No ads ran in support of the ban.
And in Democratic California, Gov. Jerry Brown led a group of supporters who together put nearly $21 million worth of ads on TV to support Propositions 1 and 2, which encompass a series of provisions to shore up California’s water supply and create a state rainy day fund. The measures faced no opposition on the airwaves, and passed handily.
Ballot measures can have broad, bipartisan support to begin with, especially if a legislature puts them on the ballot, said Smith.
Supporters of legalized marijuana won in Oregon and Alaska. Groups spent $2 million supporting the Oregon measure on the airwaves, and just $60,000 in Alaska. Voters also approved a measure legalizing the possession of the drug in the District of Columbia, despite no pro-pot ad spending.
But in Florida, a measure to allow medical marijuana failed, barely. It needed 60 percent approval to pass and only got 58 percent. The Drug Free Florida Committee, armed with millions from Republican mega-donor Sheldon Adelson, spent $5 million on TV ads against the measure, compared with just $1.9 million spent on the airwaves by supporters.
The “No on 2” campaign was more sharply focused in its attacks on the medical marijuana measure, raising a host of claims that raised doubt in Floridians’ minds,” Smith said.
Among some other high-profile ballot battles:
It took more than nine years of fighting and, ultimately, his death, but coal miner Steve Day has won his claim for federal black lung benefits, assuring his family a modest but much-needed monthly check.
Day's initial claim for benefits, filed in 2005, was wrongfully denied primarily because of reports and testimony by doctors at the Johns Hopkins Medical Institutions, which had become the coal industry's go-to institution for obtaining negative readings of X-rays to help defeat sick miners' cases.
But, in a rare move on Oct. 23, Patriot Coal agreed to stop fighting Day and his widow and to begin paying her $947.70 a month, as well as about $40,000 in benefits that had accumulated over the time it contested the claim. The company's decision is uncommon in a system in which coal giants typically wage protracted battles to avoid paying benefits, even when miners are extremely ill and are being treated for black lung.
Patriot's decision to concede came two weeks after BuzzFeed News told Day's story, detailing how his autopsy definitively showed that the negative readings in his case by doctors at Johns Hopkins were wrong.
"I think he would be very happy now," Day's daughter Patience, 30, said of her father. "I just think it's a shame that it took his death to open people's eyes."
Patriot, which now owns the company that employed Day for more than 33 years, declined an interview request and would not say why it chose to concede after years of fighting. Instead, it issued a statement that said, "We believe the Company's actions in this case were appropriate and consistent with the medical evidence presented at the time."
The lawyer representing the company, Paul Frampton of the firm Bowles Rice LLP, did not respond to repeated interview requests. Frampton has represented coal companies in many black lung cases, including Day's earlier claim.
Day's case was emblematic of the struggles faced by many other coal miners. A Center for Public Integrity investigation, conducted in partnership with ABC News, revealed that, in more than 1,500 cases decided since 2000, the leader of the Johns Hopkins unit, Dr. Paul Wheeler, never once found a case of severe black lung, even as other doctors looking at the same X-rays saw this advanced form of the disease in 390 cases. Autopsies or biopsies, which are rarely available in black lung claims, have proven Wheeler wrong in more than 100 cases.
Many of the criteria Wheeler applies when evaluating films are at odds with medical literature and the views of other leading doctors, yet judges often have deferred to his impressive credentials, contributing to denials of many miners' claims.
After Wheeler's record came to light, Johns Hopkins suspended its black lung X-ray reading program and said it was beginning an internal review. That announcement came on Nov. 1, 2013. Now, more than a year later, a spokesperson said the review was ongoing but refused to provide any further details.
The spokesperson also ignored an interview request and issued essentially the same statement that Johns Hopkins has been making for months: "Our review of the [black lung X-ray reading] program is ongoing and has proceeded as rapidly as possible. I can assure you that the review process has been thorough and that Johns Hopkins takes concerns about the … program very seriously."
This year, the U.S. Department of Labor issued a bulletin instructing agency officials not to credit Wheeler's opinions unless a company rebutted the evidence from the CPI-ABC investigation. The department also notified more than 1,000 miners that their claims may have been incorrectly denied because of Wheeler's readings and told them they might be able to file a new claim for benefits.
That is what Day did in November 2013, before the government outreach. He died this July at age 67, still awaiting a decision in his case.
When he filed his initial claim in 2005, a Labor Department claims examiner awarded benefits, but the company appealed. In 2011, an administrative law judge reversed the award and denied the claim.
This denial relied primarily on Wheeler's reports and testimony. More than half a dozen other doctors believed that Day had black lung. Even the pulmonologist who examined him on behalf of the company initially thought he had the disease, but he changed his mind after receiving Wheeler's reports on the X-rays and CT scan.
After the loss, Day and his family struggled to pay monthly bills, sometimes resorting to loans from neighbors or relatives. The entire family — Steve and his wife, two daughters, a son-in-law, and two grandsons — lived in a small house, and each person pitched in.
The long-awaited benefits payments will help with monthly expenses, including medical bills for Steve's wife, Nyoka, who suffers from rheumatoid arthritis and a disease that causes her body to retain too much iron. She is currently hospitalized.
"I wish my Dad was here to see it and enjoy what was rightly his," Patience said. He'd be pleased, she added, not just at the vindication in his own case but also the hope his victory could offer other coal miners.
"He wanted his story to be able to make a difference," Patience said. "That's our hope too. If his story can prevent other families going through what we did, it paid off. However, we've lost Dad, and that's a pretty big price."
Chris Hamby, a former reporter with the Center for Public Integrity, now works for BuzzFeed.
Update, Nov. 7, 1:20 p.m.: Ed Gillespie Friday conceded the Virginia Senate race.
When Ed Gillespie decided to run against Democratic incumbent Mark Warner for a Virginia U.S. Senate seat, his bid was universally hailed as a long shot.
No one, though, thought the American Crossroads co-founder, former Republican National Committee chairman and ex-lobbyist would have trouble attracting big money.
Conventional wisdom was off on both counts.
Gillespie — and Virginia’s U.S. Senate race — turned out to be the surprise of election night. Warner, a popular former governor who routinely led in polls, claimed victory by fewer than 17,000 votes, and Republican Gillespie has yet to concede. The election could be headed for a recount.
That Gillespie managed to mount such a serious challenge is particularly notable given his token support from outside groups like super PACs, nonprofits and party committees. Gillespie’s surge leaves everyone wondering if he would have upset Warner had such groups invested in Virginia’s race like they did in other U.S. Senate contests from Alaska to North Carolina.
“Shame on them,” said Howard Leach, one of only six donors to the We Can Do Better PAC, a super PAC started to support Gillespie’s U.S. Senate bid. “They should have put some money in Ed’s race.”
Reported outside spending on North Carolina’s U.S. Senate race, the most expensive in history, was $81.2 million. The total spent on Virginia’s U.S. Senate race, which appears to be the closest in the country? A measly $2.6 million.
The Gillespie campaign and the National Republican Senatorial Committee did not respond to a request for comment. The Washington Postreported the NRSC spent $675,000 in Virginia, including $100,000 the weekend before the election.
Leach gave $25,000 to the We Can Do Better PAC, which raised $140,000, most of which it spent on radio ads in late October.
Leach, a businessman and investor, is a former campaign cash bundler for President George W. Bush, who later appointed him as U.S. ambassador to France. His relationship with Gillespie dates back to Gillespie’s time at the helm of the RNC.
“I think very highly of Ed Gillespie as an individual,” Leach said, adding, “I wish that Ed had had more help.”
American Crossroads and its related nonprofit, Crossroads GPS, stayed out of the race entirely.
At least two of Gillespie’s former lobbying clients ran ads in Senate races, but they didn’t show Gillespie any love.
The American Hospital Association’s political action committee ran U.S. Senate-focused ads in Kansas, Alaska, Mississippi and Arkansas during the 2014 cycle, according to Kantar Media/CMAG, an advertising tracking service, but stayed out of Virginia.
The National Association of Realtors Congressional Fund, a super PAC funded entirely by the National Association of Realtors, ran U.S. Senate-focused ads in Mississippi, Alaska, Kentucky, Michigan and Kansas but also avoided the Senate race in Virginia.
Neither organization responded to requests for comment on the election results.
The biggest outside spender in the Virginia race was the Virginia Progress PAC, a pro-Warner super PAC that spent $1.8 million and aired about 3,400 ads, or one out of every eight in the race, according media data.
The National Rifle Association Institute for Legislative Action spent the most money pushing for Gillespie: $410,000, still less than a quarter as much as the Virginia Progress PAC, according to the Center for Responsive Politics.
Virginia “is a rich state for us in terms of members and supporters and donors and we felt that we could make an impact,” said Andrew Arulanandam, a spokesman for the NRA. “And we could make an impact in a race where there was a clear distinction between Gillespie and Warner. Gillespie would be someone who would support us through thick and thin and Warner … hadn’t.”
The NRA paid for an August mailing, and it also made phone calls on Gillespie’s behalf in October.
It’s clear that polls consistently showing Gillespie trailing well behind Warner. That and the possibility of the expense of playing in Virginia’s media market may have played a part in discouraging other outside groups and donors.
Warren Stephens, chairman and president of Little Rock, Arkansas-based Stephens Inc., also gave $25,000 to the We Can Do Better PAC. Stephens, a major political donor, gave more to other groups, including $2 million to American Crossroads, because Arkansas was one of Crossroads’ prime target states, he said.
“I donated to [We Can Do Better PAC] because I’ve known Ed Gillespie a long time and he’s a nice man,” Stephens said. “I think I’m probably like everyone else. I didn’t think he had a chance.”
Stephens said he doesn’t remember who approached him to contribute to the We Can Do Better PAC, but no other group brought up Virginia’s U.S. Senate race when soliciting him.
Stephens said he won’t second-guess why outside groups, including American Crossroads, didn’t put money into the Virginia Senate race.
Still, “when you have a good candidate maybe the lesson there is just go ahead and support him no matter what,” he said.
Steven Law, president of American Crossroads, was not available to be interviewed, a group spokesman said. Law personally contributed $1,000 to Gillespie’s campaign on Oct. 17, according to Federal Election Commission records.
In an e-mailed statement, the group said, “Republicans benefited from an unprecedented late-breaking wave and an abundance of top-flight candidates like Ed Gillespie. The Senate battleground was so broad this year that we would have had to shift resources from other close races to try to take advantage of any new opportunities in the campaign’s closing days.”
Gillespie’s campaign reported raising about $6.8 million and spending slightly less than $6 million through Oct. 15. Warner’s campaign reported raising nearly $16.4 million and spending $13.7 million, more than twice as much as Gillespie.
The Gillespie campaign was also out-advertised. Warner ran more than half the TV ads in the race, according to the Center for Public Integrity’s media analysis. Gillespie ran slightly more than a third. The data shows no outside group aired a TV ad in the race after Oct. 11.
It’s impossible to know whether more outside spending would have tipped the race Gillespie’s way, but it seems likely people will write bigger checks for him next time.
“What he told me…was, I’ve studied the race and it’s winnable and I’ve never studied a race harder. I’m sitting there going, ‘OK, sure, Ed, there’s no way you can win the race, but I know you, I’m behind you, we’ll do something,’” Stephens said. “Lo and behold, when Ed Gillespie tells me something going forward, you’d better believe I’m going to listen to him.”
This story was reported by Gary Gately for the Juvenile Justice Information Exchange.
All the world’s a stage — even behind bars, in Massachusetts. Inside juvenile correctional facilities in The Bay State, young offenders study the finer points of Shakespeare, rehearse for weeks, then perform the Bard’s works before parents and grandparents and aunts and uncles.
In Texas, incarcerated youths lead their relatives to schools inside juvenile facilities, where they showcase their work in classrooms and introduce their teachers. A state juvenile justice staffer likened the visits to the sort of open house you might expect at a public school.
In Indiana, juvenile authorities have greatly expanded visiting hours at their facilities. Even late-night visits can be arranged by appointment, if needed, to accommodate a family member’s schedule. For those who can’t make it in person, Indiana facilities — like some in other states — offer virtual visits through videoconferencing technology such as Skype.
The three states illustrate efforts to foster “family engagement,” which has become a buzzword in juvenile justice circles. It’s about building bridges between family members — or other key figures in youths’ lives — and the staff at juvenile facilities that house youngsters.
Experts, supported by a small but growing body of research, say fostering family engagement improves incarcerated youths’ behavior, makes families feel more connected, reduces disciplinary incidents and boosts the morale of staff.
Moreover, strengthening these connections better prepares youths for a return to the community upon release — most return to their family homes — and reduces repeat offenses.
But for all the progress in building better relations with families, critics complain that too much of the juvenile justice system in America is still beset by harsh conditions, violence and widespread use of solitary confinement, which is increasingly controversial.
And historically, relations between family members and juvenile facility staff have been marked by mistrust and, at times, downright hostility (and, in fact, the first U.S. juvenile facilities explicitly attempted to isolate kids from their families).
Staff at many juvenile facilities have developed a reputation for acting as if family members are to blame for youths’ offenses and treating the family members with disdain and disrespect.
Family members, for their part, often view officials at juvenile facilities not as allies, but as obstacles, in the ostensible goal of the juvenile justice system: rehabilitation of youthful offenders.
New mindset in Massachusetts
“A lot of the parents line up against custodial agencies. They see us as extension of the court system and the child welfare system that have been removing the kids from their homes and that they’ve had a really bad experience with over a period of years,” Peter Forbes, commissioner of the Massachusetts Department of Youth Services (DYS), said in an interview.
“You have to work against that dynamic. You have to be deliberate about how you’re going to break that down. In Massachusetts, we’ve definitely stepped away from the mindset that the parents are the problem.”
In fact, parents and other family members play an integral part of the success of the state’s innovative work with the nonprofit Actors’ Shakespeare Project, based in the Boston suburb of Somerville, Mass.
Family members and friends form the appreciative audiences for the incarcerated youths’ forays into the four-century-old works of Shakespeare. For example, incarcerated girls recently performed the comedic play “As You Like It” at the Pelletier Assessment and Rotenberg School for Girls in Westboro, Mass.
Actors’ Shakespeare Project cleverly calls the program "Incarcerated Youth At Play” and says the themes of some Shakespeare plays such as justice and revenge, violence and grief and the power of love and redemption can resonate with troubled youths of the 21st century.
Daisy Gomez-Hugenberger, communications coordinator for DYS, said in an email Shakespearean “teaching artists” from the nonprofit work from three to 16 weeks with incarcerated youths to create ensembles. And English, language arts, theater and social studies teachers in the facilities help youths explore Shakespeare’s plays and write, rehearse and perform within the context of teaching in the classroom.
On a more prosaic level, sometimes simple things mean a lot to family members, who are often guilt-ridden over what they might have done differently and racked by anxiety. Forbes says even calling families to ask about their schedules instead just mailing out a notification of a youth’s next monthly treatment plan meeting and holding parent-teacher nights can help break down barriers.
Massachusetts also invites youths and families to participate in occasional DYS “strategic planning” meetings.
Neelum Arya, research director of the Program in Public Interest Law and Policy at the University of California, Los Angeles, law school, labels such outreach “family-driven justice” in an 83-page article in the current issue of the Arizona Law Review.
“We’re in the first decade of this, so we have a long way to go,” Arya said in an interview. “I would definitely say that there are a few shining stars. But by and large, most facilities in the country are not operating with a particular understanding of how to better involve families in the system. The fact is that at this point, the examples are few and far between.”
As Arya noted in her article, the Texas Juvenile Justice Department has made family engagement a “top priority” as part of efforts to overhaul the department in the aftermath of a scandal over rampant sexual abuse.
Among other reforms, the department developed a 12-provision “Parents Bill of Rights” and a family handbook detailing facility policies.
Arya also points to the widely cited “Missouri Model” and lauds the state for putting a premium on family engagement and for viewing “families as experts.” Among other things, Missouri’s Division of Youth Services state advisory board includes parents of two youths who had been incarcerated.
The division also assigns a specific “service coordinator” to work with each incarcerated youth’s family starting within days of sentencing and continuing throughout the youth’s time with Missouri’s DYS. The service coordinators even make home visits to meet with families to put them more at ease than they would be in an institutional setting.
Most youths are also placed within 50 miles of their homes, with flexible visitation policies and transportation offered to families.
But nationally, Arya writes, “There is widespread agreement among families that the majority of juvenile detention and corrections facilities are geared towards punishment, not treatment, and are inappropriate for their children.”
Even the décor of a facility can make a “huge difference,” Arya says: “Do you have children’s artwork on the wall? Do you have positive examples of children succeeding or examples of messages saying your children are constantly in trouble?”
Real reform or window dressing?
And Sue Badeau, a longtime juvenile justice advocate based in Philadelphia, strikes a cautionary note about the progress of family engagement.
Badeau said it’s much easier for agencies to adopt cosmetic or highly visible changes like expanding visiting hours or scheduling events than to genuinely change the culture of an institution so its staff values family engagement.
She knows of what she speaks. Badeau and her husband, Hector, are the parents of six children who have spent time in the juvenile or adult criminal justice systems (among their 22 children, 20 of them adopted). And in 2011, she served a one-year fellowship focused on family engagement with the federal Office of Juvenile Justice and Delinquency Prevention and has spoken and written widely on the subject.
“The real work comes for systems to really determine whether they value the role of families,” Badeau said. “Even if they had a party or improved the visiting hour schedule or something like that, the question is how are they doing as far as training with their staff on the role of families?
“Do they value families? What do they see in terms of how they engage families in the actual planning for their child’s programming and treatment and … how their lives will be once they leave the facilities?”
Staff, she said, must be trained to build positive relationships with youth and their families, and family engagement should be part of staffers’ job descriptions and one of the skills included in staff evaluations.
Badeau said youth and their families should have some say in choosing which relatives or others such as mentors, coaches or family friends the facilities should deal with.
She pointed to innovations including “family-to-family peer support” and said families should be tapped to help train facility staff and sit on advisory boards and such at local, state and federal levels.
Oregon, known for its progressive juvenile justice policies, has created a family engagement coordinator position to improve the connection between facilities and family members or other adults who play a big role in youths’ lives.
Fulfilling unmet needs
Faith Love, the family engagement coordinator for the Oregon Youth Authority, said in an email youths' behavior may be linked to their home life, and by connecting with the families, OYA can help address unmet needs for food, shelter, employment as well as medical, mental health and substance abuse treatment.
Adults in youths’ lives may need coaching and support to help incarcerated youths, sometimes involved with multiple systems, Love said.
“Most of the families we work with are either exhausted from or unsure how to deal with the behavior of their child.” Love said. “They may have previously sought help from multiple sources. Some families are hurt, ashamed and not sure of how best to become involved.
“It is extremely rare for any parent not to want something good and better for their child.”
Sometimes, encouraging family engagement means paying for hotel stays, bus tickets or gasoline so the relatives can visit youths in Oregon facilities far from their homes.
Among efforts to increase family engagement in other states:
Kim Godfrey, executive director of the nonprofit, Braintree, Mass.-based Performance-Based Standards, which helps agencies and facilities monitor and improve conditions and treatment, noted most youths will return to their families upon release.
“All kids want to be with their families, and kids leave the juvenile justice system to go back to the community and be with their families,” Godfrey said. “And we need to support that relationship and strengthen it, rather than sever it, while they’re in custody.”
Marcy Mistrett, CEO of the nonprofit, Washington-based Campaign for Youth Justice, expressed similar sentiments about incarcerated youths.
“In detention, you’ve got to realize that you have only temporary care of them,” Mistrett said. “These kids are going to return to families. You’ve got to engage families. It’s the only way you’re going to get the kids out to stay out.”
Republicans weren’t the only big winners in last Tuesday’s election. So were health insurance companies, many of which spent heavily to influence the outcome.
There are several provisions of the Affordable Care Act that the insurance industry would like the next Congress to change. If insurers get what they want — and with the GOP in control of both houses of Congress, it’s a decent bet they will — Wall Street will be exuberant indeed.
Just the anticipation of what a Republican controlled Congress might be able to pull off has put insurance company shareholders in good humor. Within 24 hours of knowing that Mitch McConnell would replace Harry Reid as Senate Majority Leader, investors were active buyers of health insurance stock. In fact, the share prices of five of the six largest for-profit health insurers — Cigna, Health Net, Humana, UnitedHealthcare and WellPoint/Anthem — reached their highest points in a year last Wednesday. Some even reached historic highs. Aetna was the only one that fell short of reaching a 52-week high, but only by pocket change.
Even though there is still chatter about repealing Obamacare, GOP leaders and insurance company executives understand that isn’t likely to happen. And they really don’t want it to. Insurance firms and their shareholders actually love the billions of dollars in new revenue they’re getting as a result of the law’s requirement that most of us buy coverage from private insurers. They’re pretty confident that the cash will continue to flow, because, even with Republican control of Capitol Hill, the law will not be repealed.
No doubt a full repeal bill will pass in the House, just as previous bills have every year since the GOP took control of that chamber four years ago. But there’s almost no chance the Senate version will match the House’s action. Republicans still won’t have the 60 votes necessary to overcome an almost-certain Democratic filibuster of any bill that would repeal or gut the reform law. Even if they did, President Obama would surely veto it.
But we can expect Republican lawmakers to quickly introduce bills in the new Congress that would strip the law’s “root and branch,” to use a favorite McConnell phrase. This is part of a skillful game of political chess insurance company executives and lobbyists have played since the beginning of the health reform debate. Despite the fact that they have given more money through their PACs to Republicans than Democrats and have sided with groups that have sought to abolish the law, the insurers have also played Democrats at both ends of Pennsylvania Avenue to their advantage.
While they didn’t get all they wanted during the reform debate, they won the major battles. The insurance companies got the White House and Democratic leaders to stifle any real discussion of single payer health care. And they were able to kill the idea of a government-run public option to compete with them.
As a consequence, even with the provisions of the law that protect consumers from insurance company abuses, such as refusing to sell coverage to applicants with pre-existing conditions, insurers have thrived.
While the Dow Jones Industrial Average has increased an impressive 160 percent since President Obama signed the reform bill into law on March 23, 2010, the price of the insurers’ shares have doubled — and in some cases even tripled. If you had invested $25,000 in UnitedHealthcare stock in 2010, you would have $78,750 today, a 315 percent return.
But that’s not enough for the companies or their shareholders. They figure they can do even better with a few industry-friendly “fixes” to the law. For one thing, they want to get rid of a tax on some health plans that covers some of the cost of the government subsidies to help low-income folks buy insurance. Even though the subsidies go to the insurers, they want to get rid of the tax, and they have the GOP on their side.
They also want to be able to once again sell policies that only cover 50 percent of a person’s medical expenses. Not only are Republicans on board to allow that, so are many Democrats.
With Obama in the White House and the GOP in control of Congress, insurers are in the catbird seat. They know the president won’t allow the law to be repealed or even altered substantially, which will be good for future profits, and they also know they can count on the Republicans to push through legislation to get rid of the health plan tax and let them sell low-value policies again.
No wonder shareholders are smiling — all the way to the bank.
Wendell Potter is the author of Deadly Spin: An Insurance Company Insider Speaks Out on How Corporate PR is Killing Health Care and Deceiving Americans and Obamacare: What’s in It for Me? What Everyone Needs to Know About the Affordable Care Act.
Americans for Prosperity, the conservative nonprofit backed by billionaires Charles and David Koch, raised more than $44 million in 2013 and spent nearly $35 million during the same period — both records for a non-election year for the group — according to a Center for Public Integrity review of recently filed tax documents.
By contrast, in 2011, the group — which ranks among the most active political players that does not disclose its donors — raised about $26 million and spent about $18 million.
Founded in 2004, Americans for Prosperity is organized as a “social welfare” nonprofit under the U.S. tax code. It has emerged as one of the leading critics of President Barack Obama and his policies — particularly his “ObamaCare” health care reform law.
In 2013, Americans for Prosperity spent nearly $22 million on “print, radio and television ads to increase their activist base and bring their mission to the public,” according to audited financial documents filed with the state of Massachusetts.
Press releases indicate that much of this sum was spent on ads calling attention to lawmakers’ stances on ObamaCare, which the group calls “disastrous.”
On Nov. 4, Hagan lost her re-election bid to Republican Thom Tillis by less than 2 percentage points. Begich, meanwhile, appears to have been ousted by Republican Dan Sullivan. And Landrieu is headed to a Dec. 6 runoff election against Republican Bill Cassidy.
In 2013, Americans for Prosperity also spent nearly $9 million supporting its state chapters, financial documents indicate. Chapters in Florida, New Jersey and Virginia ranked highest, all receiving between $1 million and $1.4 million.
The nonprofit also contributed $200,000 to the Enterprise Freedom Action Committee, a Washington, D.C.-based social welfare nonprofit focused on overhauling health care regulations that also does business under the name Committee to Rethink Reform.
This election cycle, Americans for Prosperity ultimately aired more than 28,000 TV ads in contested U.S. Senate races, according to a Center for Public Integrity review of data provided by Kantar Media/CMAG, a firm that tracks political advertising.
Just two other non-party groups aired more ads in Senate races — Senate Majority PAC, a super PAC operated by allies of Senate Majority Leader Harry Reid, D-Nev., and Crossroads GPS, a social welfare nonprofit co-founded by GOP strategist Karl Rove.
In 2012, when Obama was running for re-election, Americans for Prosperity raised a whopping $115 million and spent more than $122 million, as the Center for Public Integrity first reported.
This year, it reportedly planned to spend $125 million.
On its website, Americans for Prosperity touts more than 2.3 million members in all 50 states, but its donors are largely unknown.
Federal regulations only require that donors to social welfare nonprofits like Americans for Prosperity only be identified if they contribute for the specific purpose of “furthering” a particular political ad — something that rarely happens.
Tax records, however, show that Americans for Prosperity has received large sums of money from other Koch-connected nonprofits such as Freedom Partners and the Center to Protect Patient Rights. And corporate interests, such as the American Petroleum Institute and tobacco giant Reynolds American, have also ranked among Americans for Prosperity’s donors over the years.
Edna Irvin enjoyed caring for other people so much that, even while she was in the grips of dementia and confined to a wheelchair, she'd wheel over to try to help other residents in the Chenal Heights Health and Rehabilitation Center in Little Rock.
Irvin had been placed there by Lisa Sanders, her youngest daughter, after a family friend found the then-80-year-old lying on the floor of her home in Magnolia, Arkansas, on January 18, 2012.
Irvin, a former certified nursing assistant who won awards for perfect attendance, had been lying there overnight.
Sanders agreed with her mother's doctor that Irvin could no longer take care of herself.
She decided to move her mother to Little Rock and, after a couple of months, into the Chenal Heights home. The daughter assumed that the staffing levels and care her mother was to receive there would match the neighborhood’s attractiveness.
After just one week Irvin was hospitalized for a bowel obstruction.
Sanders said she arrived at the home to find her mother sitting in her own feces.
The nursing home, which has since been renamed as part of an ownership change, declined to comment.
On the public website where facilities post their daily staffing levels, Chenal Heights said it provided .19 hours, or about 11 minutes, of registered nurse care each day for its residents in 2012.
But harder-to-find federal financial documents examined by the Center for Public Integrity reported average daily staffing levels at the home that were lower.
A systematic problem
Nursing homes across the country had similar reporting discrepancies between the two sources, the Center’s analysis reveals.
Data on the publicly available Nursing Home Compare website, which is promoted and operated by the government for comparison shopping, reflects staffing levels self-reported by nursing homes during a two-week period before annual federal inspections. Advocates say many homes work hard to prepare for those visits. As a result, critics say, those staffing levels may be artificially inflated.
The Centers for Medicare and Medicaid Services (CMS), the federal agency responsible for overseeing nursing homes, has talked repeatedly since 2001 about the inaccuracy of self-reported data. The self-reported staffing levels are also a crucial metric in the federal government’s broader quality rating of nursing homes on the Compare website, from one star to five stars.
In 2005 the agency said the cost reports made annually to the state-federal Medicaid program are a more accurate source of information than Nursing Home Compare. Those financial documents, which are harder for the public to locate and analyze, contain data about the home’s revenues, expenditures and resident population during the year. Similar cost reports made to the federal Medicare program were analyzed by the Center; those reports showed daily staffing levels that were lower in thousands of cases.
The discrepancies in reporting means that family members like Sanders believe their loved ones are receiving one level of care, when they may be receiving less of it. The reporting differences occurred for all types of positions, but were particularly high for registered nurses, the most skilled and highest paid workers. More than 80 percent of the facilities reported higher registered nurse staffing levels on the public Compare website than those the Center calculated through the cost reports. In more than 25 percent of nursing homes nationwide, the listed amount on Compare was at least double the level in the cost reports.
Close to 100 peer-reviewed, academic studies have shown that the amount of care, particularly that provided by registered nurses, is most strongly connected with residents’ quality of care. Lower levels of care are associated with a higher likelihood of injury and even death.
Although reporting gaps existed in nearly every state, they were greatest in the South. Eight of the 10 states with the largest reported levels of registered nurse discrepancies were southern. Among them: Louisiana and Arkansas, two states where the average self-reported levels were at least twice the amount calculated through the cost reports analysis. Baton Rouge and Memphis stood out among cities with at least 10 nursing homes.
Dr. David Gifford, senior vice president of quality and regulatory affairs for the American Health Care Association, the nursing home industry’s largest professional organization, said he is “not surprised by these findings since the way cost reports collect information on staffing is different than [Compare’s one to five star system.]" He added in a statement that daily direct-care nursing hours have increased for residents at all levels of nursing staff from 2008 to 2013.
But Robyn Grant, director of public policy for the Washington, D.C.-based advocacy group the National Consumer Voice for Quality Long-Term Care, said the results were shocking.
“We all recognize the data is flawed, but I am truly stunned by [the] findings and appalled that you’re finding this level of overreporting,” Grant said.
And Rep. Jan Schakowsky, D-Ill., a leading voice on elderly care issues, said the self-reported data included on the Nursing Home Compare website shows an “extreme overestimation.”
“Some … families select what appears to be a high quality, well-staffed nursing home based on the self-reported data, only to learn after some avoidable complication or deterioration in their loved ones’ condition that the nursing home was understaffed,” said Schakowsky, who authored a provision of the Affordable Care Act that required a transition from self-reported data to payroll data that CMS has said is close to a ‘gold standard.’
Under the law, a transition to the more accurate payroll method was supposed to occur by March 2012 under CMS’ supervision. But it hasn’t happened yet — and may not for another two years. The agency said in a statement that recent legislation gives it the necessary, multi-year funding to complete the required process. Meanwhile, hundreds of homes throughout the country are also below minimum state staffing standards, according to the Center’s analysis.
The self-reporting process
State inspectors are contracted by CMS to conduct onsite inspections about once each year to determine whether its nursing homes meet minimum Medicare and Medicaid quality and performance standards. Opinion is divided about the extent to which facilities know the precise dates of surveyor visits and inflate staffing levels in anticipation of those arrivals. Although a report in the early part of last decade prepared for CMS did not find evidence of systematic “staffing up” in advance of the surveyor visits, a 2007 academic paper found significant levels of over-reporting in Texas nursing homes that could suggest preparing for inspectors’ visits by raising staffing levels did indeed take place.
But there was little ambiguity in an internal communication sent by Administrator David Fielding of Medford Multicare Center for Living in Medford, New York.
In response to an email from owner Mordechai Klein complaining about the amount of overtime pay during one pay period, Fielding wrote the following, according to a civil complaint filed in February 2014 by New York Attorney General Eric Schneiderman:
Survey. All hands on deck during survey. It’s our super bowl and only lasts one week. The staffing hours will be a little high this week but will drop the following week.
Klein responded by calling the amount of overtime “ridiculous,” the complaint said.
The two men are among the owners, workers and administrators charged in a suit, still pending, that alleges widespread physical and financial abuse at the Medford home. Fielding’s lawyer Brian Griffin, said Fielding pled not guilty and is adamant that he violated neither criminal nor civil statutes. In a statement, Medford Multicare ownership asserted its commitment to “delivering exceptional care while maintaining fiscal responsibility,” and asserted that it consistently provided hundred of overtime hours of care per week.
Edward Mortimore, technical director of the survey and certification group within CMS, suggested that the registered nurse over-reporting could be explained in part by the inclusion in the Nursing Home Compare data of nursing staff like directors of nursing who do not provide direct care. Mortimore also said that Compare’s two-week snapshot might not give as accurate information as an average daily basis.
The Center for Public Integrity performed its analysis using a second data set with quarterly staffing information that only included nurses providing direct care.
The findings remained nearly identical. More than 80 percent of the facilities self-reported higher registered-nurse staffing levels than those calculated through the cost reports, and in 26 percent the level was at least double the cost reports level.
Advocates say this gap is critical to resolve as it is occurring at a time when the nation is bracing for a “silver tsunami,” as baby boomers reach senior citizen status.
The number of standard state nursing home inspections dropped each year from 2008 to 2012, falling 6 percent from more than 15,700 to more than 14,700 during those years, the Center’s analysis of federal data found. The number of nursing homes fell just 1 percent during those years.
The lower number of inspections only heightens the importance of accurate information, says Richard Mollot, executive director of the New York advocacy group the Long Term Care Community Coalition.
“The federal government and the state are there so that people are supposed to be able to make choices,” Mollot said. “If the information is poor, that’s not helpful at all. You have all these tools now, you’re letting the marketplace rather than enforcement play a bigger role."
“The data are entirely unreliable,” he said.
Ms. Irvin’s Struggles
Sanders said the care her mother received at Chenal Heights was completely unreliable when she returned to the facility in late April 2012 after a month-long stay at St. Vincent Hospital in Little Rock.
On May 3, Sanders learned that her mother had fallen from her wheelchair after leaning forward to pick up something off of the floor.
She sustained an inch-long laceration to her forehead.
On May 10, a nurse wrote that Irvin had a urinary tract infection. Registered nurse Lynette Smith wrote in a report that Escherichia coli bacteria were “in the normal flora of the intestine indicating she did not receive appropriate peri [perineal] care and/or Foley catheter care.” Smith gathered the documents on behalf of a law firm hired by Sanders to assist in her lawsuit against the Chenal Heights facility.
Irvin had a second fall on May 16. This time, she was found leaning forward out of her wheelchair to pick up some crackers off of the floor. A knot the size of a plum grew on her forehead.
By the end of the month, when her mother was complaining of abdominal pain, Sanders concluded that she would not readmit her mother to the nursing home after her release from the hospital.
“When she went in the hospital on May 31, 2012, I had already made up my mind that I was going to move her,” she said.
State, Federal Violations
Sanders’ decision came just two months after the Affordable Care Act required that nursing homes transition from the self-reported staffing method to a payroll-based method.
The ACA mandated that CMS implement by March 2012 an electronic data collection system by which facilities would submit payroll-based, verifiable staffing information about registered nurses, licensed practical nurses and certified nursing assistants. Information about the amount of staffing by position and staff turnover was to be published on Nursing Home Compare.
But on December 9, 2011, Thomas Hamilton, director of the agency’s survey and certification group, informed state officials that CMS would not make that deadline due to fiscal constraints.
Little progress has been made since.
Mortimore of CMS said the agency designed a pilot program it hoped would test on 1,000 homes.
“It was an experiment to see if we could get the data in,” he said. “We hoped to get 1,000. In the end, we got about 120.”
In the meantime, hundreds of nursing homes have had staffing levels that are lower than those mandated by state laws.
Thirty three states and Washington, D.C. had mandatory daily direct care staffing requirements that in 2010 ranged from .44 hours per resident in Arizona to 3.9 hours per resident in Florida, according to a survey conducted by Charlene Harrington, professor emeritus of nursing at the University of California, San Francisco.
In 2012 more than 700 facilities, including more than 250 nursing homes in Illinois, had daily care levels that were lower than the levels required by the states, after applying the cost report analysis.
Harrington said the sub-standard staffing levels revealed a related oversight failure on the state and federal levels.
“It’s just another symptom of not doing the oversight that they’re supposed to be doing at the state level,” Harrington said. “CMS should demand that the states should look at it because the very first tenet of being certified is that facilities meet state law.
“If they haven’t met state law, CMS shouldn’t be certifying them,” Harrington said.
The Center contacted CMS repeatedly, but the agency declined to comment because it had not seen the Center’s analysis.
Irvin’s problems continued after Sanders moved her from the Chenal Heights facility to the Sandalwood Healthcare nursing home in Little Rock in July 2012.
Ultimately, Sanders filed suit against Sandalwood in late September 2014, alleging that her mother received substandard care there. In the suit, Sanders asserted that her mother endured dehydration, blood clots in both legs and malnutrition.
Sanders attributed these problems in large part to the facility's meager staffing levels.
"It was the short staff and the staff that they had," she said. "Every time you went it seemed like they were reading the care plan for the first time. They would treat everyone like a one size fits all."
Sandalwood had a listed registered nurse time of .17 hours, or 10 minutes, per day.
But the Center’s analysis showed it was even lower than that, and in 2014 the state of Arkansas sanctioned the facility for its lack of staffing.
Sean Mathis, a lawyer for Hope Healthcare, the firm that owns Sandalwood, said Sandalwood will “vigorously defend itself.” He said Sanders’ suit against Sandalwood was similar to the Chenal Heights suit, and wondered why Sanders kept her mother at Sandalwood if she was unhappy with the care. And he asserted that in 2013 the Arkansas Office of Long Term Care found that the nursing home was only short staffed for two of nearly 1,100 shifts. The office said that inclement weather kept Sandalwood from achieving a perfect record, according to Mathis.
Irvin is now under her daughter's watchful care at the Arkansas Health Center in Benton, Arkansas.
Meanwhile, the mandated transition to reporting from payroll data —and more accurate reporting of staffing levels — remains incomplete.
In October, CMS said it would complete the implementation of the payroll system by the end of 2016 after bipartisan legislation authorized $11 million in funding.
Sen. Charles Grassley, R-Iowa, and Schakowsky, two of the leading figures in pushing for the transparency clause in the Affordable Care Act, expressed disappointment at the agency’s failure to complete its mandated task.
“I authored the section of the ACA that would require this,” Schakowsky said. “I’m very unhappy that nothing has been done.”
For her part, Grant of the National Consumer Voice called the implementation of the payroll data collection system “long overdue”. Although pleased with the funding from Congress and CMS’ stated timeframe, she said her organization would remain vigilant.
“We will continue our advocacy to ensure the system is implemented appropriately and within the stated time frame,” Grant said.
Lisa Creamer contributed to this story.
This story was written with support from the Fund for Investigative Journalism.