Cigna-Anthem Merger: Gov. Malloy’s Insurance Regulator Told Ethics Officials She Was Not Involved In Cigna Issues, Even As Her Agency Was

Connecticut ethics officials are now investigating whether it is legally permissible for the state’s insurance commissioner to oversee the government’s review of her former company’s proposed merger. In regulators’ probe of conflict-of-interest issues in the multibillion-dollar Cigna-Anthem transaction, one question they may ask is whether the commissioner in question, former Cigna lobbyist Katharine Wade, deliberately misled them.

Emails obtained by International Business Times show that in February, Wade told ethics officials she had no Cigna business before her, even though her agency was then leading the national multistate review of the company’s merger plan — and even though Wade had repeatedly met with the company’s representatives. The letter from Wade — whose husband is a Cigna attorney and whose father-in-law is a lawyer at Cigna’s lobbying firm — sought approval for her husband to make a Cigna stock transaction in the midst of a proposed merger that would create the country’s largest health insurance company.

An appointee of Connecticut Democratic Gov. Dannel Malloy, Wade sent the letter from her private email address, only a few years after Malloy's administration faced questions about whether it was using non-government email addresses to avoid open records laws. Wade’s email telling ethics regulators she was not involved in Cigna matters came on the same day other emails show she was scheduled to hold a conference call with Cigna and Anthem executives about the merger. Wade’s letter to ethics officials did tell them that her staff was reviewing the merger, but did not disclose any information about her own contacts with the companies and their lobbyists.

“She made an obviously untrue argument that she is not involved in any Cigna matters,” said Craig Holman of Public Citizen, a watchdog group that advocates for tougher ethics laws. “This doesn’t pass legal muster. She could formally declare that she is recusing herself and let others deal with it, but she has made no such effort. Instead, she misled the ethics committee by saying she has had no involvement, when clearly she has. Her office is overseeing the review, she is in charge of the office, she has not declared any official recusal. That constitutes a conflict of interest.”

Malloy declined to answer IBT’s questions about whether Wade had misled ethics officials.

In a statement to IBT, Wade’s spokeswoman, Donna Tommelleo, said, “The commissioner has consistently and proactively consulted with the Office of State Ethics — that's what this email shows.”

She added: “The department’s professional staff does the entire review, and the matter only comes before the commissioner following that staff review and a transparent public hearing process. That review is ongoing. As part of the process, the staff participate in calls with other state regulators. The commissioner has not and does not — because she is not currently reviewing the application. The email to ethics demonstrates that the commissioner continues to be proactive in seeking advice from the Ethics Office and will continue to follow its guidance.”

"There Are No Cigna Matters Before Me"

In 1996, Connecticut ethics officials ruled that “a conflict of interest exists” if an insurance commissioner conducts a stock transaction involving a company whose acquisition he or she is simultaneously regulating for the government. They said such a conflict exists because “it is reasonable to assume that a decision by the insurance commissioner to reject the acquisition would have a near-term negative impact on the value” of company stock.

Twenty years later, when Wade approached the same ethics office, she proposed a similar stock transaction, telling regulators “I am seeking approval for my husband, Michael, to divest his Cigna stock and options as they vest Feb. 25, 2016 through March 5, 2016.”

She did not address the implications of the 1996 ruling and simply asserted that she had no involvement in Cigna-related business.

“Anthem Inc. filed a Form A application to acquire the Cigna Companies on Sept. 22, 2015 with the Connecticut Insurance Department,” she wrote. “The application is currently under review by department staff. On behalf of the department, I signed a contract with an independent economist to assist department staff in their review of the Anthem Form A application. Presently, there are no Cigna matters before me.”

In the months leading up to that assertion, emails show Wade’s office had scheduled regular conference calls with Anthem and Cigna representatives about the merger. One such call was scheduled on the very day Wade told ethics regulators she had no Cigna matters before her.

The day before that scheduled call, an Anthem lobbyist sent an email to Wade’s scheduler saying, “Just want to double check that we are still on w. Commissioner Wade and the team tomorrow for our bi-weekly check in call on the Cigna transaction.” Wade’s scheduler replied, “Yes, it’s still on.”

A few weeks later, the same Anthem lobbyist told Wade’s scheduler in an email, “the commissioner told me that you would be sending cancellation for the meetings that we have with her every other week — I think to once a month.” Wade's scheduler replied: "I've rescheduled them and the next one will be April 14 at 9 and reoccur once a month on Thursday."

Wade’s office said the scheduled call in February did not end up happening — and an email from her office at 8:23 a.m. on the day of the call told Anthem and Cigna executives the call was canceled. Less than an hour after that cancellation notice was sent out from her government office, Wade sent the letter from her private email address to ethics officials asserting that she was not presently involved in Cigna matters.

Handwritten notes on emails provided to IBT assert that other calls between Wade and company representatives initially scheduled for March and April also did not occur. Wade’s spokeswoman confirmed that five such conference calls did take place, and that the last was in December 2015 — two months before Wade told ethics officials she had no Cigna matters before her.

Other documents obtained by IBT show Wade’s agency’s involvement in Cigna-related matters before and after her letter:

* Visitor logs show that 2015, Wade had 12 meetings with people from Cigna and/or its lobbying firm.

* Emails from September 2015 to April 2016 were sent to regulators across the country by the National Association of Insurance Commissioners “on behalf of the Connecticut Insurance Department.” Wade chairs the NAIC’s influential Health Insurance and Managed Care committee, which has discussed the merger. The NAIC emails document regular conference calls about the proposed Cigna-Anthem merger. Wade herself was not listed on the emails, but other staff from her department were.

* Connecticut Insurance Department visitor logs show that less than a month after Wade sent her letter to ethics officials, representatives of Cigna and Anthem were at the department and listed “NAIC” as their reason to visit.

* In March 2016, email correspondence between Wade’s scheduler and Cigna’s lobbying firm outline an agenda for a “pre-NAIC” meeting, and plans to include Cigna representatives in that meeting.

* In February of 2016, legislation sculpted by Wade's agency in consultation with Malloy's office was introduced in the Connecticut General Assembly. The bill, which would exempt certain insurance industry data from open records laws, was backed by the Connecticut Association of Health Plans — a lobbying group whose president is a Cigna executive and which has received dues from Cigna. Wade is listed on state documents as the department's liaison for the legislation, and her agency submitted testimony in support of it five days after her letter to the ethics department.

“It Doesn’t Mean the Matter Is Before You”

As the Connecticut Citizens Ethics Advisory Board now investigates the thorny legal issues around potential conflicts of interest, it faces myriad questions.

One is about Wade’s overall links to Cigna. Under Connecticut law, an impermissible conflict of interest exists when a public official “has reason to believe or expect” that that he, his spouse “or a business with which he is associated will derive a direct monetary gain or suffer a direct monetary loss” from a governmental decision they are involved in. Wade has made conflicting statements to ethics officials about her ties to Cigna: When arguing that she does not have a conflict-of-interest, she has told them that she is not associated with the company. However, both before and after making that assertion, Wade filed ethics disclosure forms listing Cigna as a company with which she is associated.

In ethics officials’ review of the separate questions about whether Wade has Cigna-related business before her, a 2014 ruling may be relevant. In that case, ethics officials decided that while a former assistant attorney general had been involved in an issue during his time in office, his involvement in that matter did not rise to the level that would trigger the state’s revolving door prohibitions.

In an interview last week with IBT, Connecticut Ethics Office Executive Director Carol Carson declined to comment about how germane the 2014 ruling might be in the current Wade case, nor did she comment on whether Wade was forthright when she asserted she had no Cigna business before her. Carson said now that a formal inquiry is underway, she is barred from commenting further on the Wade affair.

Carson has previously said that just because an agency is involved in an issue, it does not necessarily mean that — for purposes of the state’s ethics law — the issue is technically before the head of the agency.

“While a matter may be pending in an agency, it doesn’t mean the matter is before you or requires you to take any action,” she said.

That rationale has not satisfied those like Connecticut Common Cause executive director Cheri Quickmire, who argues that Wade has been intimately involved in the merger process and should recuse herself from the review.

“It is misleading to say your staff is addressing something and you aren’t involved, if you are the person in charge,” she said.