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THE POLITICS OF D.C. HEALTH CARE

HMO owner has ties to key players

(Published April 23, 2001)

By KATHRYN SINZINGER

Staff Writer

A major subcontractor in the plan to privatize the cityís public health-care services has donated thousands of dollars in recent months to political causes linked to Mayor Anthony A. Williams and Northern Virginia Congressman Thomas M. Davis III, who holds great sway in congressional oversight of D.C. government operations.

D.C. Chartered Health Plan Inc. stands to reap millions in the privatization deal, which depends on D.C. Chartered Health, a local health maintenance organization (HMO), to provide patient information and care management for the estimated 65,000-85,000 uninsured city residents whose health care would be delivered under a contract with Greater Southeast Community Hospital. D.C. Chartered Health also would provide some primary care services under the proposed contract.

In addition, the D.C. Department of Health recently renewed a four-year-old relationship with D.C. Chartered Health to be one of five HMOs eligible to provide primary care to Medicaid recipients. According to filings last year with the D.C. insurance commissioner, D.C. Chartered Health receives 98 percent of its income from that public contract and was paid $43.6 million under a one-year contract extension to cover about 25,000 Medicaid recipients from April 1, 2000, through March 31 of this year.

At press time, D.C. Chartered Health was delinquent in filing its required annual report with the D.C. Department of Insurance and Securities Regulation. A spokesman for the company told The Common Denominator April 20 that the report, which was originally due March 1, would be filed April 23. The company had been granted an extension of its filing deadline to April 15.

The sole owner of D.C. Chartered Health, accountant Jeffrey E. Thompson, and his business associates also have made large contributions to political action committees linked to Mayor Williamsí efforts last year to reshape the D.C. Board of Education.

The D.C. accounting firm of Thompson, Cobb, Bazilio and Associates was the focus of an Aug. 18, 1999, General Accounting Office report. The congressional auditing agency criticized the D.C. financial control board for failing to comply with its own procurement regulations and "sound contracting principles" when it awarded nine contracts Ė including two non-bid contracts Ė to Thompsonís accounting firm. According to documents filed last year with the D.C. insurance commissioner, Thompson owns 80 percent of the accounting firm.

Seven days before the GAO report was issued, Thompson donated $1,000 to the campaign committee of Congressman Ernest Istook, R-Okla., then-chairman of the House Appropriations D.C. subcommittee, who had requested the GAO review of the Thompson firmís contracting with the control board.

Thompsonís accounting firm also was one of three financial firms brought in by D.C. Chief Financial Officer Natwar Ghandi to help KPMG LLP complete the cityís fiscal 2000 audit by the legally required Feb. 1 deadline. Thompson, Cobb, Bazilio and Associates was paid $200,000 to help deal with cash reconciliation, according to published reports.

Thompson, who lives in Ward 4, is a mayoral appointee to the University of the District of Columbia Board of Trustees and to the Metropolitan Washington Airports Authority. Filings with the D.C. insurance commissioner, related to Thompsonís $4 million purchase last year of D.C. Chartered Health as part of a bankruptcy liquidation by its parent company, placed his personal net worth at $9.8 million.

Required disclosures related to government approval of the HMOís sale also reveal that Thompson personally guaranteed a $3.5 million loan from Adams National Bank to D.C. Healthcare Systems Inc., of which he is the sole owner, for its purchase of D.C. Chartered Health last spring. The remaining $500,000 of the sale price was a deposit that Thompsonís accounting firm made when the firm initially agreed to buy the HMO, but then "assigned" the deposit to D.C. Healthcare Systems as the purchaser.

Thompson told The Common Denominator he sees nothing wrong with the HMO he owns making political campaign contributions. He emphasized "investment by the owner" as one source of income for D.C. Chartered Health, which also contributed last year to the election campaigns of at-large D.C. City Council members Harold Brazil and Carol Schwartz and to both Ward 4 Councilman Adrian Fenty and the incumbent he defeated, Charlene Drew Jarvis.

Thompson said his companies support "politicians who support good public health policy."

"We will continue to support politicians who are on the side of supporting quality health care. Itís the right thing to do," he said.

Among political committees that have received recent support from Thompsonís firms is the Tom Davis Virginia Victory Fund. A spokesman for Davis, the Republican congressman who recently stepped down as the influential chairman of the House Government Operations D.C. subcommittee but remains the committeeís vice chairman, said Davis uses the political action committee to support candidates for local office in Virginia.

A financial disclosure report filed Jan. 15 by the Tom Davis Virginia Victory Fund showed that D.C. Chartered Health recently donated $10,000 to the fund and that its parent company, D.C. Healthcare Systems, donated $1,000, according to an online version of the report posted by the Virginia Public Access Project.

D.C. Chartered Health is licensed to do business only in the District of Columbia, according to a March 7, 2001, financial examination of the company by the D.C. insurance commissioner. Thompsonís accounting firm maintains one of its offices in the Rosslyn area of Arlington County.

Thompson has been a longtime personal contributor to the election campaigns of Eleanor Holmes Norton, the Districtís delegate to Congress, and has also made contributions to some of Congressman Davisís re-election campaigns. In both 1994 and 1995, his accounting firm donated $10,000 to the Democratic National Committee, and he personally donated $5,000 last August to the Federal Victory Fund. He has contributed to the campaigns of several African-American members of Congress.

Reports filed with the D.C. Office of Campaign Finance show that Thompson, his companies and his business associates each made the maximum legally allowable contribution of $5,000 to the Better Schools Political Action Committee on Oct. 23, 2000, the same day the PAC filed its statement of organization. The PAC, not directly associated with a candidate, gave independent campaign support to the election last November of Peggy Cooper Cafritz as school board president and to other district candidates supported by the mayor.

The $40,000 in total contributions reported by the PAC on its initial disclosure forms said the eight $5,000 contributions came from Thompson, his partner Ralph Bazilio and Bazilioís wife Dorothea, the Thompson accounting firm, D.C. Chartered Health and companies linked to the HMO.

D.C. Healthcare Systems Inc. also contributed $20,000 on June 22, 2000, to the New School Leadership Committee, a PAC created to support passage of a referendum issue on June 27 that changed the makeup of the D.C. Board of Education to include four members appointed by the mayor. There are no legal limits on the amount of contributions to referendum campaigns.

Campaign finance reports also show that Greater Southeast Community Hospital contributed to the campaigns of two candidates who attempted to unseat Ward 8 Councilwoman Sandra Allen, who chairs the councilís Human Services Committee, in last yearís Democratic primary election. The hospital, located in Allenís ward, contributed $200 to former advisory neighborhood commissioner Winifred Freeman and $250 to D.C. Taxicab Commission member Sandra Seegars.

The chairman and CEO of Greater Southeastís parent company, Doctors Community Healthcare of Scottsdale, Ariz., appears to have made only one contribution to a congressional campaign during the 2000 election cycle, according to reports filed with the Federal Election Commission that are posted online by the Center for Responsive Politics. A search of the online reports showed Paul R. Tuft contributed $1,000 on Oct. 11, 2000, to the re-election campaign of D.C. Delegate Norton, who faced no significant opposition on the November ballot.

Copyright 2001, The Common Denominator