Health care pay probe snares Se­nate-con­firmed Obama of­fi­cial

The Washington Times Weekly - - Politics - BY JIM MCELHATTON

When mem­bers of Congress de­cided in Novem­ber to start in­ves­ti­gat­ing the re­cip­i­ents of sev­en­fig­ure pay pack­ages in the health in­sur­ance in­dus­try, they may not have ex­pected to find them­selves prob­ing a top Obama ad­min­is­tra­tion of­fi­cial.

Just months ear­lier, In­te­rior Depart­ment Chief of Staff and As­sis­tant Sec­re­tary Thomas L. Strick­land had breezed through his Se­nate con­fir­ma­tion hear­ing without a men­tion of his $2 mil­lion bonus from one of the coun­try’s big­gest health care plans.

Al­to­gether, the two-time Demo­cratic U.S. Se­nate can­di­date in Colorado re­ceived more than $5 mil­lion in salary, bonus and stock com­pen­sa­tion last year as the chief le­gal of­fi­cer at Unit­edHealth Group, a Min­nesotabased health care plan, ac­cord­ing to reg­u­la­tory fil­ings.

The pack­age has come un­der much closer scru­tiny since Sen. Tom Harkin, Iowa Demo­crat and chair­man of the Health, Ed­u­ca­tion, La­bor and Pen­sions Com­mit­tee, called on Unit­edHealth and three other health care plans to pro­vide de­tails on ex­ec­u­tives who re­ceived more than $5 mil­lion in com­pen­sa­tion.

The re­quest, which did not men­tion Mr. Strick­land by name, is part of an in­ves­ti­ga­tion into the in­dus­try’s rate-set­ting prac­tices. A House com­mit­tee is con­duct­ing a sim­i­lar in­quiry.

In re­sponse, Unit­edHealth has turned over to Congress in­forma- tion about its ex­ec­u­tives’ pay, in­clud­ing de­tails about Mr. Strick­land’s com­pen­sa­tion, com­pany spokesman Don Nathan said.

Mr. Strick­land was one of three top cor­po­rate of­fi­cers who re­ceived more than $5 mil­lion from the com­pany in 2008, ac­cord­ing to the Unit­edHealth’s proxy state­ment filed April 23 with the U.S. Se­cu­ri­ties and Ex­change Com­mis­sion (SEC).

He re­ceived a salary of $692,115, but his $2 mil­lion bonus, along with stock awards and other com­pen­sa­tion, boosted his to­tal pay for the year to $5,016,808, ac­cord­ing to the SEC fil­ing.

“Tom was named in the proxy so his in­for­ma­tion would have been in­cluded” in the re­sponse the com­pany sent to Congress, Mr. Nathan said.

Mr. Strick­land, through an In­te­rior Depart­ment spokes­woman, said he hasn’t been con­tacted by any mem­bers of Congress who want to know more about his com­pen­sa­tion or work for Unit­edHealth.

“In­te­rior has no reg­u­la­tory or fis­cal in­volve­ment with the man­aged care in­dus­try, in­clud­ing Unit­edHealth. Tom has no in­volve­ment in the health care leg­isla­tive de­bate,” In­te­rior spokes­woman Ken­dra Barkoff said.

Mr. Strick­land’s pay stands out among the com­pany’s top ex­ec­u­tives. He was alone in get­ting a seven-fig­ure bonus last year.

“The com­pen­sa­tion com­mit­tee awarded Mr. Strick­land a bonus of $2 mil­lion be­cause his de­par­ture date made him in­eli- gible to re­ceive any awards un­der the com­pany’s ex­ec­u­tive in­cen­tive plan,” the com­pany ex­plained in its SEC fil­ing.

David F. Lar­cker, di­rec­tor of the cor­po­rate gov­er­nance re­search pro­gram at Stan­ford Uni­ver­sity, said that ex­ec­u­tives leav­ing com­pa­nies gen­er­ally for­feit claims to such un­vested longterm com­pen­sa­tion plans.

“In this case, it seems that the ex­ec­u­tive was paid in ad­vance for what he would have re­ceived if he con­tin­ued his em­ploy­ment. This seems un­usual to me,” he said.

Mr. Strick­land re­ported get­ting $2.7 mil­lion in salary and bonus money from Unit­edHealth in a fi­nan­cial dis­clo­sure form filed March 13 with the U.S. Of­fice of Gov­ern­ment Ethics. He also listed stock awards, but said the value of those awards was not read­ily as­cer­tain­able.

He also noted that he would re­tain his “stock ap­pre­ci­a­tion rights,” but said he would not re­ceive any ad­di­tional rights from the com­pany af­ter his res­ig­na­tion. While he would re­tain his Unit­edHealth 401(k) ac­count, nei­ther he nor the com­pany would make any fur­ther con­tri­bu­tions, he said.

Both Unit­edHealth and the In­te­rior Depart­ment said Mr. Strick­land has no plans or agree­ments to re­turn to the com­pany when­ever he leaves the gov­ern­ment.

Mr. Strick­land’s nom­i­na­tion sailed through the Se­nate by a vote of 89-2. He serves as the as­sis­tant sec­re­tary for fish and wildlife and parks, as well as chief of staff for the en­tire In­te­rior Depart­ment.

His ties to Unit­edHealth never arose dur­ing his nom­i­na­tion ex­cept for a pass­ing ref­er­ence by Sen. Amy Klobuchar, Min­nesota Demo­crat, who noted that he “worked in Min­nesota so he knows our state well.” Unit­edHealth is based in Min­neapo­lis and is one of the state’s largest em­ploy­ers.

Mr. Strick­land, who served as U.S. at­tor­ney in Colorado dur­ing the Clin­ton ad­min­is­tra­tion, tes­ti­fied to the Se­nate that he was asked to join the In­te­rior Depart­ment in part be­cause of his ex­pe­ri­ence as a fed­eral pros­e­cu­tor. The In­te­rior Depart­ment came un­der sharp crit­i­cism from Congress last year af­ter an ethics scan­dal in­volv­ing its Min­er­als Man­age­ment Ser­vice.

Mr. Strick­land told se­na­tors that he and In­te­rior Sec­re­tary Ken Salazar vis­ited the Min­er­als Man­age­ment Ser­vice “to meet with ev­ery em­ployee there and ad­dress th­ese ethics and in­tegrity is­sues.”

“We sent a mes­sage through­out the depart­ment that the rule of law will ap­ply and that pol­icy de­ci­sions will be based on sci­ence and on the ap­pro­pri­ate con­sid­er­a­tions and not pol­i­tics or spe­cial in­ter­ests,” he said.

Mr. Strick­land ran twice for a U.S. Se­nate seat in Colorado, los­ing in 1996 and 2002 to Wayne Al­lard, the Repub­li­can in­cum­bent. He worked at the Ho­gan & Hart­son law firm be­fore tak­ing the job at Unit­edHealth in April 2007.

The com­pany’s stock price dropped from about $49 per share when he ar­rived to $28 when he left, but he was cred­ited with help­ing see the com­pany re­spond to “le­gal and reg­u­la­tory chal­lenges,” the com­pany said in its SEC fil­ings.

The com­pany’s com­pen­sa­tion com­mit­tee also cred­ited him with re­build­ing the le­gal depart­ment and a pro bono pro­gram across Unit­edHealth.

Days be­fore the an­nounce­ment that Mr. Strick­land was leav­ing the com­pany, New York At­tor­ney Gen­eral An­drew M. Cuomo dis­closed a $50 mil­lion set­tle­ment with Unit­edHealth to re­solve an in­ves­ti­ga­tion into the com­pany’s billing prac­tices.

IN­TE­RIOR DEPART­MENT

Thomas L. Strick­land, a top of­fi­cial at the In­te­rior De­par tment, re­ceived more than $5 mil­lion in com­pen­sa­tion last year from Min­nesota’s Unit­edHealth Group.

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