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Read Making a Killing

home / healthcare / in the media

Milwaukee Journal Sentinel (Wisconsin)
Feb 04, 2005

by STEVE SCHULTZE, Milwaukee Journal Sentinel

Insurers give Doyle $28,500;

Donations called 'quid pro quo politics' after merger
Gov. Jim Doyle received $28,500 in campaign donations late last year, near the time a major insurance company merger was finalized, from the firms' top executives, their spouses and former executives, state records show.

The money came on top of more than $47,000 in contributions top officials of the Wellpoint and Anthem insurance companies have given Doyle since his 2002 run for governor. The figure also includes contributions from executives at Blue Cross & Blue Shield United of Wisconsin, which was acquired by Wellpoint in 2003.

The latest batch of cash for Doyle was given just before and after the huge Wellpoint-Anthem merger was finalized Nov. 30. The Doyle administration has been criticized for allowing the merger without getting monetary concessions from the merged company. The $20 billion merger created the largest health insurer in the United States.

The biggest givers were Wellpoint Chairman Leonard Schaeffer and his wife, Pamela, of Westlake Village, Calif. They gave Doyle a combined $18,500 on Dec. 27. Pamela Schaefer's $10,000 donation - the maximum permitted under Wisconsin law - was her first to Doyle.

Leonard Schaeffer, who earlier had given Doyle $1,500, also hit the maximum with his $8,500 gift. Aside from those donations, the Schaeffers have never given to any Wisconsin state candidates, according to a campaign contribution database dating to 1993 that is maintained by the non-profit Wisconsin Democracy Campaign.

Public advocates criticized the money as inappropriate, though probably legal.

"It's evident that quid pro quo politics are very much alive in Wisconsin," said Jay Heck, executive director of Common Cause in Wisconsin, a group that favors stricter donation rules. "The chairman of Wellpoint is able to make big donations and he is rewarded handsomely," Heck said, basing his view on the timing of the donation.

The Wellpoint-related donations to Doyle follow a similar pattern the firm has set elsewhere, said Jerry Flanagan, health-care advocate for the Foundation for Taxpayer and Consumer Rights, based in California. Such donations give the appearance of "pay to play," Flanagan said.

"That certainly violates the intent of conflict-of-interest laws," he said. "It sends a message to voters that the governor's approval is up for bid."

Doyle, through spokesman Dan Leistikow, said the contributions' timing was a coincidence.

"The governor has broad support from people in a variety of fields," Leistikow said. "He has broad support for expanding access to health care and it's not surprising that people who support health care support the governor."

Flanagan and Heck said Doyle ought to return the donations. But Leistikow said Doyle would not return the Wellpoint-related donations, adding that Doyle has always carefully followed campaign finance law.

Tim Cullen, a Wellpoint senior vice president and personal friend of Doyle's, said any suggestion that the donations amounted to a payoff was "outrageous."

Schaeffer and his wife donated because Schaeffer "likes Governor Doyle," said Cullen, who was responding on behalf of the Schaeffers and Wellpoint. "They share a lot of the same political philosophy," Cullen said. Schaeffer, like Doyle, is a pro-business Democrat and once served as a top health official under former President Jimmy Carter, Cullen said.

In addition to the Schaeffers, Wellpoint chief executive Larry Glasscock gave Doyle $1,000, and other executives provided the rest of the $28,500, all in November. The Schaeffers' donations likely were made after a fund-raising trip Doyle made to California late last year, Cullen said.

Schaeffer stood to personally gain tens of millions of dollars through stock options and other benefits linked to the merger, according to company filings.

Cullen said money donated by Wisconsin Wellpoint employees came from a fund-raiser Cullen hosted for Doyle at his Janesville home in November. That event had been planned for a year and wasn't tied to the merger approval, Cullen said.

He said the timing of the money also shows it was not a thank-you for the Wellpoint merger approval because Wisconsin Insurance Commissioner Jorge Gomez signed off on the deal last April, some seven months before final approvals were given by California and Georgia.

But when California rejected the merger in July, Georgia rescinded its approval, and other states were reconsidering their approvals. Eileen Mallow, Wisconsin's assistant deputy insurance commissioner, told The Daily News of Los Angeles in November that Wisconsin officials "have the right to review the deal" if a $265 million concession package Wellpoint gave to California affected the merger.

Wisconsin, however, did not reconsider its decision. Gomez said Friday he didn't believe he had the authority to rescind his earlier approval and force concessions like California or Georgia, which received a $126 million concession package. Critics have said Wisconsin may have missed a chance for tens of millions that could have been used for health programs for low-income families.

Doyle appointed Gomez to his position in 2003. Gomez said he did not consult with Doyle about his decision on the Wellpoint merger.

Gomez once worked for a Wellpoint predecessor firm, but has said he didn't remove himself from the decision because he didn't believe his former job created a conflict.

Nov. 30 - Date the Wellpoint-Anthem merger was finalized.

Dec. 27 - Date that Wellpoint Chairman Leonard Schaeffer and his wife, Pamela, gave $18,500 to Gov. Doyle.


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