Ohio2006 Blog

News, analysis, and comments on Ohio elections.

Sunday, September 10

Atty Gen: New Developments in Managed-Care Organizations Scandal

On Friday, a day after newspapers reported that private care managed-care organizations (MCOs) established under a Republican intiative allegedly to hold down costs may have overcharged the fund $1.6 billion since 1998, attorney general candidate State Sen. Marc Dann (D-Liberty Township) announced at press conferences in Columbus and Cleveland that he had written to his opponent, State Auditor Betty Montgomery (R), to demand that she order performance audits of all of the MCOs. Dann said that the BWC had become “the silent filler of Republican pockets” and a “veritable ATM machine for contributors to the Republican Party and its candidates.”

Montgomery immediately refused, saying that the auditor’s office does not have the authority to audit private, forprofit companies. This appears to be a wholly disingenuous response. Service contracts routinely include clauses that permit the service recipient to review the books and records of the service provider, especially when compensation depends on the quantity of work performed. Such clauses would enable state auditors to examine the performance of the MCOs. In the unlikely event that the MCO contracts do not contain such clauses, that would open up a whole new level of incompetence and corruption in the adminstration of the BWC in the form of wilfully turning a blind eye to fraud and waste by the MCOs.

At the press conferences, Dann outlined the history of Republican mismanagement of BWC, beginning with Gov. George Voinovich's declaration in 1991 that the BWC was the "silent killer of jobs in Ohio." That was Voinovich's rationale for taking direct control of the BWC, which had been governed by an independent board comprised of representatives of employer and employees. "But the evidence shows that the real intent was to create a fundraising bonanza for Republicans, a source of tens of millions of dollars in contracts for their benefactors, and a place to park political cronies like Terry Gasper who doled out the money and contracts to vendors favored by the GOP," Dann said. "As a result, billions of dollars that could have been used to reduce employer premiums and pay benefits to injured workers was, instead, funneled into the pockets of scam artists and schemers like Tom Noe. The whole situation is disgusting."

Dann said that the sordid dealings at BWC were made possible because the Republican officeholders who were elected to monitor the agency, notably Montgomery who had oversight authority over the BWC as both attorney general and auditor, ignored the fact that Noe and others were looting the BWC’s treasury and violating Ohio’s ethics laws.

Also at the Columbus press conference, Dann announced that he is returning all campaign contributions he has received from those connected to the MCOs. "To avoid even the appearance of impropriety, I feel I must return all the contributions I have received from principals and employees of MCOs, including $60,000 raised for the campaign by the Lucarelli family which controls 1-888-OhioComp," Dann said. "I have no idea if 1-888-OhioComp is part of the problem or not because Betty Montgomery has never examined this aspect of operations at BWC,” Dann continued. "Just as they sang Terry Gasper’s praises when they appointed the now-convicted criminal to the state’s Venture Capital Authority, BWC officials have consistently and loudly praised the performance of the MCOs. So when the Lucarellis offered to help my campaign, I viewed them as reputable businesspeople."

However, the Toledo Blade reported on Friday that Sam Lucarelli, who reportedly does not own any part of 1-888-Comp but is the father of it's CEO, pleaded guilty to a racketeering charge related to loan sharking and numbers rackets in 1987. He was released from prison in 1991. The Montgomery campaign immediately attacked Dann for having accepted the contributions from the Lucarellis. On her web site, Montgomery accuses Dann of hypocrisy and questions his fitness to serve as attorney general. In the guise of calling on Dann to answer questions about the contributions, she insinuates that Dann may have held secret meetings with organized crime figures and made promises in return for contributions.

Meanwhile, the Montgomery campaign says that it is reviewing contributions made to Montgomery to identify contributions from MCOs. Dann said at the press conferences that since 1998 Montgomery has taken thousands of dollars from Umberto Fideli, the principal of Care-Works of Dublin, the largest MCO. Care-Works controls 30% of the market including two-thirds of state agencies. Fedeli was forced to resign from the Ohio Turnpike Commission in the 1990s. "Just as was the case with ‘Coingate,’ Betty Montgomery, who could have been a hero, was instead asleep at the switch while the taxpayers were being robbed," Dann said. "I don’t know if that has anything to do with [the Fideli contributions], if she just doesn’t care enough to do more than the bare minimum, or if she flat out doesn’t know how to do either of the jobs the people of Ohio have given her. But one thing is clear: she has repeatedly failed to discover misspending and misdeeds that newspaper reporters who don’t have her power, her budget, or her staff have unearthed."

On a related point, the Toledo Blade reports today that Montgomery is on the witness list for defendant Tom Noe in the state criminal case set to begin in Toledo on October 10. Noe is the Republican fundraiser and operative who has already pleaded guilty to election law violations in federal court. It is unclear whether Montgomery will take the stand before or after election day, but her involvement is seen as a boon to Dann in his efforts to publicize the connections between Montgomery and Noe.

UPDATE: After I posted this, the Dann campaign issued a press release about Montgomery being a witness for Tom Noe:
State auditor Betty Montgomery has been listed as a possible defense witness in the upcoming trial of her long-time friend, political contributor, and “Coingate” scandal mastermind Tom Noe. ...

Noe, the former head of the Lucas County GOP, will be sentenced on Tuesday for laundering money into George Bush’s presidential campaign. His trial on state charges centers on the Ohio Bureau of Workers’ Compensation’s decision to invest $50 million in rare coins peddled by the one of the state’s most prominent Republican activists.

When he learned that Ms. Montgomery was on the witness list State Senator Marc Dann, the Democratic nominee for Attorney General, suggested that defense attorneys will try to find out if she, as the attorney general at the time Noe got the first of two $25 million payments from the state, knew why the Ohio Bureau of Workers' Compensation would invest in rare coins. "There had to be some talking and convincing ... and maybe they want to know what she knew," Mr. Dann said. “If they could prove that the state knew how he would use the money, it might not be considered theft.”

Leo Jennings, Communications Director for the Dann campaign, offered another scenario: “Perhaps they are going to call her as a character witness,” he said. “After all, she’s known him for decades, she carried legislation for him when she was in the Senate, she’s accepted thousands of dollars from him over the years, he was a member of the host committee at a fundraiser she held last year after ‘Coingate’ broke, and she didn’t do a thing to investigate the rare coin scam until she was forced to take action by Senator Dann and the media. Maybe they’re hoping she’ll get on the stand and say he was a real nice guy who just made an honest mistake.”

“For that matter, I wouldn’t be surprised if they ask her if any of the many contributions she took from him were in coins, after all, they were supposed to be a great investment,” Mr. Jennings said.

1 Comments:

At 7:03 PM, Anonymous Anonymous said...

GO MARC GO!!!!

 

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