WellCare’s investor wants disclosure
By Jim Saunders and Mike Wells
5/7/2010 © Health News Florida
A New York-based investor is pushing to require WellCare Health Plans --- a major contributor to Florida politicians and parties --- to disclose more information about how it spends company money on political activities.
Amalgamated Bank, through one of its investment funds, wants shareholders to approve a proposal next month that would require WellCare to provide semi-annual reports about money it spends on candidates, political parties and other types of organizations that try to influence campaigns, according to a proxy statement released last week.
Amalgamated attorney Con Hitchcock says it has had more success in negotiating disclosure from other, similar-sized companies in the health care industry. In those cases, Amalgamated was able to withdraw the proposal from a formal vote.
"We didn't get that response from WellCare," Hitchcock said.
In recent years, he said, Amalgamated has pushed for disclosure on political spending in a broad range of industries; it focused on the health-care industry this year because of the level of interest, Hitchcock said.
The proposal states: "Disclosure is consistent with public policy and (is) in the best interest of our company and its shareholders. Absent a system of accountability, company assets can be used for policy objectives that may be inimical to the long-term interests of and may pose risks to the company and its shareholders.''
But WellCare's board of directors, in the proxy statement, recommended that shareholders reject the proposal during the company's annual meeting June 10 in Tampa. It argued, in part, that information about political contributions is already available in public databases.
"The company is dedicated to the highest standard of legal compliance, disclosure and ethical behavior,'' the board said in the statement. "Numerous federal, state and local laws regulate the company's political contributions and expenditures and related disclosure.''
WellCare spokeswoman Amy Knapp said Thursday she could not discuss the matter beyond what was included in the proxy statement.
The filing indicates that the New York City Employees Retirement System, another WellCare investor, is expected to co-sponsor the disclosure proposal. Amalgamated, founded by a labor union in the 1920s, describes itself as "America's Labor Bank'' and manages investments for unions and public-employee benefit plans.
WellCare is a major player in Florida's Medicaid system. As of April, WellCare's Healthease and Staywell programs combined to enroll nearly 355,000 Medicaid recipients --- or about one-third of all recipients who get care through HMOs, according to a state report. The Agency for Health Care Administration said WellCare received $914.5 million from Florida Medicaid last year.
The company's 2009 annual report says that almost one-fourth of its members are from Florida: 425,000 from Medicaid and 114,000 from Medicare.
In the proposal, Amalgamated points to reports that show WellCare made at least $2 million in political contributions since the 2002 election cycle. Also, it says WellCare pays money to trade associations, with an "undisclosed and unknown" amount of those funds going to political activities.
The $2 million figure in the proxy statement appears to substantially underestimate the amount that WellCare has spent on politics in recent years. In Florida alone, WellCare and its affiliated companies have contributed about $2.2 million to state candidates, parties and political committees since January 2001, according to information in a Department of State database.
Already in the 2010 election cycle --- which generally describes the two-year period leading up to the November 2010 elections --- WellCare has contributed about $128,000 to Florida candidates, parties and committees. The largest chunk of that, $90,000, has gone to the Republican Party of Florida, the state records show.
Many health insurers and other types of insurance companies spend large sums on political activities. But WellCare has a particular interest in public-policy decisions because its business depends on providing managed care through Medicaid and Medicare.
As an example, the managed-care industry lobbied heavily during this year's legislative session for changes that could have forced hundreds of thousands of Medicaid recipients to enroll in HMOs. The proposals failed to pass but are expected to return during the 2011 session. Along with creating additional customers for WellCare and its competitors, the proposals could open new lines of Medicaid business, such as long-term care.
"The company believes that active participation in the political life of the communities in which it does business is in the best interests of the company and its stockholders because many national and local public-policy decisions affect its businesses,'' WellCare's board said in the proxy statement.
"As a result, the company participates in policy debates on many issues to support the company's positions and, where permitted by law and deemed appropriate by management, makes strategic political contributions and expenditures from time to time that promote the company's business objectives,'' the board continued.
Amalgamated has proposed similar political-disclosure requirements in the past at companies such as Comcast and American Financial Group, according to company news releases. But the WellCare proposal comes about two months after Amalgamated and a group of other large investors launched a broader effort to try to spur companies to provide information.
That effort stemmed from a U.S. Supreme Court decision in January that eliminated longstanding limits on corporate spending in federal elections, according to the non-profit Center for Political Accountability.
While public databases make it relatively easy to track direct contributions to candidates and parties, the Supreme Court ruling has increased concerns that corporations will funnel money through trade associations and other organizations without similar disclosure.
--Capital Bureau Chief Jim Saunders can be reached at 850-228-0963 or by e-mail at email@example.com.