Wednesday, September 08, 2004

Inquiry Proposes Penalties for Hiding Medicare Data

WASHINGTON, Sept. 7 - The Bush administration illegally withheld data from Congress on the cost of the new Medicare law, and as a penalty, the former head of the Medicare agency, Thomas A. Scully, should repay seven months of his salary to the government, federal investigators said Tuesday.

The investigators, from the Government Accountability Office, said Mr. Scully had threatened to fire the chief Medicare actuary, in violation of an explicit provision of federal appropriations law.

Accordingly, they said, federal money could not be used to pay Mr. Scully's salary after he began making the threats to the actuary in May 2003.

The conclusion came in a formal legal opinion by the accountability office, an investigative arm of Congress formerly known as the General Accounting Office. The agency applied its interpretation of the law to factual findings previously made by the inspector general at the Department of Health and Human Services.

The Bush administration did not quarrel with those facts, but said on Tuesday that it was unconstitutional for Congress to compel the disclosure of data over objections from the executive branch.

Mr. Scully's salary in 2003 was $145,600, the department said. He would owe the government $84,933 under the legal opinion issued on Tuesday.

Asked in an interview if he would repay the money, Mr. Scully said: "No. I'm not required to. It's a matter of principle. I never did anything wrong, and I am proud of every minute of my three years at the Centers for Medicare and Medicaid Services.''

Mr. Scully, who now works for a law firm and a private investment firm, has registered as a lobbyist for Abbott Laboratories, Aventis Pharmaceuticals, Caremark Rx and other health care companies, but says his actions in government were motivated solely by a desire to help Medicare beneficiaries and taxpayers.

The White House had no immediate comment. William A. Pierce, a spokesman for the Department of Health and Human Services, said the department would not try to recover the money because Mr. Scully had "acted within his legal authority.''

But Senator John Kerry, the Democratic presidential nominee, cited the report as evidence that "the Bush administration broke the law by covering up the true cost of their phony Medicare bill.''

Senator Frank R. Lautenberg of New Jersey, one of 18 Democratic senators who requested the legal opinion, said the administration had purposely hidden information about "its flawed Medicare plan,'' and he asserted, "This was a corruption of the process at the highest levels.''

President Bush signed the Medicare law, widely seen as one of his major domestic achievements, on Dec. 8. Less than two months later, the White House said the law would cost much more than Congress had assumed - $534 billion over 10 years, as against $400 billion.

Lawmakers of both parties said the law would not have passed in its current form if Congress had known of the higher cost estimates, prepared by the chief actuary, Richard S. Foster, a career civil servant who has worked for the government since 1973 and received an award for outstanding service in 2001.

The law under which Mr. Scully could be penalized says that no federal money can be used to pay the salary of any federal employee who "prohibits or prevents, or attempts or threatens to prohibit or prevent, any other officer or employee of the federal government'' from communicating with Congress.

Similar laws have been on the books since 1912, when Senator Robert M. La Follette, a progressive Republican from Wisconsin, inveighed against "gag rules'' imposed by Presidents Theodore Roosevelt and William Howard Taft.

Laura Kopelson, a spokeswoman for the Government Accountability Office, said lawyers there were "not aware of any similar case'' in which a federal official was found to have violated the law. "This is the first time we have been asked to rule on this point of law,'' she said.

The finding is the latest development raising questions about the new statute, which offers drug benefits to all 41 million Medicare recipients and gives private insurers a huge new role in the program. The changes represent the biggest expansion of Medicare since its creation in 1965.

The Government Accountability Office said the Department of Health and Human Services should try to recover the money, just as it would try to secure payment of any debt owed to the department.

The department itself found that Mr. Scully had threatened to dismiss the actuary if he provided information and estimates sought by Congress last year in the heat of debate over Medicare.

But lawyers at the health department and the Justice Department said the law requiring the disclosure of information to Congress violated "executive privilege,'' the constitutional separation of powers and the president's right to control communications with Congress.

The Government Accountability Office rejected that argument. No court has ever held the law unconstitutional, it said, and the cost estimates were neither classified nor privileged. Indeed, it said, Mr. Scully's threats to the actuary were "a prime example of what Congress was attempting to prohibit'' when it outlawed "gag rules."

"Midlevel employees provide much of the information Congress needs to evaluate programs'' and legislation, the Senate said when it adopted the language of the 1912 law as part of the Civil Service Reform Act of 1978. Similar language was included in spending bills for 2003 and 2004.

Anthony H. Gamboa, general counsel of the Government Accountability Office, said the administration was "prohibited from paying Mr. Scully's salary after he barred Mr. Foster from communicating with Congress.'' The money appropriated by Congress was simply "unavailable for the payment of his salary,'' Mr. Gamboa wrote.

...Bad executive! No biscuit!

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