Fasano, Kelly, McLachlan Submit Public Comment re: Investigation into Commissioner Wade’s Potential Violation of the State Code of Ethics

July 20, 2016

Hartford – Senate Minority Leader Len Fasano (R-North Haven), Senator Kevin Kelly (R-Stratford) and Senator Michael McLachlan (R-Danbury) today submitted public comment to the Office of State Ethics explaining why they believe Insurance Commissioner Katharine Wade’s participation in the Anthem-Cigna merger constitutes a violation of the State Code of Ethics. The Citizen’s Ethics Advisory Board is accepting public comment as part of their investigation into a petition filed for declaratory ruling by Common Cause CT requesting a formal review of Commissioner Wade’s alleged conflicts.

The Republican lawmakers explain in their comments that they see a substantial conflict of interest because Commissioner Wade’s decision to grant or deny the Anthem-Cigna merger can reasonably be expected to have a direct monetary impact on her and her husband, who is a current Cigna high level employee and stockholder. That would be a violation of the State Code of Ethics, which prohibits a public official from taking any “official action” if he or she has reason to believe or expect that such action would have a direct financial impact on such official, a spouse, a dependent child or a business with which such official is associated. (C.G.S. Sec. 1-85)

They identified six reasons why Commissioner Wade’s argument that the Code of Ethics was not violated falls flat:

  1. The Commissioner’s argument that she “does not have a Cigna matter before her” is legally irrelevant, factually incorrect and completely disingenuous. The application, while filed by Anthem, clearly, directly and on its face requires the Commissioner to take “official action” impacting Cigna, its employees and stock holders, such as her husband Michael Wade.
  2. Given the Commissioner’s specific and exclusive statutory authority to review and decide the application to acquire Cigna, she cannot avoid the conflict of interest statute simply by delegating certain interim administrative functions to staff. Commissioner Wade has tried to distance herself from the application process by stating that the application was being reviewed by staff at the time she sought guidance regarding selling her husband’s Cigna stock.
  3. The Commissioner will be required to review and possibly negotiate aspects of the application directly impacting Cigna employees such as Michael Wade.
  4. The Commissioner’s decision to approve or deny the application will directly impact her husband’s financial condition as a stockholder. Anthem’s proposal to acquire Cigna includes a stock offer of $188 per share to be paid to Cigna stockholders in a combination of cash and Anthem stock. This represents a premium of between 22% and 35% above Cigna’s year to date stock value. Thus, the Commissioner’s decision on the application will have a substantial, immediate and direct impact on the value of Michael Wade’s stock.
  5. Under the circumstances of this case, placing the stock in a blind trust is an insufficient remedy for this direct conflict. Placing the stock in a blind trust, while protecting against the prospect of the Commissioner or her husband timing trades of the stock based on confidential information, does not eliminate conflict created by the fact that action on the application will directly and immediately impact the value of the stock in that trust.
  6. The impact on Michael Wade as a high level management employee and stock holder is distinct. The application does not impact all insurance companies generally but instead directly, significantly and uniquely impacts Cigna, its employees and shareholders. The Commissioner is not one of 151 part time legislators, but a highly paid executive official with sole statutory authority to approve or deny the application.

For a copy of the senators’ complete public comments please see attached.