Media Blog

Meet the Obamacare Contractor Under Criminal Investigation in the UK

A few day’s ago, NRO’s Jillian Kay Melchior wrote an excellent piece on Serco, a government contractor awarded $1.25 billion to process paper applications for Obamacare. Jilian detailed the troubling allegations of fraud levied against Serco at the time of the contract’s award as well as the company’s ties to questionable lobbyists. An excerpt:

Even as myriad other allegations emerged about its work around the globe, Serco spent heavily on lobbying in Washington, D.C., and secured a multi-year contract potentially worth $1.249 billion to handle paper applications for the Obamacare exchanges. Serco did not respond to e-mail and voice-mail requests for comment.

Public records demonstrate Serco’s concentrated effort to woo the U.S. government. In recent years, it has spent more than a million dollars on lobbying and political activities, including $6,450 donated to President Obama’s election campaign, according to the Sunlight Foundation. This year, as the Centers for Medicare & Medicaid Services (CMS) was considering proposals for insurance-exchange work, Serco spent $100,000 to hire Greenberg Traurig, former home of Jack Abramoff, to lobby regarding the “implementation of [the] Patient Protection and Affordable Care Act,” according to January registration papers.

Among the Greenberg Traurig lobbyists working on the Serco account was Mark Hayes, a former Senate health-policy aide. During his time on Capitol Hill, Hayes “was instrumental in the key coverage, financing and delivery system reform provisions of the Patient Protection and Affordable Care Act,” according to his Greenberg Traurig bio, and “acted as lead Republican staff negotiator for the ‘Group of Six’ health-care reform negotiations.” Less than a year after the ACA was signed, Hayes left Capitol Hill to become a lobbyist, representing several health-sector clients.

Earlier this year, Hayes became a central subject of a federal insider-trading investigation. The Washington Post reported that Hayes had sent information on April 1 about a significant Medicare policy change to an analyst at Height Securities. The analyst then “sent out an alert to Height’s hundreds of investor clients — ahead of the administration’s public announcement — and trading in Humana, Aetna, and other health-care stocks immediately soared.” Hayes could not be reached for comment, and it’s unclear whether the investigation is continuing. Papers filed in May, after the incident, stated that Hayes was expected to cease lobbying for Serco.

And to update Jillian’s story, the allegations against Serco just got upgraded to a “formal criminal investigation.” Via the Guardian:

Serious Fraud Office launches inquiry into G4S and Serco overcharging claims

Investigation follows justice secretary’s claims that firms overcharged on electronic tagging contracts for offenders

The Serious Fraud Office has launched a formal criminal investigation into two of the government’s biggest suppliers, G4S and Serco, following claims by the justice secretary, Chris Grayling, of tens of millions of pounds of overcharging on electronic tagging contracts for offenders.

Grayling asked the SFO to look into the billing allegations in July when he told MPs that an external audit had revealed that the overcharging included billing for tracking the movements of criminals who had moved abroad, who were back in prison, who had had their tags removed and even, in a few cases, those who had died.

To be fair, the criminal probe is against the parent company in the UK and not the subsidiary here in America that won the ACA work. But the question is, as was asked originally by Jillian, how did this company win the business in the first place? 

Due to the criminal nature of the probe now, an investigation and audit of the company’s performance here in America is warranted as well as a full examination of the Obamacare contract and the role played by the lobbyists in the procurement of that contract.




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