Terrific: “Community Health Alliance Mutual Insurance Co., a Knoxville-based health insurance cooperative in Tennessee, announced earlier this week that it would offer a free smartphone to qualifying members.”

The state has stepped in, arguing that the phone giveaway may violate state regulations requiring insurance companies to disclose incentive programs such as giveaways on an insurance policy or certificate. A spokeswoman for the Tennessee Department of Commerce and Insurance says the federal government will have to approve the phone giveaway.

And yes, your tax dollars helped pay for those phones: Community Health Alliance was funded by a $73.3 million loan from the federal government.

The good news for CHA is that their “Government and Community Relations Counsel”, David Braam, should be able to sort this out quickly. He previously worked as legislative liason and counsel for former Tennessee Governor Phil Breseden.

That’s David Braam; the chairman of the Board of Directors of CHA is Ronald Braam, who Gov. Breseden appointed to the state’s Conservation Commission back in 2010. Bredesen appointed another CHA board member, Kathy Wood-Dobbins, to his Health Care Safety Net Task Force in 2005 and she chaired the Best Practices committee.

Breseden founded Health America Corp. and sold his interest in the country in 1986; he was considered a top contender to be Health and Human Services Secretary for President Obama but the president selected Kathleen Sebelius.