Does HHS Secretary nominee Tom Price have a conflict-of-interest problem — or does CNN have a credibility problem? Two days ago, CNN’s Manu Raju reported that Price had purchased stock in a company that would benefit from legislation he had drafted just prior to introducing it to the House. That would violate House rules and create a big problem for his confirmation hearing, which starts today:
Rep. Tom Price last year purchased shares in a medical device manufacturer days before introducing legislation that would have directly benefited the company, raising new ethics concerns for President-elect Donald Trump’s nominee for Health and Human Services secretary.
Price bought between $1,001 to $15,000 worth of shares last March in Zimmer Biomet, according to House records reviewed by CNN.
Less than a week after the transaction, the Georgia Republican congressman introduced the HIP Act, legislation that would have delayed until 2018 a Centers for Medicare and Medicaid Services (CMS) regulation that industry analysts warned would significantly hurt Zimmer Biomet financially once fully implemented.
Zimmer Biomet, one of the world’s leading manufacturers of knee and hip implants, was one of two companies that would have been hit the hardest by the new CMS regulation that directly impacts the payments for such procedures, according to press reports and congressional sources.
After Price offered his bill to provide Zimmer Biomet and other companies relief from the CMS regulation, the company’s political action committee donated to the congressman’s reelection campaign, records show.
Almost immediately, the national media picked up the story. But was it accurate? Ellen Carmichael, who worked as Price’s aide at one time, ripped CNN for “journalistic malpractice” on Twitter, and provided the missing context in Raju’s reporting:
.@RepTomPrice has a Morgan Stanley brokered-directed stock portfolio. He is not personally engaged in trades made on his behalf. (2/x)
— Ellen L. Carmichael (@ellencarmichael) January 17, 2017
CNN says that @RepTomPrice introduced legislation after purchasing stock. This is demonstrably false. Work on this began in 2015! (5/x)
— Ellen L. Carmichael (@ellencarmichael) January 17, 2017
Twitchy has the entire tweetstorm. The Daily Caller picked up on Carmichael’s testimony:
- Importantly, Price played no role in the decision to purchase the stock, which was executed under a broker-directed account by Morgan Stanley, according to a knowledgeable source. The stock purchase was by his brokerage firm during a regular rebalancing of accounts.
- The congressman — who for two decades was an orthopedic surgeon — also went on record opposing the CMS regulation six months before the stock selection had been made.
- On Sept. 21, 2015 Price joined 60 Democrats and Republicans who questioned the Obama administration’s new, controversial Medicare reimbursement policy. In the letter, the group asked Andy Slavitt, the CMS acting administrator, to delay the regulation.
- Further, Price introduced his legislation before he knew of the stock purchase. He was the chief sponsor of the HIP Act and he introduced it on March 23, 2016, according to House records. But Morgan Stanley did not inform Price of the Zimmer Biomet stock until April 14, according to House financial disclosure forms on the Georgia congressman’s transactions.
That does tend to put a hole in the conflict-of-interest story, especially the last bullet. How can there be a conflict of interest when the principal is unaware of the interest? That hasn’t kept Chuck Schumer from being … well, Chuck Schumer:
Senate Minority Leader Chuck Schumer (D-N.Y.) on Monday night renewed his calls on the Office of Congressional Ethics to launch an investigation into potential violations of the STOCK Act by Rep. Tom Price (R-Ga.), President-elect Donald Trump’s nominee to lead the department of Health and Human Services.
“The President-elect claims he wants to drain the swamp, but Congressman Price has spent his career filling it up,” Schumer said.
Schumer, who made the comments in a statement and on Twitter, was responding to a CNN report published earlier in the day alleging that Price had purchased shares in a medical device manufacturer last March “days before introducing legislation that would have directly benefited the company.” CNN also reported that the company’s political action committee donated to the congressman’s re-election campaign after the legislation was introduced.
The biggest rebuttal to this charge is the fact that the broker runs the account and not Price. In Raju’s defense, he apparently asked Price’s office about that possibility before the story ran, and wrote that he didn’t get a response:
Zimmer Biomet is included in a broker-directed account and that the stock was purchased without his knowledge, a Price aide said after the story published.
But CNN asked Price’s office before the story published if there was a broker involved in the transaction, and a representative for the congressman declined to say.
That seems to be a mistake on the part of Price’s office. However, now that we know Price doesn’t direct those trades, doesn’t that make this a non-story — especially since Price reported the trade almost immediately after being informed of it? Shouldn’t that prompt a retraction, since there wasn’t a conflict of interest in either the trade or the legislation, and Price reported it properly?
Team Trump has now demanded that CNN retract its story and acknowledge the errors in it:
On January 16, 2017, CNN broadcast a story by Manu Raju, titled “First on CNN: Trump’s Cabinet pick invested in company, then introduced a bill to help it”, which omitted facts and drew conclusions in an effort to attack President-Elect Donald Trump’s designee for Secretary of Health and Human Services, Dr. Tom Price.
The facts were available to CNN through House Financial Disclosure Filings. Dr. Price’s position on the Comprehensive Joint Replacement demonstration, which date back to fall 2015, is also a matter of public record.
The facts are:
- Dr. Tom Price has a diversified portfolio with Morgan Stanley in a broker-directed account. The portfolio includes both health care and non-health care related stocks.
- Dr. Price’s Morgan Stanley financial advisor designed his portfolio and directed all trades in the account. Pursuant to the arrangement with Morgan Stanley, the financial advisor, and not Dr. Price, has the discretion to decide which securities to buy and sell in his account.
- Dr. Price’s financial advisor periodically rebalances his portfolio to ensure proper diversification. On March 17, 2016, Morgan Stanley undertook a comprehensive rebalancing of Dr. Price’s portfolio. In the course of that rebalancing, the advisor purchased 26 shares of Zimmer Biomet, worth $2,697.74, on behalf of Dr. Price.
- Dr. Price learned of the purchase of Zimmer Biomet on April 4, 2016, when his financial advisor sent him a list of trades to be disclosed on his House Periodic Transaction Report (PTR).
- Dr. Price submitted the PTR reflecting the March trades on April 15, 2016.
- Dr. Price began work on his legislative effort to delay the comprehensive joint replacement demonstration project in 2015 in order to preserve treatment options for patients. He sent a Dear Colleague letter regarding this effort on September 21, 2015.
The Presidential Transition Team requests that CNN retract this blatantly false story.
We’ll see whether CNN retracts the story, but at the very least, they owe their viewers and readers a serious update that reflects these facts.