Why Health and Human Services Nominee Price’s Smoking Gun Ethics Breaches Won’t Disqualify Him


There was good news on the Trump Administration Ethics Train Wreck, still just pulling out of the station. Despite the ethically-challenged reaction fro the Trump transition team when it was revealed that Monica Crowley had plagiarized in her latest book, somebody, somewhere, persuaded the conservative radio talk-show host to resign her new White House post. Good. But as many—most?—predicted, the muck is just beginning to bubble to the surface.

CNN reports that Rep. Tom Price,Trump’s nominee for Secretary of Health and Human Services who will have much of the responsibility for dismantling Obamacare  without triggering a health system crash, appears to have engaged in a flagrant instance of using his position for financial gain.  Last year, Price purchased shares in Zimmer Biomet, a medical device manufacturer [Full disclosure: I have one of their artificial hip joints, setting off metal detectors at airports all over the world] right before he introduced  legislation that would have directly benefited the company.

Price bought between $1,001 to $15,000 worth of shares in the company last March, and then, less than a week after the transaction,  introduced the HIP Act (Clever!) to delay until 2018 a regulation that industry analysts believed  would significantly hurt Zimmer Biomet, one of two companies most affected by a regulation that limits payments for joint implant procedures. Not only did Price have a financial stake in the regulation he tried to stall,but after Price introduced  his bill, Zimmer Biomet’s political action committee donated to the Georgia congressman’s reelection campaign.

Merely a coincidence, I’m sure.

Price is scheduled to appear before the Senate Health Committee this week, and the Senate Finance Committee later. He should withdraw, or failing that, Trump should pull the nomination. Price’s purchase of the Zimmer Biomet shares isn’t the first time he’s used inside information (the inside information being “I’m going to propose a bill”) to buy shares in a company. The Wall Street Journal reported last month that he traded roughly $300,000 in shares over the past four years in health companies while pursuing legislation that could affect their bottom lines.


Larry Noble, general counsel at the Campaign Legal Center told CNN, “It clearly has the appearance of using your influence as a congressman to your financial benefit.” Ya think??? “If he believed in the bill, he should not have purchased the stock.”

And if he bought the stock, he should have recused himself from any related legislation. That’s me talking, not Larry.

You can read Price’s spokesman’s “humina humina,” ‘he was in complete compliance,’ ‘how DARE you suggest that the contribution was a quid pro quo!’ response to these inconvenient facts in the CNN story. Price is busted. This is the appearance of impropriety by any definition, and actual impropriety by any honest assessment. If Trump wants to reassure the public and his critics that corruption, self-dealing and conflicts mean anything to him, he should deal with Price immediately, sending his nomination to the shredder and explaining why.

My bet is that Trump won’t, and that Price will be confirmed. Despite the enactment of the STOCK Act in 2012, aimed at combating the practice of Capitol Hill insider trading, most observers believe that the practice is still widespread. The law is filled with loopholes.

Prof. Jonathan Macey of Yale argued in 2011,

“On closer examination, it appears that what Congress really wants is to keep making the big bucks that come from trading on inside information but to trick those outside of the Beltway into believing they are doing something about this corruption.”

The most recent Ethics Alarms post about Congressional insider trading is here. An excerpt:

Kerry Kircher, the House General Counsel by Speaker John Boehner, argued in that brief that any SEC investigation of congressional insider trading was unconstitutional, because lawmakers and their staffs are  protected from such inquiries by the Separation of Powers provision of the Constitution. In other words, Congress passed a law against their own insider trading, but it can’t be enforced.

Let me be clear: insider trading as well as stock buys based on anticipated legislation that they control is far more unethical when done by members of Congress than ordinary insider trading.It warps our laws and policies, as elected officials vote to enrich their business cronies and themselves at the same time. Any member of Congress who engages in this practice—and the data suggests that many do—should be not only thrown out of office, but into prison.

I doubt that Senators want any more scrutiny of this ongoing scandal by making an issue of it in the Price hearing. And we all know–don’t we?—that quid pro quo campaign donations like the one received by Price are epidemic, and properly described as bribes. Few Senators want to focus on this, either.

But wouldn’t it be wonderful if Donald Trump shocked everyone and took a bold step to expose both of these corrupt practices? And wouldn’t it be wonderful if Paul Ryan and Nancy Pelosi teamed up and won an Olympic medal in synchronized swimming?

No, I’m certain Trump will let this superb opportunity to take a stand against unethical government pass.  I guess the thing for me to do is to protest before he has a chance to do anything.

11 thoughts on “Why Health and Human Services Nominee Price’s Smoking Gun Ethics Breaches Won’t Disqualify Him

  1. “I doubt that Senators want any more scrutiny of this ongoing scandal by making an issue of it in the Price hearing. And we all know–don’t we?—that quid pro quo campaign donations like the one received by Price are epidemic, and properly described as bribes. Few Senators want to focus on this, either.”

    There’s a sort of cynical optimism in me that thinks it might be the other way around. The Senate may throw a giant conniption about potential corruption in Trump nominees to distract the public from their own corruption and make themselves look like they’re tough on it. Tom Price may end up being the Congressional Scapegoat.

  2. Jack,

    I don’t know on this one, I am talking of your prediction that Trump wont pull the nomination, not everything else, it is spot on. Trump is so inconsistent and seems to keep surprising, this may well be one he pulls, it may even give him some insulation on the other nominees. If he quickly ascts on information that comes out of the process he could really make some easy political capitol.

  3. Perhaps all elected persons should be required to create blind trusts. Equal treatment under the law should be the norm.

    • This congressional insider trading thing is just so brazen. And Martha Stewart gets thrown in jail for it. Mind blowing. They pass the Securities Act and then exempt themselves. The mind boggles.

  4. It’s interesting that our last two incoming presidents have had trouble fielding scandal-free nominees for HHS. Obama was forced to withdraw Tom Daschle from consideration in 2009 because of the former senator’s failure to pay taxes on various services he received as a consultant in the private sector.

  5. I wonder why there was a bill to control the price of medical devices in the first place. Seems to me that such a bill would benefit health insurance firms. Would the holders of shares in Aetna, the Blues, or United Health benefit from such a regulation?

    This should not be interpreted as a rationalization of the appearance of impropriety only that if we look backward into what members of Congress hold health insurance stocks it might expose the fact that regulatory price controls may have been motivated by financial gains by those members.

    Arguing for the greater good to justify a regulation while you stand to profit seems to me as unethical as what Price has done.

  6. Price’s explanation is that he had nothing to do with making these trades. They were made in a broker-directed account. That is, all trades in the account were made by the broker without notifying Price and without receiving any input from Price. From the Trump team’s information release:

    • 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.

    • No excuse. His job and duty is to avoid such conflicts. He is responsible for purchases made in his name, no matter who makes them. If he cannot ensure that stock purchases won’t compromise him, then it is unethical for him to have them made.

      • But that’s contrary to the nature and purpose of a blind trust.

        Consider what you’re suggesting should happen: Price gives investment discretion to Morgan Stanley in order to avoid conflicts of interest and the appearance of impropriety. Then, from time to time, Price calls his broker to say, “I’m planning to introduce the following piece of legislation. It’s a secret, so don’t tell anybody. Please figure out which companies will benefit or be harmed by this legislation and make sure you don’t make any trades that might might appear improper.”

        That can’t be right.

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