Sunday, February 06, 2005

CVS tied to R.I. lawmakers

I am aware that Rhode Island has had its share of healthcare problems in the insurance sector. Here's another angle to the dangers of allowing those involved making a living from healthcare parasitically to curry favor from those who set or enforce the rules for society (i.e., politicians, also usually with no healthcare credentials).

I am the son of a small, independent pharmacist in Philadelphia who opened his first store in the early 1950's. I worked for my father as a teen and literally watched the takeover of his profession by large corporate interests as chain drugstores started dotting the landscape, including directly across the street from his venerable Lumar Pharmacy, Somerton (far Northeast Philadelphia).

-- SS

CVS tied to R.I. lawmakers
The drugstore chain's dealings led to the state Senate president's resignation.

By Michael Mello, Associated Press

PROVIDENCE, R.I. - From the University of Rhode Island's sparkling Ryan Center, named after CVS Corp.'s top executive, to the familiar red signs that dot the landscape, the nation's second-largest drugstore chain is a clear economic force in the nation's smallest state. Yet CVS's behind-the-scenes political clout may be even stronger.

A furor has erupted at the Statehouse over the recent disclosure that CVS - Rhode Island's largest private employer - had secret business dealings with some lawmakers.

The uproar has spurred the resignation of the state Senate president and led to an investigation by the Rhode Island attorney general - himself a former CVS lobbyist.

Activist groups are demanding tighter disclosure laws. Others want to replace the state's part-time legislature with a full-time one, so that lawmakers are less likely to hold down outside jobs that could create conflicts of interest.

Republican Gov. Don Carcieri, meanwhile, wants a special commission to investigate corporate influence in government.

"We have a huge crisis of confidence in the public's mind," he said last week. The governor's concern goes beyond CVS to recent ethics complaints involving other firms, including Blue Cross & Blue Shield of Rhode Island, the state's largest insurer.

Also, two executives connected to the Lincoln Park dog track and gambling hall have been indicted on charges of conspiring to pay a bribe of up to $4.5 million to the House speaker's law firm in 2000 and 2001 for help in winning approval for more video slot machines and blocking a proposed casino. Rep. John Harwood, who is no longer speaker, has denied any wrongdoing and has not been charged.

Few, if any, companies are as tightly woven into the fabric of the state as CVS. Cofounded by Woonsocket native Stanley Goldstein, CVS opened its first store in 1963 in Lowell, Mass. The Fortune 100 company now has about 4,200 stores in 32 states and the District of Columbia. It has dozens of stores in the Philadelphia area. Its corporate headquarters are in Woonsocket, and it employs about 5,200 people in Rhode Island. CVS has long been lauded for its philanthropic efforts, including an annual charity golf tournament. The company and its chief executive officer, Tom Ryan, donated at least $4 million to help build the state university's sports arena.

But critics say the goodwill generated by the company's good citizenship has been erased by the secret business relationships with Democratic Senate President William Irons and Sen. John Celona, who was chairman of a committee overseeing the health-care industry. "I can't trust them," Democratic State Sen. Leonidas Raptakis said of CVS. "Why didn't they come out and tell the public of this hidden agenda?"

Irons, an insurance broker, received $70,000 in commissions over two years as the broker on a CVS employee health-insurance policy, according to federal documents.

And Celona acknowledged he was being paid $1,000 a month by CVS as a consultant when a bill opposed by CVS died in his committee. The bill would have relaxed the exclusive relationship Blue Cross has with CVS and certain other pharmacies, and allowed patients to get their prescriptions filled at drugstores including Walgreens.

Celona has since stepped down from the chairmanship, and CVS's competitors are again pushing the bill.

CVS said in a statement that it violated no state laws but is adopting new procedures that "will hold CVS to a higher standard of conduct than that required by Rhode Island state law or regulation."

Some of the financial arrangements were brought to light by the Providence Journal. Because Rhode Island lawmakers are part-time, they are not barred from working for CVS or any other company. Lawmakers must report the names of their employers, though not the exact amounts they are paid.

Celona and Irons could be fined for not disclosing their business relationships. Criminal investigators are looking deeper, to see if businesses have bought influence with lawmakers. Celona and Irons both declined interview requests.

Rhode Island Attorney General Patrick Lynch is heading the investigation along with state police. He has resisted calls to remove himself and appoint a special prosecutor because of his own past connections to CVS.

CVS also is named in an ethics complaint against Republican State Rep. William McManus, a business analyst for the company. McManus is accused of improperly speaking against a bill to allow the sale of medications imported from Canada.

The Rhode Island legislature typically meets six months a year in the late afternoons, and includes teachers, lawyers, restaurant owners, firefighters, insurance agents and farmers. Most of the lawmakers make $12,063 a year.

Democratic Sen. Joseph Polisena said Rhode Island needed a full-time legislature. "As we have seen in a number of instances, there can be unfortunate results when members of the part-time General Assembly serve two masters - the citizens in their districts and their regular, full-time jobs," he said.

But having full-time legislatures can lead to complaints, too - namely, that the lawmakers are too focused on reelection.

"If it is their primary source of income, then it becomes a job that's important for them to hold onto, then they'll make decisions in the interest of getting reelected," said Karl Kurtz of the National Conference of State Legislatures.

1 comment:

Anonymous said...

My company is being bought out by these people, CVS Corps., in order to rip arpart it's infostructure and sell it off to the highest bidder. I work for Albertson's, the gorcery chain whose sister companies inclue Jewel/Osco, a pharmicutical company. I am appalled at this blaitent disregard for the law and am fearful that these ethical values will reflect the treatment of their employees. We are unionized, and therefore have a certain amount of protection, yet, i worry that this industry will serve to devide and conquer what has been established - fearful employee