Wherever private profit intersects with government power, an old boss once told me, sniff around that intersection long enough, and you’ll find corruption.
Democratic Sen. Bob Menendez’s relationship with wealthy Florida doctor Salomon Melgen was based on blending private riches and campaign contributions with public policy, if the story federal prosecutors tell is true. And it’s a good lesson in how that mixture yields cronyism and abuse of power.
Indictments tell only one side of the story, of course, and Menendez firmly denies all the charges, accusing federal prosecutors of persecuting him because of his views. We can’t rule it out. Federal prosecutors often overreach and abuse their power — witness the conviction of the late Sen. Ted Stevens, R-Alaska, which was subsequently overturned because prosecutors withheld exculpatory evidence.
But the story told in the Menendez indictment is a compelling one.
Menendez allegedly asked Melgen to pay for his plush hotel suites, and he also allegedly flew in Melgen’s private jet many times and stayed at Melgen’s villa in the Dominican Republic.
Menendez, prosecutors charge, “never disclosed any of the reportable gifts that he received from Melgen.”
Then there’s the $750,000 Melgen spent to aid Menendez’s 2012 reelection. A small minority of that money went through Menendez’s campaign. The biggest chunk — $600,000 — went through the Senate Majority PAC, the SuperPAC connected to then-Majority Leader Harry Reid.
“With so much money at stake,” Miles Rapoport, president of Common Cause, told the Washington Post, “it’s not surprising to find senators and representatives paying special attention to the desires of their donors.”
As reformers like Rappaport try to ferret out the culprit, they may be looking at the wrong pile of money. Read further down in the indictment of Menendez and Melgen, and you see much bigger dollar amounts.
Melgen evidently made tens of millions of dollars off of Medicare. When the government is the single biggest health insurer, it is going to be the single largest source of cash for many doctors. It also means that doctors who falsely bill patients, as Melgen is accused of doing, aren’t actually bilking their patients (who might object) but taxpayers.
It also means that politicians can effectively interfere with the insurer (Medicare) to make sure politically-connected providers get paid what they want to get paid. And boy, did Menendez interfere, according to prosecutors.
The Center for Medicare and Medicaid Services (CMS) in 2009 concluded that Melgen had overbilled Medicare by nearly $9 million. So Melgen allegedly called on Menendez to fix this problem and get Medicare to allow, or at least forgive, his aggressive billing practices.
Menendez emailed his staff to call Melgen “asap…re a Medicare problem we need to help him with.” Then the Senator’s office went to work for Melgen. First, a Menendez aide reached out CMS and pleaded for a change in rules to favor Melgen. Then Menendez on July 27, 2009, personally called the director of CMS to plead Melgen’s case.
Having no luck so far, Menendez tried to set up a call with the Secretary of Health and Human Services. The Secretary agreed, and offered a time, but Menendez was unavailable at that time — he was on Melgen’s private jet flying to Melgen’s villa in Casa de Campo, the indictment says.
Menendez then, “arranged for Melgen to meet with” Sen. Tom Harkin, D-Iowa, chairman of the Senate Health, Education, Labor, and Pensions committee, the indictment states. Still unsuccessful, Menendez recruited Reid to petition HHS. Then he lobbied the acting administrator of CMS, and then lined up a personal meeting with HHS Secretary Kathleen Sebelius.
This was about the time that Melgen allegedly roped fundraisers for Reid’s Senate Majority PAC into the lobbying effort.
On other issues that never ended up in the indictment, Melgen and Menendez also blended policy, profits, and contributions.
Melgen invested in a company called Gaseous Fuels Systems, which “sells products to convert diesel-fuel fleets to natural gas,” as the Associated Press describes it. Menendez repeatedly introduced legislation to subsidize the conversion of diesel vehicles to natural gas.
The whole story goes to show that the more government gets involved in the private sector, the more the private sector gets involved in politics. That’s a breeding ground for corruption.
Timothy P. Carney, The Washington Examiner’s senior political columnist, can be contacted at [email protected]. His column appears Sunday and Wednesday on washingtonexaminer.com.
