Wednesday, August 17, 2011

Nancy-Ann DeParle & Rick Scott's Financial Conflict of Interest

Democratic President Obama's Deputy Chief of Staff and former Health Czar Nancy-Ann DeParle made millions from her stake in for-profit hospitals and healthcare companies, much like Republican Governor Rick Scott of Florida.  A portion of DeParle's profits came from Triad Hospitals, a spinoff from Scott's HCA. 

As public servants,  Scott and DeParle needed to dispose of potentially conflicting assets.  Rick Scott put his assets in a trust in his wife's name:  Legal experts said Scott complied with Florida law, but his action would not meet federal requirements.

Nancy-Ann DeParle's financial disclosure documents are murky around her stake in CCMP Capital Partners.  Private equity underwriters require managing directors to have a stake in their affiliates.  Deparle's disclosure forms identify her board slots in CCMP affiliates but showed no equity stake in CareMore Health Plans, Legacy Hospital Partners or Noble Environmental Partners.  CareMore is being acquired by WellPoint. 

Nancy's 2010 filing cites CCP/JPMP Friends, the stake she held in relation to JPMorgan private equity, prior to CCMP's spinoff:  For CCP/JPMP Friends her discolure states:

I made an irrevocable transfer of my interest to James DeParle.
I take it this is the son who sat in her lap as the House of Representatives passed health reform.  As the transfer occurred on 6-1-09, James would benefit from companies who win under the bill passed March 2010.

The attachment showed four distinct investment funds

CCP/JPMP Friends 2001-1
CCP/JPMP Friends 2002-1
CCP/JPMP Friends 2003-1
CCP/JPMP Friends 2004-1

A number of investments are pharmaceutical/healthcare firms, Xenon Pharmaceuticals, WarnerChilcott, National Surgical Care, Psilos/Comprehensive Neuroscience, FlowCardia Inc., Pharmos/Vela Pharmaceuticals and Transmedics.  These Four distinct Friends investments showed as $15,000 to $50,000. That seems a tiny stake for private-equity underwriters (PEU's) to hold in their investments.

Under arrangements DeParle listed:

CCMP:  I retained my 401(k) with CCMP.  Neither CCMP nor I have made any further contributions to the account.
The filing shows one listing for CCMP Capital Advisors LLC 401(k), a Vanguard small cap fund worth $1,001 to $15,000.  A number of mutual funds follow, but are not expressly listed as part of the 401(k).  This seemed odd as "NancyAnn SEP IRA" was listed above all its mutual fund holdings.  Her 2011 filing corrected this, listing a number of mutual funds under her CCMP 401(k).

Her three years of filings show no indication of any equity stake for her years as Managing Director of CCMP.   Nancy's 2009, 2010 and 2011 disclosure forms are silent on the CareMore Health Plans and Legacy Hospital Parnters.  What happened to them?  They should show up in some form.

This concern is punctuated by her 2011 filing which lists:

MQ Interholdings, LLC (share of proceeds of earn-out of 2007 sale of CCMP portfolio company)

Her capital gain from the sale of MedQuest, a medical imaging company, was $6,825.  What other PEU compensation schemes remain unlisted?  How might she participate in CareMore, CCMP's five bagger?

Rick Scott's wife, Nancy-Ann DeParle's son, do they really remove PEU conflicts of interest? Red and Blue love PEU's.

Source:  DeParle's 2010 Financial Disclosure and 2011 Financial Disclosure forms.  American University published her 2009 form.

Update 9-3-11:  DeParle wrote a stinging defense of her Rube Goldberg health care plan.  She failed to identify her residual PEU health care stakes and how greed will save American health care.  Extrinsic motivators kill intrinsic ones.

Update 8-20-14:  President Obama continued his conflicted health reform appointments.  Naked Capitalism found two more. 

Update 2-19-21:  Nancy Ann Deparle had a banner payday after Consonance Capital sold Enclara Healthcare to Humana in 2020.  Enclara is "one of the nation's largest hospice and benefit management providers."  Yet, Humana intends to spin off Kindred Hospice as it prefers a partnership model for end of life care.