Blumenthal settlement draws group's ire

John O'Brien Jan. 30, 2007, 3:47pm


HARTFORD, Conn. -- According to Connecticut Attorney General Richard Blumenthal, the "pay-to-play" principle of business extends beyond the insurance companies against which he has so actively litigated.

The leader of an antitrust research and education center, however, says it's just another case of attorneys general inappropriately wielding the power of federal antitrust laws.

Blumenthal settled Thursday with Healthcare Research and Development Institute, which will pay the state $150,000 and disband its group of health care industry vendors and chief executives from the nation's premier hospitals and health care institutions.

Blumenthal, known for his role in leading investigations into bid-rigging by insurance companies and recently named the worst state attorney general in recent history by the Competitive Enterprise Institute, said that HRDI was charging vendors $40,000 for a membership, "enabling them direct access to the hospital CEOs who wielded immense purchasing power."

HRDI will now dissolve its organization under terms of the settlement and create a new one that excludes vendors or their representatives.

"HRDI is history," Blumenthal said. "It is replaced by an organization that returns to its fine roots and goals of improving health care. The new network will have a drastically different dynamic and culture, as well as formal structure."

Skip Oliva, president and founder of the Voluntary Trade Council, said that Blumenthal's behavior has been improper.

"The federal antitrust law gives people like him the additional power to wave his stick around," he said.

"I thought Blumenthal's conduct was particularly outrageous, given that if you actually read the text of the voluntary assurance -- and that's a real B.S. phrase by the way --- there's no finding of guilt or liability. It's very clear that (HRDI) just wanted (Blumenthal) to go away.

"And then you read the press release, and Blumenthal makes it very clear that he thinks they violated the law."

No papers were actually filed in court, and the voluntary assurance does not provide that Blumenthal will not later attack the group's successor, Oliva said.

"There are a lot of lines saying Blumenthal can take this thing and turn it around and go after them if he wants because he's not happy with their compliance. It's a very one-sided agreement," Oliva said. "The successor to HRDI and the individuals have nothing to go on but Blumenthal's word that he will not prosecute, when we've already seen him issue a press release saying that they're guilty."

In his release, Blumenthal said the settlement "shatters an anticompetitive secret society -- an elite and exclusive club -- of premiere hospital executives and select health care supply businesses."

Florida Attorney General Bill McCollum joined Blumenthal in the agreement. Florida is HRDI's home state.

Oliva, who says he is not a lawyer by trade but has worked for years analyzing antitrust policies, claims it is business-as-usual for the attorneys general.

"I think that the general problem -- and it's certainly not specific to Blumenthal -- is the whole notion of prosecutors commencing investigations, forcing the targets of investigations to shell out legal costs just to comply with documents and other processing fees," Oliva said.

"Then when there is no finding of guilt and the target signs the settlement to obviously avoid the costs of trial, then the attorney general turns around and issues a press release saying they violated the law.

"A lot of the AGs engage in that sort of practice, as well. Blumenthal is one of the more publicly obnoxious people."

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