The recent debates in Florida were heated to say the least. Most of this heat was emanating from Mitt Romney and Newt Gingrich, two political contenders who have been duking it out for months with their campaign ads against each other. The latest being an attack ad run in Florida against Mitt Romney for his involvement in a company that committed Medicare fraud. The ad is being run by a pro-Newt super PAC.
This issue is old news for anyone from Massachusetts, but with Medicare fraud permeating through Florida, it seems the issue was eventually going to be brought up. One notable event was around February of 2011 when 21 residents in the Miami-area were indicted for their alleged participation and connection in a home health care Medicare fraud scheme that totaled $25 million. Two of the alleged were doctors, while six were nurses, and eleven were patient recruiters (Source.) So it would make sense that any presidential candidates involvement with a Medicare fraud scheme would be something note-worthy to Florida residents.
The ad made quite a few claims against Mitt and his association with the company in question, Damon Corp. It states that Mitt was head of the company at the time of the Medicare fraud, that he made different statements regarding the “scandal”, and that he sold the company to avoid a federal investigation while owning it. These are three of the biggest accusations made against Romney in Newt’s latest ad. Let’s start at the beginning of this story and work our way up.
It’s no secret that Mitt was part of Bain Capital. This company was a private equity firm, it bought companies, mainly troubled, then turned them around and sold them for profit. Or rather, so that they could see profit, regardless of how the company did after they left. See: Ampad.
In 1989 Bain Capital bought Damon Corp. a medical testing company that was based out of Needhamm, Massachusetts. Eventually, Bain took Damon Corp. public in 1991, and Romney served on their board of directors. After four years Bain decided to sell the company, and this was done in August of 1993 to Corning Inc. The sale earned Romney a nice chunk of change around the order of $473,000. Then things get weird.
Corning immediately laid off 115 people after closing the main facility in Needham. A bit odd, but then you see that in August of 1993 – this being the same year Bain let Damon Corp. go – federal subpoenas were issued to Damon Corp. regarding Medicare fraud. The fraud committed by Damon Corp. was pretty scummy, in my opinion, when you look at what they did.
You see, Damon Corp. was providing doctors with forms that weren’t clear what tests would be included. The forms were misleading to the physicians and was causing them to order unnecessary blood tests that the company was assuring doctors would be covered by Medicare. The company claimed that it inflated its earnings by submitting false claims to Medicare as well as other federal programs. These blood tests that seemed to be ordered by the doctors because of the misleading forms were being billed by the company. This over billing occurred from the years 1988 to 1993.
In October of 1996 it was announced by federal prosecutors that Damon Corp agreed to pay $199 million. This amount was for both civil and criminal fines after the corporation plead guilty to defrauding Medicare. US Attorney Donald Stern was quoted as saying “This is a case, pure and simple, of corporate greed run amok”, and I don’t believe anyone could have said it better. Now that we have the history out of the way, we can look at just how the ad attacks Romney.
The first accusation is that Mitt was head of the company at the time of the fraud being committed: “Romney would manage the company and serve on its board of directors. . . . Under Romney’s direction, the company was making huge profits. . . . Under Romney, the number of tests skyrocketed. . . . Romney’s company was ordering unnecessary blood tests. . . .” (Source.) Pretty bold claims, using poor language, to suggest Romney had a direct hand in every aspect of Damon Corp.
This accusation is both true and false. Mitt Romney was on the board of directors, who did oversee company executives, but did not have direct control of any sort of decisions the company made. In fact, Bain Capital only held 10% of company ownership which made it a minority investor. It was not Romney’s company, and Bain was also managing other companies at the time it owned part of Damon Corp.
Next, we have the claims that Romney made different statements regarding the “scandal” at Damon Corp. The Boston Globed reported in October 10 of 1993 on the issue and that Romney had stated that the chief executive told the board in about 1992 “that all current practices at the company were now in conformity with government regulations and that in the past there may have been practices which would not be deemed appropriate.” Now let’s look at how Romney replied to then opponent Shannon O’Brien after being accused of his scant oversight at Damon.
Mitt Romney suddenly wanted to be a bastion of justice, despite statements that pointed to him being totally unaware of any activity that was fraudulent. After this accusation Romney replied that the board took “corrective action” before selling the company to Corning. That would be a great reply if it was, well, true. at least in the eyes of the law. According to prosecutors it was Corning who was given credit for cleaning up the fraud committed at Damon Corp.
Mitt continued to say that he was a whistle-blower on the entire issue. Telling reporters in 2002 that “we put a program in place to stop that immediately,” and “that’s how you blow a whistle.” Oh, you see, this entire time I was under the impression that whistle-blowing meant calling out a company for submitting false Medicare claims. I guess Mitt was more about internal whistle-blowing.
So that’s a point for the ad, and, if this issue gains traction, something that could very well be brought up again in upcoming debates. It would be a great point for Newt to make that Romney was back and forth on an issue that was happening to a company of which he was a board member. But can Newt use every point from this ad? Most likely not, because we come to the biggest, and probably flimsiest point.
The ad calls Romney out as selling the company to avoid a federal investigation while owning it. Wait, what? Apparently the coincidence that Bain sold Damon Corp to Corning in the same month that subpoenas were issued is grounds for accusing Mitt Romney of selling the company to avoid a federal investigation.
I think anyone sensible would know that a company that had been sold another company on those grounds would have probably sued Bain Capital hard for doing something like that. Not to mention that if the investigators believed Mitt or anyone associated with Bain was a part of this PR nightmare, that they would have had some sort of measure forced against them.
The accusation is just plain wrong and should be of no problem for Mitt. Regardless of this, Mitt still loses when it comes to this ad, in more ways than one. He was a part of a company that was committing fraud, and was flip-flopping on his stance with the company. We all know Mitt made money from this company, but that’s the whole reason Bain Capital bought Damon, to make money.
Now everyone can argue that this was Mitt’s obvious corporate greed showing through again, but I just can’t see it. I can see that Mitt really had poor excuses and apparently was unsure of what he did at the company at times. That really reminds of the latest debate where Romney was unaware of an ad he was running against Gingrich that later turned out to be endorsed by Mitt. I just can’t see any reason for either Democrats or Republicans to turn this into another campaign against Romney’s supposed evil use of capitalism.
Romney supporters will take this ad and turn it into another attack at Gingrich and say how he just won’t stop saying all these mean things about their beloved candidate. You know, even though Newt is not directly running this ad. But none of them are looking over their shoulder at the current ads being run by Mitt blatantly attacking Newt. It’s quite comical to actually read some of these people pointing the finger at Newt and comparing his tactics to Obama’s in terms of mudslinging, which is a whole other issue.
I don’t like Mitt Romney, I never have. Ever since I have seen who contributes to his campaign, how he acts in debates, and his overall attitude, I have not liked him. But this isn’t an issue that I feel will be able to gain traction with the upcoming debates. It might get a mention, but there just isn’t simply enough blame to definitively put on Romney. Either way, this is a huge ad that will leave Florida voters thinking.
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