Obamacare Causes a $1.5 Billion Flop in Chicago

Blue Cross parent lost $1.5 billion on individual health plans last year

ChicagoTribune: Year 2 of the Affordable Care Act was another financial flop for the Chicago-based parent of Blue Cross and Blue Shield of Illinois but hints of a turnaround are emerging.

Health Care Service Corp.’s financial losses in its individual business, which includes ACA plans, worsened in 2015. The company, which owns Blue Cross affiliates in Illinois and four other states, said it lost $1.5 billion in its individual business, up from $767 million in 2014, the first year of the health law’s state exchanges for buying coverage.

In anticipation of ACA-related losses in 2015, HCSC set aside nearly $400 million in 2014 to boost reserves to $680.9 million. The company spent $657.3 million of those reserves to cover the medical expenses associated with ACA plans in 2015.

HCSC is the latest large insurer to report losses on 2015 ACA business, a troubling sign for the state exchanges that are the heart of President Barack Obama’s health care overhaul. The far-reaching legislation has increased access to insurance coverage by expanding Medicaid and providing tax credits to subsidize the cost of insurance. Though the law has brought new customers to many insurers, much of that growth has been unprofitable, reflecting higher-than-expected medical expenses, regulatory challenges and unexpected shortfalls in federal risk-sharing programs.

UnitedHealthcare said it had losses of about $475 million on its 2015 ACA business. Aetna didn’t break out the loss on its individual health plans but said the operating losses on that line of business were 3 to 4 percent of the sales.

As a result of the losses, some insurers have considered withdrawing from the state marketplaces. Any exodus would threaten the stability of exchanges, making the online marketplaces less attractive to consumers.

“2015 was not a good year as far as the ACA went,” said Stephen Zaharuk, senior vice president at Moody’s Investors Service, who covers the health insurance industry. “Insurers had no idea what to expect.”

Still, no one expected the rollout of some of the biggest reforms in health care to be smooth. The exchanges are a new way to sell health plans to a population that largely was uninsured. Moreover, the law forbids insurers from using consumers’ medical history to set prices. Insurers were essentially groping in the dark.

But with two years of experience under their belts, insurers may be on more secure footing. HCSC, for one, didn’t book a reserve for potential 2016 losses on ACA plans, said Carl McDonald, a divisional senior vice president at the company. Zaharuk said that’s a good sign the company’s individual business may break even this year.

But HCSC officials are not so optimistic that the ACA plans will be profitable in 2016. Company spokesman Greg Thompson said in an email, “Our not booking a (reserve for ACA losses) for 2016 does not indicate nor imply an anticipated level of profitability for the year.”

Despite problems with its ACA-related business, HCSC narrowed its overall loss in 2015, according to a financial statement filed with the National Association of Insurance Commissioners. The filing is primarily an accounting of its fully insured lines of business.

The company reported a loss of $65.8 million, down from $281.9 million in 2014, reflecting higher earnings from its group health plans and an increase in investment income. Premium revenue rose 12.5 percent to $31.2 billion.

HCSC is among the biggest players in the individual market, with 1.64 million members at the end of last year, an increase of 3.4 percent, according to the filing. Nearly one-third of its enrollment is in Illinois, where Blue Cross sold roughly 80 percent of all 2015 individual policies in the state.

HCSC doesn’t disclose how much of its individual enrollment came from ACA plans sold on and off the exchanges. The individual market also includes policyholders who were allowed to keep the plans they had before the health law was implemented through 2017. Insurers blame that last-minute change by the Obama administration for keeping healthier people out of the exchanges.

When the exchanges launched, HCSC’s Blue Cross plans offered some of the lowest-priced policies and largest provider networks. The strategy was to provide cost-effective health care access, reflecting the company’s status as a not-for-profit, customer-owned insurer, analysts said.

However, medical costs and customers’ use of health care services on ACA-related plans were higher than anticipated. In 2014, HCSC’s key medical-loss ratio, which measures the share of premiums used to pay patient medical costs, rose to 86.5 percent, from 85 percent. Last year, the ratio jumped to 90.4 percent, according to the annual statement.

To manage the risk, HCSC followed in the footsteps of its for-profit competitors and made significant changes last year that were not consumer friendly.

The company raised 2016 premiums and redesigned policies to shift more costs to consumers. In Illinois and Texas, its two largest markets, HCSC eliminated its popular PPO plans that were more expensive but had the largest networks of hospitals and doctors. The decision sent Blue Cross customers scrambling to find other plans on the exchanges that included their doctors.

The company even took the hard line of walking away from business. In New Mexico, the company sought a rate increase averaging 51.6 percent, after it said it lost $19.2 million in 2014 on its individual business in the state. New Mexico insurance regulators rejected the request but were willing to approve a lower increase, according to published reports. Instead, HCSC pulled out of the New Mexico exchange.

The company also is cutting expenses. Thompson confirmed that HCSC has laid off employees in its information-technology department but declined to say how many were let go. Last month, the company eliminated commissions to independent brokers in Illinois, Texas and Oklahoma on sales of individual plans that take effect April 1 or later.

After eliminating commissions in Illinois, Blue Cross said it remains committed to “expanding access to quality health care to as many people as possible.” The changes are necessary to continue offering “sustainable” health plan options to members, the company said.

Despite signs of strain, the Obama administration says the exchanges are getting stronger. There were many new customers among the 12.7 million people who chose plans during open enrollment for 2016. In Illinois, enrollment grew nearly 12 percent to about 388,000.

Still, the administration has tweaked some regulations to benefit insurers. It placed a one-year moratorium for 2017 on the annual tax insurers pay, which is generally passed along to customers. The change will save some insurers hundreds of millions of dollars. For 2016, HCSC expects to pay a fee of $538.7 million.

The administration also has tightened some of the eligibility rules for people who sign up for insurance after the enrollment deadlines. Insurers have complained that people are waiting until they are sick to buy plans and then dropping coverage after their health problems are resolved, driving up costs and premiums.

 

Facebook’s Zuckerberg Against Hiring Americans

Record high 91.5 million people not included in labor force, 2014

Senate legislation to stop H1B Visa Abuse.

Zuckerberg to Supreme Court: Give Me More Cheap Foreign Labor

IR: In news that will surprise no one, Facebook’s Mark Zuckerberg urged the U.S. Supreme Court to allow for the implementation of President Obama’s executive amnesty programs. In a friend of the court brief (known as an amicus brief), Zuckerberg and 60 other business executives asked the Supreme Court to overturn the Fifth Circuit’s injunction blocking the Deferred Action for Parents of Americans (DAPA) and expanded Deferred Action for Childhood Arrivals (DACA) amnesty programs. “The federal government’s recent actions—clarifying its enforcement priorities and making temporary work authorization available to certain low-priority [illegal aliens]—strengthen the American economy by stabilizing the workforce, promoting job creation, reducing deficits and increasing federal, state and local tax revenues,” the brief claims. The business executives continue, “Preventing or delaying these policies will only withhold the tangible benefits of a more diverse, productive business environment.”

The message from Zuckerberg and Co. is clear: we want access to more cheap foreign labor. Rather than “stabilizing the workforce,” implementation of DAPA and expanded DACA would flood the labor market with at least 5 million illegal aliens who would receive work authorization under these amnesty programs. Instead, Zuckerberg and his business pals want to stabilize costs in the form of lower wages to these amnestied illegal aliens in order to further pad their pockets with even higher profits. Unsurprisingly, Zuckerberg’s brief fails to mention that the tech industry has experienced record profits yet wages have flat-lined for years.

Despite the ample supply of native workers at the high-skilled (there’s a glut of STEM degree holders) and low-skilled (workforce participation is at historical lows) levels, Zuckerberg continues to demand amnesty and increased guest worker programs simply because they are cheaper than hiring Americas.

The Supreme Court will hear arguments in U.S. v. Texas starting April 18. To learn more about the case, visit FAIR’s resource page here.

**** Then there is the Donald:

In the CNN March 10 debate…..hey Trump is there a right or wrong standard you won’t exploit? See the video here.

Donald Trump, facing questions in tonight’s CNN debate about the H1B visa program, said it’s a program he knows well. “It’s something that I frankly use and shouldn’t be allowed to use,” Trump said. “We shouldn’t have it — very, very bad for workers.””I’m a businessman and I have to do what I have to do,” Trump continued. “When it’s sitting there waiting for you, but it’s very bad. It’s very bad for business. And it’s bad for our workers and unfair for our workers.”

NYT:Donald J. Trump’s Mar-a-Lago Club in Palm Beach, Fla., describes itself as “one of the most highly regarded private clubs in the world,” and it is not just the very-well-to-do who want to get in.

Since 2010, nearly 300 United States residents have applied or been referred for jobs as waiters, waitresses, cooks and housekeepers there. But according to federal records, only 17 have been hired.

In all but a handful of cases, Mar-a-Lago sought to fill the jobs with hundreds of foreign guest workers from Romania and other countries.

In his quest for the Republican presidential nomination, Mr. Trump has stoked his crowds by promising to bring back jobs that have been snatched by illegal immigrants or outsourced by corporations, and voters worried about immigration have been his strongest backers.

But he has also pursued more than 500 visas for foreign workers at Mar-a-Lago since 2010, according to the United States Department of Labor, while hundreds of domestic applicants failed to get the same jobs.

*** Further:

Trump’s modeling agency broke immigration laws, attorneys say

CNN Investigations: Throughout his campaign, Trump has loudly opposed the practice of U.S. companies using foreign workers instead of Americans — specifically the highly-skilled workers brought to the United States through the controversial H-1B visa program.

“These are temporary foreign workers, imported from abroad, for the explicit purpose of substituting for American workers at lower pay. I remain totally committed to eliminating rampant, widespread H-1B abuse,” Trump said in a statement on his website, though he backtracked on his position during a recent Republican debate.

While this visa program is best known for bringing over technology workers like engineers and computer programmers, Trump’s own modeling agency has used the program for years, federal data shows. That’s because federal law surprisingly lumps in fashion models with these other specialized workers — though it’s the only job that doesn’t require higher education. (Instead, models must have “distinguished merit and ability.”)

And now, the use of this visa by Trump Model Management, founded by Trump in 1999, is being questioned.

The agency is currently battling a proposed class action lawsuit filed by Jamaican model Alexia Palmer, who was brought to the country with an H-1B visa.

The suit alleges that the agency recruits foreign models with promises of wages that never materialize and defrauds the U.S. government on visa applications. Palmer is currently the only plaintiff and the suit has not yet been approved as a class-action.

In her case, Palmer says she was paid only a few thousand dollars over three years despite being lured with the promise of more than $200,000 in earnings in that same time period.

That salary was also what was listed by Trump Model Management as part of the visa application.

“Ms. Palmer will receive compensation of at least $75,000 per year,” the agency’s president Corinne Nicolas said in a letter to immigration officials. “She is a model whose services have been in great demand, and whose proposed temporary presence in the United States has stirred great anticipation by Trump Model Management and its clientele.” (Nicolas did not respond to a request for comment).

alexia palmer court doc

Government data analyzed by Howard University professor Ron Hira shows that since 2008, Trump’s agency has successfully brought over around 30 foreign models — from countries like Brazil, Latvia and China — using the H-1B program. Almost half of these applications indicated the same $75,000 annual salary, while others went as high as $416,000.

CNNMoney asked a dozen attorneys and other immigration experts to review facts and documents from the case, and the vast majority said Trump’s agency appears to have violated immigration law.

“It seems pretty clear to me that there was a violation… and a pretty egregious violation,” said New York immigration attorney Jeffrey Feinbloom.

Experts say that the U.S. government requires that full-time H-1B workers like Palmer be paid a high enough wage that they aren’t being exploited or displacing American workers — regardless of how much they end up working.

Experts say that the firm was required by law to pay the amount stated on Palmer’s visa — in this case, $75,000 a year. Even more egregious, they say, was that the Trump agency didn’t pay the “prevailing wage” determined by the U.S. government (which is based on the industry and location).

The U.S. Citizenship and Immigration Services agency (USCIS) confirmed that a sponsoring company “must pay the actual wage or the prevailing wage, whichever is higher” — meaning it was illegal to pay Palmer below either listed wage. “Employers may never pay below the prevailing wage,” the agency said in a statement.

For Palmer, the prevailing wage acknowledged by the Trump agency on the visa application was roughly $45,000 a year. Instead, she made less than $30,000 over three years from modeling jobs for clients ranging from Conde Nast to Saks Fifth Avenue.

And she didn’t even get to keep that full amount. It was almost entirely eaten up by taxes, a 20% commission to the Trump agency, administrative fees and modeling-related costs like $75 walking lessons and a $200 dermatology visit.

In the end, Palmer netted $4,985 over three years (which included cash advances and a $3,880.75 check), a figure acknowledged by the Trump agency. Much more here.

Silenced workers who lost jobs to H-1B visa abuse (quietly) speak out

WashingtonExaminer: The Senate Judiciary Committee recently held a hearing into abuses of the H-1B skilled guest worker visa program. Lawmakers heard experts describe how the use of foreign workers has come to dominate the IT industry, with many tech giants using the program to fire well-paid current workers and replace them with workers from abroad at significantly lower pay.

“The current system to bring in high-skill guest workers … has become primarily a process for supplying lower-cost labor to the IT industry,” two experts who testified at the hearing, Howard University’s Ron Hira and Rutgers’ Hal Salzman, wrote recently. “Although a small number of workers and students are brought in as the ‘best and brightest,’ most high-skill guest workers are here to fill ordinary tech jobs at lower wages.”

Exhibit A in the abuse of H-1Bs was the case of Southern California Edison, which recently got rid of between 400 and 500 IT employees and replaced them with a smaller force of lower-paid workers brought in from overseas through the H-1B program. The original employees were making an average of about $110,000 a year, the committee heard; the replacements were brought to Southern California Edison by outsourcing firms that pay an average of between $65,000 and $75,000.

 

 

 

Expectation of Lynch to Prosecute Hillary Dashed?

Would there be major chaos and embarrassment if FBI Director James Comey resigned over the Hillary Server-gate scandal? Is Comey at odds with his boss Loretta Lynch? He threatened to resign during the Bush administration….he is his own principled man.

Comey’s FBI makes waves

TheHill: The aggressive posture of the FBI under Director James Comey is becoming a political problem for the White House.

The FBI’s demand that Apple help unlock an iPhone used by one of the San Bernardino killers has outraged Silicon Valley, a significant source of political support for President Obama and Democrats.

Comey, meanwhile, has stirred tensions by linking rising violent crime rates to the Black Lives Matter movement’s focus on police violence and by warning about “gaps” in the screening process for Syrian refugees.

Then there’s the biggest issue of all: the FBI’s investigation into the private email server used by Hillary Clinton Obama’s former secretary of State and the leading contender to win the Democratic presidential nomination.

A decision by the FBI to charge Clinton or her top aides for mishandling classified information would be a shock to the political system.

In these cases and more, Comey — a Republican who donated in 2012 to Mitt Romney — has proved he is “not attached to the strings of the White House,” said Ron Hosko, the former head of the FBI’s criminal investigative division and a critic of Obama’s law enforcement strategies.

Publicly, administration officials have not betrayed any worry about the Clinton probe. They have also downplayed any differences of opinion on Apple.

But former officials say the FBI’s moves are clearly ruffling feathers within the administration.

With regards to the Apple standoff, “It’s just not clear [Comey] is speaking for the administration,” said Richard Clarke, a former White House counterterrorism and cybersecurity chief. “We know there have been administration meetings on this for months. The proposal that Comey had made on encryption was rejected by the administration.”

Comey has a reputation for speaking truth to power, dating back to a dramatic confrontation in 2004 when he rushed to a hospital to stop the Bush White House from renewing a warrantless wiretapping program while Attorney General John Ashcroft was gravely ill. Comey was Ashcroft’s deputy at the time.

That showdown won Comey plaudits from both sides of the aisle and made him an attractive pick to lead the FBI. But now that he’s in charge of the agency, the president might be getting more than he bargained for.

“Part of his role is to not necessarily be in lock step with the White House,” said Mitch Silber, a former intelligence official with the New York City Police Department and current senior managing director at FTI Consulting.

“He takes very seriously the fact that he works for the executive branch,” added Leo Taddeo, a former agent in the FBI’s cyber division. “But he also understands the importance of maintaining his independence as a law enforcement agency that needs to give not just the appearance of independence but the reality of it.”

The split over Clinton’s email server is the most politically charged issue facing the FBI, with nothing less than the race for the White House potentially at stake.

Obama has publicly defended Clinton, saying that while she “made a mistake” with her email setup, it was “not a situation in which America’s national security was endangered.”

But the FBI director has bristled at that statement, saying the president would not have any knowledge of the investigation. Comey, meanwhile, told lawmakers last week that he is “very close, personally,” to the probe.

Obama’s comments reflected a pattern, several former agents said, of the president making improper comments about FBI investigations. In 2012, he made similarly dismissive comments about a pending inquiry into then-CIA Director David Petraeus, who later pleaded guilty to a misdemeanor charge for giving classified information to his biographer, with whom he had a personal relationship.

“It serves no one in the United States for the president to comment on ongoing investigations,” Taddeo said. “I just don’t see a purpose.”

Hosko suggested that a showdown over potential criminal charges for Clinton could lead to a reprise of the famous 2004 hospital scene, when Comey threatened to resign.

“He has that mantle,” Hosko said. “I think now there’s this expectation — I hope it’s a fair one — that he’ll do it again if he has to.”

Comey’s independent streak has also been on display in the Apple fight, when his bureau decided to seek a court order demanding that the tech giant create new software to bypass security tools on an iPhone used by Syed Rizwan Farook, one of the two terrorist attackers in San Bernardino, Calif.

Many observers questioned whether the FBI was making an end-run around the White House, which had previously dismissed a series of proposals that would force companies to decrypt data upon government request.

“I think there’s actually some people that don’t think with one mindset on this issue within the administration,” said Sen. Tom Carper (D-Del.), the Senate Homeland Security Committee’s top Democrat, at a Tuesday hearing. “It’s a tough issue.”

While the White House has repeatedly backed the FBI’s decision, it has not fully endorsed the potential policy ramifications, leaving some to think a gap might develop as similar cases pop up. The White House is poised to soon issue its own policy paper on the subject of data encryption.

“The position taken by the FBI is at odds with the concerns expressed by individuals [in the White House] who were looking into the encryption issue,” said Neema Singh Guliani, a legislative counsel with the American Civil Liberties Union (ACLU).

This week, White House homeland security adviser Lisa Monaco tried to downplay the differences between the two sides. The White House and FBI are both grappling with the same problems, she said in a discussion at the Council on Foreign Relations.

“There is a recognition across the administration that the virtues of strong encryption are without a doubt,” Monaco said on Monday. “There is also uniformity about the recognition that strong encryption poses real challenges.”

But former officials see Comey as wanting to blaze his own trail on the topic.

“I have been very surprised at how public and inflammatory, frankly, the FBI and the Justice Department’s approach has been on this,” said Chris Finan, a former National Security Council cybersecurity adviser.

“That doesn’t tend to be the administration’s preferred approach to handling things.”

The Republican National Committee is suing Hillary and they are on the right track in one case for certain, those communications in her mobile devices.

FreeBeacon: he RNC is requesting communications between Clinton and her key aides, including Bryan Pagliano, her former IT staffer. Pagliano has reportedly received a limited immunity deal from the Department of Justice as part of its investigation into the transmission of classified information over Clinton’s private email server.

The committee is also seeking correspondence between State Department officials and the Clinton campaign that took place after Clinton stepped down from the department.

According to the RNC, it originally submitted public records requests for these documents last October and December, but the State Department has yet to turn over the records. The RNC filed the lawsuits on Wednesday in the U.S. District Court for the District of Columbia.

“The Obama Administration has failed to comply with records requests in a timely manner as required by law,” RNC chairman Reince Priebus said in a statement on Wednesday. “For too long the State Department has undermined the public and the media’s legitimate right to records under the Freedom of Information Act, and it’s time it complies with the law. If this administration claims to be the ‘most transparent in history,’ and Clinton the ‘most transparent person in public life,’ then they should prove it, release these records, and allow the American people to hold her accountable.”

The State Department is currently facing a number of legal proceedings seeking documents from Clinton’s tenure. The watchdog group Citizens United filed another lawsuit against the department on Monday requesting emails between Dennis Cheng, Clinton’s deputy chief of protocol, and Teneo Holdings, a consulting company run by Clinton confidante Doug Band.

Two lawsuits have been delayed due to the State Department’s discovery of thousands of previously unsearched documents from the executive secretary’s office, the Washington Free Beacon reported last week. The State Department said it could take until next fall to process the newly discovered records and turn them over to the plaintiffs.

AG Loretta Lynch Dodges Questions About Hillary Clinton Email Investigation

PJM: Attorney General Loretta Lynch suggested Wednesday that the Justice Department would not be obligated to pursue charges against Hillary Clinton for her email infractions even if the FBI recommends criminal charges.

 

Sen. John Cornyn (R-TX) brought up the topic during a Senate Judiciary Committee hearing on Wednesday:

“If the FBI were to make a referral to the Department of Justice to pursue a case by way of indictment and to convene a grand jury for that purpose, the Department of Justice is not required by law to do so, are they — are you?” Cornyn asked.Lynch didn’t answer directly, but seemed to indicate the department has some wiggle room, and can consult with officials before deciding what to do.

“It would not be an operation of law, it would be an operation of procedures,” Lynch said in reply. She added that the decision to pursue a criminal case would be “done in conjunction with the agents” involved in the investigation. “It’s not something that we would want to cut them out of the process.”

Lynch declined to answer Cornyn’s questions about the decision to grant immunity to Bryan Pagliano, the former Clinton aide who set up the private “homebrew” server at her home in Chappaqua, NY. Asked Cornyn:

If in fact this was immunity granted by a court, that had to be done under the auspices and with the approval of the Department of Justice, which you head.

Lynch answered:

We don’t discuss the specifics of any ongoing investigation. With respect to the procedure relating to any specific witness, I would not be able to comment. … With respect to Mr. Pagliano or anyone who has been identified as a potential witness in any case, I’m not able to comment on the specifics.

Later, Senator Lindsey Graham (R-SC) asked Lynch about comments made by White House Press Secretary Josh Earnest in January that downplayed the FBI investigation. Earnest had told reporters that “some officials” had said she was “not the target of the investigation,” and that an indictment did not seem to be the direction in which the case was trending:

“So when Josh Earnest speaks about the investigation and talks about, basically, to reassure the American people that this is no big deal, do you know where he gets that information from?” Graham asked.“Senator, I do not,” Lynch said.

“Would you tell him that he should just stay silent?” Graham pressed.

“Certainly it’s my hope when it comes to ongoing investigations that we would all stay silent,” Lynch responded.

In January, Fox News’ chief intelligence correspondent Catherine Herridge reported that her sources in the DOJ and FBI were “super pissed off” about Earnest’s comments.

 

Operating Military Drone Flights over U.S.

Pentagon admits operating military drone flights over U.S.

WashingtonTimes: The Pentagon has deployed spy drones to fly over U.S. territory for non-military missions over the past decade, but the flights were few and lawful, according to a new report.

The domestic drone flights have occurred less than 20 times between 2006 and 2015 and were always conducted in compliance with existing laws, according to the report by the Pentagon Inspector General which was made public under a Freedom of Information Act request, according to USA today.

The Pentagon did not provide details of the domestic spy missions, but said it takes the issue of military drone flights over America soil “very seriously.”

The list of domestic drone operations was not made public in the report, but some examples were cited.

In one case, an unnamed mayor asked the Marine Corps to use a drone to identify potholes in the mayor’s city. The Marines denied the request because obtaining the required approval from the defense secretary to “conduct a UAS mission of this type did not make operational sense.”

The issue of unmanned aerial surveillance drone flights over the U.S. first arose in 2013 when then-FBI director Robery Mueller told a Congressional committee that the bureau employed spy drones to aid in investigations, but in a “very, very minimal way, very seldom.”

According to the report, which was completed in March 2015, the Pentagon established guidance in 2006 governing when and whether drones could be used domestically.

The interim policy allowed spy drones to be used for homeland defense purposes and to assists civil authorities.

However, the policy said that any use of military spy drones for civilian authorities must be cleared by the Secretary of Defense or someone delegated by the secretary. The report found that the defense secretaries never delegated that responsibility, according to USA Today.

 Truthseeker/UK

But the desire for domestic drone operations is growing, according to the report. Military units that operate the drones told inspectors that they would like more opportunities to fly them on domestic missions, even just to give pilots more experience.

Shortly before the report was completed a year ago, the Pentagon issued a new policy on the use of spy drones requiring the defense secretary to approve all domestic drone operations.

Unless permitted by law and approved by the secretary, drones “may not conduct surveillance on U.S. persons,” under the new policy.

**** Is it is nefarious? Very doubtful:

Plotted out all the information we’ve (Electronic Frontier Foundation) received about applications to fly domestic drones on our Map of Domestic Drone Authorizations. (Clicking this link will serve content from Google.)

US Federal Agencies:

 

WH: All FOIA Requests Require WH Scrutiny

Being snarky, but just how many in the Obama administration got the early heads up….Hillary? Kerry? Holder? Jackson? Rahm?

It Took a FOIA Lawsuit to Uncover How the Obama Administration Killed FOIA Reform

By Jason Leopold

The Obama administration has long called itself the most transparent administration in history. But newly released Department of Justice (DOJ) documents show that the White House has actually worked aggressively behind the scenes to scuttle congressional reforms designed to give the public better access to information possessed by the federal government.

The documents were obtained by the Freedom of the Press Foundation, a nonprofit organization that supports journalism in the public interest, which in turn shared them exclusively with VICE News. They were obtained using the Freedom of Information Act (FOIA) — the same law Congress was attempting to reform. The group sued the DOJ last December after its FOIA requests went unanswered for more than a year.

The documents confirm longstanding suspicions about the administration’s meddling, and lay bare for the first time how it worked to undermine FOIA reform bills that received overwhelming bipartisan support and were unanimously passed by both the House and Senate in 2014 — yet were never put up for a final vote.

Moreover, a separate set of documents obtained by VICE News in response to a nearly two-year-old FOIA request provides new insight into how the Securities and Exchange Commission and the Federal Trade Commission (FTC) also tried to disrupt Congress’s FOIA reform efforts, which would have required those agencies to be far more transparent when responding to records requests.

The disclosures surface days before Sunshine Week, an annual celebration of open government, and a renewed effort by the House and Senate to improve the FOIA by enacting the very same reforms contained in the earlier House and Senate bills — the seventh attempt in at least 10 years by lawmakers to amend the transparency law. But the administration is again working to derail the legislation, according to congressional staffers.

The FOIA Oversight and Implementation Act of 2014, co-sponsored by then–House Oversight and Government Reform Committee Chairman Darrell Issa and ranking member Elijah Cummings, would have codified into law Obama’s presidential memorandum, signed on his first day in office in 2009, that instructed all government agencies to “adopt a presumption in favor of disclosure, in order to renew their commitment to the principles embodied in FOIA, and to usher in a new era of open Government.” (Attorney General Eric Holder issued a set of guidelines to federal agencies a couple of months later that explained how the presumption of disclosure should be implemented.)

Additionally, the legislation called for the implementation of a centralized online portal, overseen by the Office of Management and Budget (OMB), to handle all FOIA requests and required government agencies to update their FOIA regulations. The bill unanimously passed by a vote of 410-0, one of the few pieces of legislation during President Barack Obama’s tenure to receive bipartisan support.

But the administration “strongly opposed passage” of the House bill and opposed nearly every provision that would have made it easier for journalists, historians, and the public to access government records. The White House claimed it would increase the FOIA backlog, result in astronomical costs, and cause unforeseen problems with processing requests, according to a secret six-page DOJ set of talking points turned over to the Freedom of the Press Foundation along with 100 pages of internal DOJ emails about the FOIA bill.

“The Administration views [the House bill] as an attempt to impose on the Executive Branch multiple administrative requirements concerning its internal management of FOIA administration, which are not appropriate for legislative intervention and would substantially increase costs and cause delays in FOIA processing,” the talking points say. “The Administration believes that the changes… are not necessary and, in many respects, will undermine the successes achieved to date by diverting scarce processing resources.”

US Justice Department talking points on the FOIA bill that went nowhere despite bipartisan support in Congress

Remarkably, the talking points go on to say that the DOJ opposed the administration’s own instructions that called on agencies to act with the “presumption of openness” as stipulated in Holder’s guidelines and Obama’s presidential memo. The DOJ, they said, would “strongly oppose” any attempts to codify it into law. Instead, the DOJ touted a December 2013 “National Action Plan” to “modernize” FOIA and make it more efficient, saying that effort went far enough. But that had little to do with forcing the government to be more transparent.

“If this memo reflects thinking of the White House, than I have to question their commitment to transparency,” said Anne Weismann, the executive director of The Campaign for Accountability and a leader in the effort to reform FOIA. “The notion that these changes are going to increase the FOIA backlog, increase costs, and increase problems with FOIA is ludicrous. The breadth of their objections and lack of evidence to back up their claims and their absolute opposition to codifying Obama’s memo expose the lie that is the administration’s policy…. If the president and this administration believes in their stated FOIA policy they should be supporting an effort to codify it.”

Notably, the DOJ’s talking points also shed light on the ongoing turf war between the Office of Information Policy and the independent Office of Government Information Services (OGIS), also known as the FOIA ombuds office, which provides requesters with mediation services. Congressional efforts to expand OGIS’s role, as cited in the bill, were interpreted by DOJ to be an encroachment on its powers. The DOJ went so far as to claim that empowering another agency to improve FOIA administration was unconstitutional.

DOJ spokeswoman Beverley Lumpkin told VICE News that the Justice Department is “committed to the Freedom of Information Act and dedicated to improving transparency and open government.” When asked about DOJ’s opposition to FOIA reform, she said, “It is not uncommon for subject matter experts to provide feedback on technical aspects of proposed legislation and potential unintended consequences.”

‘The FOIA reform bill was incredibly modest and had the unanimous support of both parties — something that almost never happens.’

When the Senate took up its version of the 2014 FOIA reform bill, co-sponsored by Democratic Senator Patrick Leahy and Republican Senator John Cornyn, it was much stronger than the House’s version. Importantly, the Senate bill would have transformed the most overused and abused FOIA exemption — there are nine total — that government agencies routinely cite to deny requesters access to records: Exemption 5, also known as the deliberative process privilege, which covers “inter-agency or intra-agency memorandums or letters,” drafts, and attorney-client records.

Exemption 5 is referred to by open government advocates as the “Withhold it because you want to exemption.”

The discretionary exemption has been cited to justify the withholding of countless documents, such as a half-century old CIA history of the Bay of Pigs invasion and an internal CIA study on the agency’s torture program, on grounds that they are not “final decisions.” The reform bill would have authorized the release of records that fell under Exemption 5 after 25 years and it would have introduced a “foreseeable harm” standard, requiring government agencies to demonstrate the harm that would result from the disclosure of records; currently, they need only cite a specific FOIA exemption to justify the withholding of records. It too was unanimously passed by the Senate.

But everything died in the House in December 2014 after then–Speaker John Boehner failed to bring up the final version for a vote. Rumors soon began to surface that the DOJ, the SEC, and the FTC, prodded by banking lobbyists, worked behind the scenes and lobbied lawmakers not to bring the legislation up for a vote. The DOJ used the same talking points to sound alarm bells about the Senate bill.

“This FOIA reform bill was incredibly modest, had already been watered down, and had the unanimous support of both parties — something that, in today’s political climate, almost never happens,” said Trevor Timm, executive director of the Freedom of Press Foundation. “Transparency advocates have been very cynical of the Obama administration’s claim that they’re the ‘most transparent ever’… but the fact that they opposed virtually every aspect of this bill is sadly a new low.”

Tracking down hard evidence to back up claims about the administration’s intervention proved to be extremely difficult. So the Freedom of the Press Foundation and VICE News used the very law at issue — FOIA — to obtain answers.

“It took the Freedom of Information Act to provide evidence of what many felt but could not prove: that the Department of Justice ‘strongly opposes’ fixing the Freedom of Information Act,” said Nate Jones, the director of the FOIA project at George Washington University’s National Security Archive. “The released talking points make clear that on the one hand, DOJ ensures agencies do the bare minimum to comply with the FOIA’s requirements and paints a misleadingly rosy picture during congressional testimony, while [on] the other it secretly works to block Congress’s attempts to release more records to more people more quickly.

“It’s no wonder FOIA requests take decades to process and tens of thousands of pages are improperly withheld when the DOJ — the agency envisioned in 1966 to be the watchdog tasked to “encourage compliance” — is actually working to stymie reform.”

Last year, in testimony before the House Oversight and Government Reform Committee, Melanie Pustay, who heads the DOJ’s Office of Information Policy (OIP), which is supposed to ensure that all government agencies adhere to Holder’s guidelines, told lawmakers that the DOJ is doing a great job with FOIA. She graded the agency five out five on “presumption of openness.”

“Five out of five, on an effective system in place for responding. Proactive disclosure. Are you kidding me?” Committee Chairman Jason Chaffetz asked Pustay. “The Department of Justice gives themselves a five out of five on proactive disclosure. You really think anybody in the world believes the Department of Justice is the most — they’re at the top of their game, they got an A-plus, five for five? Do you really believe that?”

“I do,” Pustay responded. “I absolutely do.”

“You live in la-la land,” Chaffetz responded. “That’s the problem.”

[I also testified before the committee last year and discussed the problems with the FOIA, pointing to OIP’s failure to enforce Holder’s guidelines.]

Emails that were included with the talking points turned over to the Freedom of the Press Foundation also show that most congressional staffers were not heeding DOJ’s dire warnings and did not bow to the intense lobbying campaign by DOJ officials in the Office of Legislative Affairs about what would happen if the bill were passed.

But one lawmaker made a fuss: Senator Jeff Sessions. The deputy chief counsel for Sessions, Rachael Tucker, who had placed a hold on the 2014 bill, said the Republican lawmaker was concerned that reforms to Exemption 5 would harm attorney-client privilege if documents potentially including that info could no longer be withheld after 25 years. The email makes clear that Sessions’ opposition was partially the result of the DOJ’s lobbying, and that the Senate would not support any attempt by Sessions to try and strip the provision from the bill.

A Senate Judiciary Committee report from February 2015 noted that the DOJ and the National Association of Assistant United States Attorneys contacted Sessions and objected to the FOIA reform legislation, specifically the overhaul to Exemption 5. Moreover, during a House Oversight and Government Reform Subcommittee hearing that month, Representative Elijah Cummings said the DOJ had contacted lawmakers to voice opposition to the FOIA reform bill.

Tucker emailed an official at the DOJ’s Office of Legislative Affairs and asked, “I’m wondering if extending the [25-year] sunset would be something DOJ could support. Maybe making it 40 years or something? Do you have any suggestions or thoughts?”

A response from DOJ, if there was one, was not included in the cache of documents. Sessions eventually relented and removed the hold and voted in favor of the Senate bill. But congressional sources told VICE News he’s now the lone lawmaker who placed a hold on the new version of the Senate FOIA reform bill, raising the very same concerns about Exemption 5 that he did two years ago. It’s unclear why he is holding up passage of the bill again. A spokesperson for the senator did not respond to requests for comment.

VICE News filed separate FOIA requests with the DOJ, FTC, and SEC seeking documents about conversations officials may have had with members of Congress about the 2014 FOIA reform bills. It took more than a year to obtain responsive records from the agencies. In the case of the FTC, it required VICE News to file a formal appeal challenging the integrity of the agency’s search after the FTC initially turned over just a handful of documents. Eleven months after we lodged the appeal, the FTC said it found an additional 900 pages of emails and produced those.

As if to underscore why Congress has been aggressive in its attempt to reform Exemption 5, the FTC redacted 95 percent of the emails — citing Exemption 5.

Still, there are a few noteworthy takeaways. The emails reveal that the the regulatory agency raised red flags about the FOIA reform bill, issuing warnings to lawmakers — notably Democratic Senator Jay Rockefeller — about how its passage would stymie the FTC and SEC’s ability to protect American consumers from financial fraud and other abuses.

Before the Senate sent its version of the FOIA reform bill to the floor for a full vote, Rockefeller placed a hold on the legislation, claiming that unnamed “experts” with whom he’d consulted told him parts of the bill would “greatly aid corporate defendants and undermine law enforcement efforts,” one of his staffers told VICE News at the time.

The emails reveal that Rockefeller reached out to government agencies and requested they articulate their concerns about the bill in a joint letter, suggesting there was far more coordination between the executive branch and Congress on efforts to thwart passage of the bill than had been previously reported.

Additionally, the emails show that Jeanne Bumpus, director of the FTC’s Office of Congressional Relations, wrote to her colleagues and said she contacted Leahy and left messages for his staff “reiterating serious concerns and seeking more information abut the timing and content of the [FOIA] bill to be considered.”

A spokesperson for Leahy, who has historically been a staunch advocate for transparency, said the Senator was unavailable to comment. When the Senate bill was not put up for a vote, he released a statement saying, “In a political climate as divided as this, I had hoped that we would come together in favor of something as fundamental to our democracy as the public’s right to know.”

Jones told VICE News that the the emails “confirm what we knew at the time: that some at the FTC and other ‘independent regulatory agencies’ with little knowledge of FOIA used vague, incorrect warnings at the last minute to try to kill the FOIA bill.”

“Throughout the correspondence — ironically marred with huge exemption 5 redaction boxes — there is not a single tangible example of how this bill could harm the FTC or other agencies mission,” Jones said. “[There is] just vague scare phrases such as ‘compromise public interest investigatory or litigation strategies’ or ‘make it more difficult to obtain information from sources.'”

Prior to the passage of the Senate bill, a handful of lawmakers who sit on the Senate Banking Committee said they were informed that the reform bill would loosen the FOIA’s Exemption 8, which protects information pertaining to financial regulatory institutions. But it was all a ruse, prompted by the SEC, to force the Senate to specifically state on the record that Exemption 8 would not lead to the release of more information about financial institutions that would otherwise be protected from disclosure under Exemption 8.

In one email VICE News obtained, the SEC’s chief FOIA officer, John Livornese, remarked to a colleague after the Senate memorialized its position in a report, “Just when you thought exemption 8 couldn’t get any stronger,” meaning the SEC could continue to withhold information under that exemption.

Chaffetz, who co-sponsored the latest FOIA reform bill passed by the House in January, told VICE News in a statement that the Obama administration’s promises of transparency have never materialized.

“President Obama promised the ‘most transparent’ administration in history. I see no evidence to support that statement,” Chaffetz said. “Time and time again this administration has aggressively thwarted efforts for a more open and transparent government.”

*****

If you are so inclined to review over 1000 responsive pages and names with text, click here.