Feinstein's Fury (one of Project Censored's 25 most underreported stories of 2007)

29 weeks later: Following the fallout from Metro's investigation of Sen. Feinstein.

I AM PLEASED to announce that my national exposé of Sen. Dianne Feinstein's conflict of interest has been selected as one of the 25 most underreported stories of 2007 by Project Censored, headquartered at Sonoma State University. I cherish this award because it means I am doing my job as an investigative reporter. Stories that the mainstream media ignore often reveal truths about our system of governance that editors at corporate daily newspapers work overtime to cover up. In this case, the cover-up was abetted by the editor and publisher of The Nation, Katrina vanden Heuvel, after The Nation's nonprofit investigative fund bankrolled my investigation of Feinstein. The story was headed for the cover of that weekly magazine shortly before the 2006 elections when vanden Heuvel, a wealthy Democratic Party partisan, spiked it. Subsequently, vanden Heuvel wrote an editorial praising women leaders of the newly empowered Democratic Party, mentioning Feinstein on a positive note.

In the kill memo, The Nation's investigative editor, Bob Moser, who had worked closely with me on the project, wrote that I had done a "solid job," but that the magazine liked to have a political "impact" and since Feinstein was "not facing a strong challenge for re-election," they were not going to print the story. Moser claimed the story had no "smoking gun," which totally amazes me, since I had reported that Michael R. Klein, the vice chairman of Perini Corp., a company owned by Feinstein's husband, Richard C. Blum, regularly gave Feinstein lists of Perini projects impacted by Senate legislation. As chairwoman of the MILCON appropriations subcommittee, Feinstein regularly vetted and approved Perini's military construction projects. That gun wasn't smoking, it was on fire!

Fortunately, Metro and its sister papers had the guts to print the Feinstein story. I wrote three follow-ups: a look at her husband Richard C. Blum's war-contracting business partner, Michael R. Klein and the nonprofit Sunlight Foundation he set up last year with a $3.5 million donation; an exposé of Blum's conflict of interest as a regent of the University of California; and a news column on the senator's abrupt resignation from the Appropriations Military Construction subcommittee, where she committed her unethical behavior. In March, left- and right-wing bloggers by the thousands started calling for a congressional investigation of Feinstein. Michael Savage and Rush Limbaugh did radio segments on my findings. Because I do not associate with demagogues, I declined to appear on their shows. Fox's Bill O'Reilly invited me to talk about Feinstein on his show, but disinvited me after I promised that the first sentence out of my mouth would cast Feinstein as a neoconservative war-profiteer just like him and his boss, Rupert Murdoch.

As the storm of conservative outrage intensified, political reporter Joe Conason of the Nation Institute telephoned and asked to have the sentence thanking the Nation Institute for its funding removed from my stories because, he said, vanden Heuvel did not want The Nation brand to be positively associated with Limbaugh. I informed Conason that I am required to credit the Nation Institute under the terms of our contract, period.

After the stories appeared, my editors and I received a stream of threatening emails from Klein—who until recently was a partner in the powerful WilmerHale law firm. But since Klein could show no errors of fact in my reporting, we declined his request for a retraction. Soon, the story crested a Google wave of bloggers wondering why the mainstream media was ignoring the Feinstein scandal. In April, two dozen daily newspapers throughout the United States ran a McClatchy wire service article about the blogger tempest. The story observed that no one had found any factual faults in my reporting, but it did not report the details of Feinstein's conflict of interest. Consequently, without calling me for comment or finding any errors in my reportage, the liberal group Media Matters attacked me on its website as being a right-wing pawn. I parried Media Matters' malicious rant with hard facts and the authors were compelled to retract substantial errors of their own.

In April, Code Pink held a demonstration in front of Feinstein's San Francisco mansion, demanding that she return war profits to the Iraqi people. And on April 30, The Hill newspaper in Washington, D.C., ran an op-ed by a conservative pundit quoting from my story and (unfairly) comparing Feinstein to convicted felon and former Congressman Randy "Duke" Cunningham. Shortly thereafter, without contacting me for comment, an employee of the Sunlight Foundation posted a "critique" of my story on the foundation's website that was loaded with personal insults, but contained no factual substance. Not coincidentally, Feinstein's press office distributes, upon request, an almost identically worded "rebuttal," which, while citing no factual errors in my reportage, insults my personal integrity. Such "press" additionally does not address the damning fact, that after reviewing the results of my investigation, four nonpartisan D.C.-based ethics experts declared that the senator had a serious conflict of interest.

In my original story, I quoted Jennifer Gore, the spokeswoman for the Project on Government Oversight (POGO) in Washington, D.C. For attribution to POGO's executive director, Gore said, "The paper trail showing Sen. Feinstein's conflict of interest is irrefutable." But Gore's comment was made before I found out about Klein's role. It turns out that POGO receives finding from the Sunlight Foundation. After my article appeared with the damning information about Klein, Gore claimed that she had not said "irrefutable."

I offered to give her a copy of the tape recording of our 90-minute interview in which she indisputably uses "irrefutable" and goes on at great length about the egregiousness of Feinstein's ethics, but she declined.

On July 1, the Copley News Service reported on the fallout from my story. Seduced by the promise of mainstream coverage for this important story, I walked Copley reporter Marcus Stern through my research document by document. But instead of reporting on Feinstein's failure to recuse herself from acting on matters that substantially affected her personal wealth, Stern framed his piece in accordance with the spin coming out of Feinstein's office: that I had accused the senator of feloniously steering contracts to Perini and URS. That is not what I reported; that is a straw issue created by public relations experts to confuse people about what was really reported. Somehow, Stern failed to mention Klein's role in the ethical lapse. Incredibly, Stern concluded that the public record is so "opaque" that "there is little the public can do but trust Feinstein when she denies helping her husband's companies." In fact, the record is anything but opaque.

Tom Fitton, president of the conservative group Judicial Watch, agrees. His national organization, which files lawsuits regarding governmental ethic violations, has mounted its own investigation of Feinstein's conduct using the Freedom of Information Act (FOIA). It takes time and lawyers to pry FOIA documents out of the federal bureaucracy—they are not generally inclined to do so. I did not go that route in my investigation, relying on more easily accessible public records.

I have suggested that Fitton's forensic specialists compare the defense contracts that Blum's companies received through the military construction appropriations process with the forms that the defense department submitted to Feinstein's MILCON subcommittee as budget justifications. These documents lay out the details of every Perini and URS project that Feinstein approved as chairperson or ranking member of MILCON, and should leave little doubt about what the senator and her MILCON staffers knew and when they knew it.

Medicare Auditors Blasted
Capps Questions Tactics of Acute-Care Auditors
Thursday, August 9, 2007
By Nick Welsh (Contact)

Paperwork nightmare: Dr. Cheryl Ellis (left) and Melinda Staveley of the Rehab Institute show paperwork required by “bounty hunter” auditors. Photo: Paul Wellman

Congressmember Lois Capps and six other members of the California congressional delegation met on August 1 to question the conduct of a private company that’s been giving fits to the Rehabilitation Institute of Santa Barbara and other California providers of acute medical care, or short-term treatment for a severe or debilitating illness. Auditing firm PRG-Schultz International (PRG) was hired to examine the Medicare- and Medicaid-funded acute-care cases over the past five years and determine whether the patients should have been authorized for treatment. The pilot program was designed to ensure that limited federal Medicare and Medicaid dollars aren’t spent to treat acute-care patients with high-end treatments when cheaper therapies could suffice.

Thus far, PRG has reviewed 314 cases at the Rehab Institute and concluded that 99 percent should never have been authorized and that federal reimbursement should have been denied. If these denials are upheld on appeal, the financially rickety Rehab Institute could have to refund the federal government $3.12 million from its annual $12 million budget.

At last week’s meeting — held with Centers for Medicare and Medicaid Services (CMMS), the federal agency that hired PRG — Capps questioned the rate of PRG’s denials, and according to her press secretary Emily Kryder, wondered whether the 25-30 percent bounty that PRG received for money saved might have colored the company’s results. Capps and other congressmembers noted that PRG was the only private for-profit company hired to conduct statewide audits. (New York and Florida both hired nonprofits to examine their acute care cases.) PRG’s critics have also pointed out that the company reported earning $18.6 million in the last three months — up from the $3.6 million loss posted by the company for the same quarter last year — and that U.S. Senator Dianne Feinstein’s husband Richard Blum is a major investor.

According to Kryder, CMMS officials said they had not heard these concerns before and asked for written accounts of them. They also conceded that perhaps they hadn’t given acute-care providers like the Rehab Institute enough notice that the eligibility rules might be changing so dramatically. The program went into effect just two years ago; if deemed a success, it will be expanded to all 50 states.

According to Rehab Institute spokesperson Melinda Staveley, the program has been a bureaucratic nightmare, draining staff resources with the task of producing 50 records a month. “We operated strictly according to the rules that were in place at the time,” Staveley said. “Now, we’re being told we should not have accepted these patients, that they could have gotten just as good care someplace cheaper and someplace else.” For example, Staveley said, PRG might find that a stroke patient the Rehab Institute treated might have done as well at a skilled nursing facility or at home. “On an individual basis, who knows? That might be true,” Staveley said, before explaining that studies indicate patients will be better off if they receive focused rehabilitation treatment. Staveley also noted that PRG’s incentive to deny cases could have been heightened because it receives its incentives whether its recommendations pass appeal or not. And for a small treatment center like the Rehab Institute to file an appeal, she said, would be costly and burdensome.

Much of the congressional concern was that PRG’s audit might wipe out some healthcare providers. The Rehab Institute, independently owned since its inception in 1955, announced this summer that it had entered into negotiations to be acquired by Cottage Health System. “I can’t say this was the last straw, but it sure didn’t help,” Staveley said, adding that the institute has “walked the edge” by providing services not compensated by Medicaid, Medicare, or private insurers. She said private donations have held steady, while the cost of services has increased and public remunerations diminished. Staveley said Cottage was in the process of conducting due diligence for a deal that both parties hope to conclude September 5. Cottage may be able to provide the services currently offered by the Rehab Institute, but that switch may result in about 30 institute employees losing their jobs.

http://www.independent.com/news/2007/aug/09/medicare-auditors-blasted/

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