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Sunday, August 03, 2008

AG Probe of Foley Requested

By Colleen Heild
Copyright © 2008 Albuquerque Journal
Journal Investigative Reporter
          A state contract that offers supplemental insurance to government employees has proven profitable for a top Republican legislator over the past year.
        Last week, a Chaves County commissioner asked the state attorney general to look into business ties between state Rep. Dan Foley, R-Roswell, and the contract the state awarded to Allstate last year.
        Foley, who is an Allstate agent, said the company pays him a 10 percent commission on all policies sold under the contract. So far, an estimated 500 state and local government employees have purchased the insurance, meaning Foley's cut would run into the thousands of dollars.
        Foley said he has done nothing improper and added that the contract was awarded through a competitive process. He dismissed the request for an AG investigation as "purely a political ploy."
        The request came from one of Foley's critics, Chaves County Commissioner Harold Hobson, who lives near Roswell.
        At issue is the state's decision in 2007 to allow Allstate to sell supplemental cancer, accident and universal life insurance to government employees.
        Foley, who serves as House minority whip, said he has had no contact with state officials about the contract. State General Services Department spokesman Alex Cuellar confirmed that in a recent e-mail message to the Journal.
        <b>'In the right direction'</b>
        Foley said Allstate pays him the commission because he was the one who noticed the state was soliciting proposals for the insurance on the public General Services Department Web site and alerted his company.
        "I mean any Allstate agent could have done that," he added.
        He said he also worked with Allstate "getting them pointed in the right direction" on how to respond to the request for proposals.
        "We didn't win it (the contract) before, but we won it this time because (of) my two cents that I gave them," Foley said.
        Foley said he routinely checks the Web site for business prospects.
        A state Web site for supplemental voluntary insurance lists Foley as one of Allstate's 19 participating agents. Foley said he has been one of Allstate's top sellers of supplemental insurance. A September 2007 memo showed him earning six times more "points" (which are based on business generated) than more than 30 New Mexico Allstate agents or agencies.
        In a July 29 letter to Attorney General Gary King, Hobson noted that New Mexico law bars state agencies from entering into a sole source contract in which a public officer or employee of the state has a "substantial interest."
        Hobson said an inquiry is especially relevant with the special legislative session to begin Aug. 15.
        "As part of the elected Republican leadership in our legislature, Rep. Foley will be involved in negotiations on proposed legislation for universal health care or expanded health care coverage that Governor Richardson is promoting," Hobson said in his letter.
        He alleged that Foley's involvement in supplemental health care policies represents a "direct conflict of interest as the impact of any proposed legislation may reduce the need or the method of these supplemental policies for state employees." Foley, a Roswell insurance agent for 11 years, has served in the Legislature since 1999 but lost his bid for re-election in June's primary. His term ends Jan. 1.
        Attorney General's Office spokesman Phil Sisneros said the letter had been received and would be forwarded to the appropriate legal section.
        Foley said Hobson's argument has no merit because state law defines sole source contracts as being awarded without competition. He noted that Allstate participated in a competitive request for proposals process. However, Allstate was the only health insurance provider to submit a proposal to offer that specific supplemental insurance, Cuellar said.
        Other companies were selected to offer other types of insurance such as pre-paid legal services, home and auto insurance, and whole life.
        Foley also said he hasn't directly sold the insurance to any state employee and hasn't solicited any state employee to buy it.
        "I felt like it was probably not right for me as Rep. Foley with my red (legislative) license plate to pull into the Department of Transportation (or any other state agency) and say 'I'm here to sell you something.'"
        An Allstate spokeswoman on Friday wouldn't comment about any particular agent's commission but said the state procurement was a "very transparent process." She said individual agents usually don't sell the insurance because it is offered at annual employee enrollments in the workplace.
        Rates for Allstate cancer insurance range from $9 to $24 per paycheck and from $7 to $51 for accident coverage. The state Web site for employee benefits did not list specific rates for life insurance premiums.
        Cuellar estimated that about 500 state or local employees have signed up for the voluntary insurance through payroll deduction.
        Employees can also make personal payments to Allstate.
        The state Risk Management Division had no contact with Foley regarding the Allstate contract, Cuellar said.
        Supplemental insurance was offered effective July 1, 2007, after the state Risk Management Division "conducted an internal member survey asking for insurance product suggestions."
        The state went to a request for proposals, after gaps were identified in the employees' benefits package.
        As a contractor, Allstate makes no payments to the state. It offers employees a group rate for which Foley said employees pay 100 percent of the cost.
        A request for proposals issued in the spring of 2007 allowed vendors to bid on any or all portions of the voluntary benefits insurance products required by the RFP. Six other companies submitted proposals, Cuellar stated in his e-mail, but none for the three types of insurance Allstate is providing.
        <b>History of criticism</b>
        Hobson, a Roswell area farmer, has been critical of Foley in the past, and on primary election night in 2006 the two had a public verbal altercation.
        "He was yelling at some women and I told him to stop," Foley said. Hobson, in a letter to the Roswell Daily Record, contended the "attack required two deputies to jump in between Mr. Hobson and Mr. Foley."
        Hobson also wrote a letter to Foley last week calling on him to "recuse himself from any participation in negotiations, debate or votes on legislation dealing with state insurance during the special session. It's impossible for the public to know when Dan Foley 'the Legislator' is speaking and when Dan Foley 'the state insurance contractor' is talking."
        Foley responded that Hobson "is just throwing mud against the wall to see what sticks."