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Lujan Grisham finds Delta questions hard to shake

Copyright © 2018 Albuquerque Journal

SANTA FE – As summer has turned into fall, Michelle Lujan Grisham has been hounded by opponents in New Mexico’s governor’s race over her past ties to a consulting firm with a long-standing contract to run the state’s high-risk insurance pool.

The Democratic congresswoman, who’s forgoing a re-election bid to run for governor, has steadfastly defended her past work with Delta Consulting as evidence of her commitment to helping the seriously ill and has insisted she violated no state laws or ethics rules.

But she has faced attacks from Republican Steve Pearce, whose campaign went so far as to call Lujan Grisham “dishonest and dirty” in a recent television ad and suggested her election could represent a return of sorts to Gov. Bill Richardson’s tenure.

Michelle Lujan Grisham

“I think we all have suffered enough embarrassment through that,” Pearce said in a recent KOB-TV debate.

Lujan Grisham’s campaign has pointed out that her ownership interest in Delta Consulting was cleared in 2011 by the U.S. House Ethics Committee and that she disclosed income from the company on annual reports that all members of Congress are required to file.

In all, Lujan Grisham earned $376,000 from Delta Consulting from 2013 to 2017, according to tax returns for those five years she released in May. Her campaign manager has said that income was not salary and instead represented distributions from the company that were largely used to pay the firm’s tax bills.

Meanwhile, a Journal review of Delta’s past contracts to act as the high-risk pool’s executive director shows the contracts were awarded after the pool publicly solicited bids, as required by the state’s procurement code.

However, no other companies ultimately submitted bids for the job, despite what one board member describes as attempts to stir up possible interest from other firms.

Delta Consulting was co-founded in 2008 by Lujan Grisham and another former state Cabinet secretary, Rep. Deborah Armstrong, D-Albuquerque, who is still the firm’s president. At the time, Lujan Grisham had recently resigned as state Health Department secretary. She was then elected to Congress in 2012, after a two-year stint as a Bernalillo County commissioner.

Lujan Grisham divested herself from Delta Consulting last year – after announcing her campaign for governor – at no financial gain, campaign spokesman James Hallinan said.

He also said Lujan Grisham would, if elected, consider legislation barring elected officials from having state contracts. Such a law has been proposed on the campaign trail this year by Pearce and others.

“Michelle would support looking carefully at any such legislation that would help bolster public trust and reduce the potential for conflicts of interest,” Hallinan said. “Michelle believes transparency and the protection of taxpayer dollars are paramount.”

He also asserted that Delta does not have – and has never had – any state contracts. The high-risk insurance pool recently filed a lawsuit against State Auditor Wayne Johnson’s office that hinges on whether the pool, which uses a mix of insurance company fees and patient premiums to pay for its administrative contracts, should be defined as a state agency.

The lawsuit was filed after Johnson, a Republican, announced plans to launch a special audit of the high-risk pool, saying the public deserves transparency from public entities.

Delta contracts

Delta Consulting signed contracts in 2009, 2013 and 2017 to run the high-risk insurance pool, which assists New Mexico residents who do not have insurance or have been quoted at higher rates than the pool’s rate.

Each of those three contracts allowed for three one-year extensions to be negotiated between Delta and the pool’s board, according to documents obtained by the Journal in response to a public records request. All three were also subject to competitive bidding, but Delta was the lone bidder.

“If there had been another bid and they submitted a better offer … we would have given the contract to them,” said John Arango, a longtime board member of the high-risk insurance pool who signed off on the 2017 contract.

The current yearly contract is reportedly worth about $790,000, and could be extended by the pool’s board before the end of the year.

Meanwhile, Richardson has insisted the Governor’s Office had nothing to do with the 2009 contract awarded to Delta. The 2013 and 2017 contracts were issued during the administration of outgoing Gov. Susana Martinez, a Republican.

In an interview, Arango said administrative duties for the high-risk pool were handled for years by the late Patty Jennings, who was married to former Senate President Pro Tem Tim Jennings, a Democrat from Roswell. Jennings frequently clashed with Richardson during the ex-governor’s second term in office.

Delta Consulting has also made hefty campaign contributions to both Lujan Grisham and Armstrong in the past. Lujan Grisham reported receiving $11,000 in contributions – the maximum amount allowable for the 2018 election cycle – for her gubernatorial bid from Delta in March 2017.

But those contributions were exempt from a disclosure requirement under the state’s procurement code, Lujan Grisham’s campaign spokesman said, because they were not made to members of the high-risk pool’s board.

2,400 enrolled

New Mexico’s high-risk insurance pool was created in 1987 and currently covers about 2,400 individuals, down from roughly 10,000 at the time the federal Affordable Care Act was enacted.

Many of those enrolled are kidney dialysis patients who are disabled, and others are immigrants who are in the country illegally and cannot qualify for federally subsidized health insurance.

But backers of the high-risk pool have expressed reluctance to scrap the pool, as some states have done, given recent debate in Congress about repealing or overhauling the landmark federal health care law. In response to criticisms that the rates are higher than elsewhere, supporters say the premiums are intended to ensure that only those with serious health issues remain covered.

As governor, Lujan Grisham would have the final say on whether to sign or veto potential bills dealing with the high-risk pool.

For her part, Armstrong, who is currently the chairwoman of the House Health and Human Services Committee, has pledged to not sponsor any legislation for the high-risk pool and to recuse herself from any bills that could pose a conflict of interest.

As such, she did not vote on 2017 legislation that would have effectively done away with the high-risk insurance pool. The bill was ultimately tabled in the House committee she runs, and she did not participate in the hearing on the issue.

Lujan Grisham’s campaign spokesman told the Journal that Armstrong, who was also Lujan Grisham’s campaign treasurer until recently, would not be immediately considered for a Cabinet post in a Lujan Grisham administration, in part due to a constitutional provision that bars lawmakers from being appointed to civil offices during their elected terms.

“Michelle is interested in appointing the most qualified New Mexicans for positions within her administration who can begin immediately and who are committed to seeing the critical work needed to move our state forward through to the end,” Hallinan said.

Potential conflicts

Questions about Lujan Grisham’s past ties with Delta were raised by her rivals during a three-way Democratic primary election earlier this year and have been picked up by Pearce in the run-up to the general election.

The Republican gubernatorial nominee, who faces conflict-of-interest questions of his own about business interests in the oil and gas industry, recently called for the Legislature and U.S. Department of Justice to investigate Delta Consulting’s contract history.

“We must put an end to cronyism, phony contracts, and rampant corruption that undermines faith in our institutions,” Pearce said.

New Mexico’s Governmental Conduct Act allows elected officials and legislators to contract with state government, but only if the contract is issued after a competitive bidding process and if the elected officials publicly disclose their interest.

“These false allegations and debunked theories are just nonsense,” Lujan Grisham said during the KOB-TV debate in response to Pearce’s attacks about Delta and other issues.

Early voting has started for New Mexico’s general election. Election Day is Nov. 6.

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