Outgoing Alabama Rep. Randy Davis, R-Daphne, was indicted Wednesday for his alleged role in a conspiracy to pressure Blue Cross and Blue Shield to cover medical services offered at clinics in which he had a financial interest.
Davis is the latest to be indicted as part of a federal investigation that has already ensnared Rep. Jack Williams, R-Vestavia Hills, former Alabama Republican Party Chairman and lobbyist Martin Connors and Trina Health CEO Greg Gilbert — all three of whom were indicted earlier this year.
According to prosecutors, Gilbert used a gaggle of influential GOP lawmakers in a scheme to bypass roadblocks to expanding Trina Health clinics in Alabama. Those clinics, which operated in Foley, Fairhope and Hoover, offered artificial pancreas treatments — an Intravenous Insulin Infusion Therapy (OIVIT) for diabetics.
According to the indictment, Davis and former House Majority Leader Micky Hammon, R-Decatur, agreed to help recruit investors to open Trina Health clinics in exchange for a 5-percent interest in subsidiaries set up to operate those clinics.
Prosecutors say they would usually have received a 5-percent interest, but at least one of the lawmakers knew that was the threshold that requires state officials to disclose income to the Alabama Ethics Commission.
Prosecutors say that, when approached about getting involved with Trina Health in 2014, Davis sent an email saying he hoped the group would “make millions on this deal.”
However, Trina Health quickly ran into a problem in Alabama. The state’s largest health insurance provider, Blue Cross and Blue Shield, didn’t offer coverage for OIVIT
To get around that, the clinics initially coded those treatments by their individual component parts when submitting them to BCBS, which prosecutors says is a type of healthcare fraud often called “unbundling.”
When BCBS found out, it billed the clinics in Fairhope and Foley for the difference, but Gilbert appealed the decision and began what investigators say was a conspiracy to coerce and eventually an attempt to force the company to provide coverage for those services.
That’s where the legislators came in.
At first, prosecutors claim Davis and Hammon tried to pressure BCBS into voluntarily covering OIVIT treatments and recruited other public officials to do the same. There were also behind-the-scenes “public relations” efforts in hopes that public pressure would get BCBS to cave and offer coverage to avoid any backlash.
However, as early as May of 2015, Gilbert seemed to be entertaining the idea of forcing BCBS to offer coverage through legislative action. In a letter to potential investors at the time, Gilbert wrote, “the Alabama legislature is likely to pass a special private bill recognizing the Artificial Pancreas Treatment as a preferred model of treatment.”
At the same time, Hammon also owed Regions Bank more than $241,000 for an unpaid loan, prosecutors alleged that Gilbert, after first securing an extension, assured Hammon that Trina Health would pay off his debt with the understanding he’d help push an bill through the House requiring BCBS to offer OIVIT coverage for its members.
The superseding indictment unsealed on July 25 says Gilbert quickly began drafting the legal language himself with assistance from Conners, and claims Davis was in charge of finding a sponsor for the bill.
Initially, prosecutors say he approached Rep. Ronald Johnson, R-Sylacauga, about adding the OIVIT verbiage as an amendment to a health care bill he had already introduced. Johnson refused but said he was willing to introduce a standalone bill, which he did in March of 2016. If HB 415 had passed, it would have recognized insulin infusion as a medically necessary treatment in the hospital setting, making it a standard part of most BCBS benefit plans.
Sometime before then, Davis allegedly asked Williams to support the bill, and he agreed to “in part as a favor to Hammon.” Prosecutors say that support was needed to ensure the bill wound up in front of the House Commerce and Small Business Committee that Williams chaired at the time.
The plan worked, too. On April 13, 2016, the bill went before the committee for consideration during a meeting Williams presided over. BCBS spoke against the bill, while Davis and Gilbert spoke in support. The indictment claims the group also arranged for an unnamed diabetic legislator to speak about OIVIT treatment he received in Foley.
Davis is also accused of arranging to have someone from the House clerk’s office attend the meeting and record video of it. The indictment alleges that Hammon — who at this point was trying to distance himself from legislative efforts people knew he had a personal interest in — did not attend the meeting, but waited in the hall trying to listen in.
On the day the committee was supposed to vote on HB 415, Williams pulled it from the agenda. It’s unclear why that happened, but the indictment says that soon afterward, Gilbert began using threats of future legislative action to pressure BCBS into covering OIVIT and to reimburse what his businesses had already paid back to them in refunds.
In a letter to Williams that was eventually forwarded to BCBS representatives, Gilbert wrote: “We are the ‘good guys’ and do not deserve the treatment we have received to date. It can be remedied easily, or not. The decision is entirely BCBSAL.” He also began talks with Hammon around the same time about submitting a similar OIVIT bill in 2017.
In all, the superseding indictment charges Davis, Gilbert and Connors with conspiracy to commit bribery related to federal programs because their efforts affected health insurance coverage. Additionally, the superseding indictment alleges Gilbert committed various others acts of bribery related to federal programs.
Gilbert and Davis are also charged with committing interstate travel and communications in aid of racketeering, while Connors was hit with an additional charge of making a false statement to a federal agent for allegedly lying to investigators about what he knew of Hammon and Davis’ ties to in Trina Health.
If convicted of the most serious offenses, each defendant could face a maximum sentence of 10 years in prison, significant monetary penalties, asset forfeiture and be required to pay restitution. Shortly after their arrests in April, Williams, Gilbert and Conners all pleaded not guilty to conspiracy charges.
Davis, who has yet to enter a plea, was first elected in 2002. Other than Williams, he is the only alleged co-conspirator who still holds a public office, though he opted not to seek reelection for his House seat last year when he announced plans to run for Baldwin County Probate Judge. He later dropped out of that race, though it’s still unclear why.
Hammon, who the indictment described as a “close friend of Rep. Davis,” hasn’t been charged with any offenses related to Trina Health, even though he had a significant role in the alleged activities.
However, he pleaded guilty to mail fraud in 2017 in an unrelated scheme involving campaign funds and was automatically removed from office after a 15-year career in the legislature. Though he faced 20 years in prison, Hammon was only sentenced to 90 days and was released from prison in late June.
He was also ordered to pay $50,657 in restitution to previous campaign contributors.
Shortly after news of Davis’ indictment was released, Maurice Horsey — a Democratic candidate vying for his seat in the House — released a statement calling it a sad development, but one that reinforces his decision to enter the race.
“Our democratic system depends on holding our elected officials accountable and when one party monopolizes the process year after year, accountability just isn’t being served,” Horsey said.“The baton for governing belongs to the voters, not the Republican Party.”
Horsey will take on Republican Matt Simpson and Libertarian Matt Shelby in the November general election.