18 Oct 2012

Pressing for Answers about Questionable Medical Malpractice Reform Grants

By Grassley Press

Wednesday, October 17, 2012

 

Grassley, Hatch, Smith Press for Answers about Questionable

Medical Malpractice Reform Grants

 

WASHINGTON -- Senate Judiciary Committee Ranking Member Chuck Grassley, Senate Finance Committee Ranking Member Orrin Hatch and House Judiciary Committee Chairman Lamar Smith are continuing to press for answers from the Obama administration about its grant program that was sold to the American people as a means to study medical malpractice reform, but has instead diverted tens of millions of dollars to research, of which the usefulness has yet to be explained by the administration.

 

The members wrote to the Secretary of Health and Human Services, Kathleen Sebelius, in April, and again today, asking questions about President Obama's September 9, 2009 address to Congress where he announced an initiative to deal with the rising costs of health care associated with medical malpractice lawsuits.

 

The members wrote, "Frivolous lawsuits, the high cost of malpractice insurance and excessive damages awards are dragging down our health care system...However, the AHRQ's (Agency for Healthcare Research and Quality) description of the research being funded (through the President's initiative) does not mention, much less emphasize, reforms to medical malpractice laws, as was clearly implied by the President's speech."

 

The letters call attention to the fact that none of the $23.2 million awarded has gone to researching or implementing "traditional" medical malpractice reforms and that it appears that all of the research funded by the AHRQ is aimed at proving the obvious: as the number of adverse events declines, the number of malpractice lawsuits also declines.

 

The department's response to the April 3 letter failed to answer the members' questions, including basic, but important, questions such as how the projects will reduce frivolous lawsuits and reduce malpractice insurance premiums, how the projects will directly benefit American taxpayers, and how the projects will lower health care costs.

 

A copy of the text of both the April 3 and October 16 letters to Sebelius are below.  A signed copy of both letters can be found here.

 

 

October 16, 2012

 

Via Electronic Transmission

 

The Honorable Kathleen Sebelius

Secretary

Department of Health & Human Services

200 Independence Avenue, S.W.

Washington, DC 20201

 

Dear Secretary Sebelius:

 

We write regarding the Department of Health and Human Services' (HHS) letter dated June 11, 2012 and received by our offices on September 27, 2012, after multiple inquiries.

 

The letter from the HHS was responding to our April 3, 2012 letter to you.  In our letter, we expressed our concerns with the Patient Safety and Medical Liability Reform Demonstration and Planning grants being funded by the HHS.

 

On September 9, 2009, President Obama, in a speech to a joint session of Congress on health care, directed you to move forward on an initiative aimed at reducing health care costs.  On June 11, 2010, pursuant to the President's orders, the HHS, through the Agency for Healthcare Research and Quality (AHRQ), awarded $23.2 million to fund demonstration and planning projects.

Frivolous lawsuits and the high cost of malpractice insurance are dragging down our health care system.  The goal of "traditional" medical malpractice reforms is not to hinder meritorious lawsuits, but rather to reduce the incidence of frivolous lawsuits, inflated awards and inflated attorneys' fees.  However, the AHRQ's description of the research being funded does not mention, much less emphasize, reforms to medical malpractice laws, as was clearly implied by the President's speech.

The President's September 9, 2009 speech gave the clear impression that taxpayers' monies would be spent, in significant part, on projects related to "traditional" medical malpractice reforms.  Contrary to that clear impression, it appears that none of the $23.2 million awarded has gone to researching or implementing "traditional" medical malpractice reforms.

 

We were concerned that these developments did not fulfill the President's commitment to move forward on medical malpractice reform.  Consequently, we wrote to you on April 3 and asked several direct questions and made requests for documents.

 

After several follow up inquiries, we only recently received a response from the HHS.  The HHS' response letter, however, ignores the vast majority of our questions, if not all of them, and did not include any documents.

 

Accordingly, we are attaching a copy of our April 3 letter and ask that you directly answer all of our questions and produce documents as appropriate.

 

The HHS's response letter also raises new questions that we would like to have answered:

(A)             The June 11, 2010 press release by the AHRQ stated that the "grants [we]re part of the patient safety and medical liability initiative that President Obama announced during a September 9, 2009, address to a joint session of Congress."[1] What is the exact source of the $23.2 million in funding for the demonstration and planning projects and the $2 million in funding for the JBA/RAND evaluation project?

(B)              Identify whether Congress expressly approved the demonstration, planning and evaluation projects as well as appropriated the funding for them.  If Congress did not expressly approve these projects and their funding, identify the authority for the HHS to initiate and fund these projects, without first receiving approval and appropriations from Congress.

We ask that you provide written answers and documents by October 29, 2012.

 

Sincerely,

 

 

 

 

________________________       ________________________

Charles E. Grassley                       Lamar Smith

Ranking Member                         Chairman

Senate Judiciary Committee                      House Judiciary Committee

 

 

 

 

________________________      

Orrin G. Hatch                         

Ranking Member                        

Senate Finance Committee

 

 

April 3, 2012

 

Via Electronic Transmission

 

The Honorable Kathleen Sebelius

Secretary

Department of Health and Human Services

200 Independence Avenue, S.W.

Washington, DC 20201

 

Dear Secretary Sebelius:

 

We are writing to express our concerns with the Patient Safety and Medical Liability Reform Demonstration and Planning grants being funded by the Department of Health and Human Services (HHS).

 

On September 9, 2009, President Obama, in a speech to a joint session of Congress on health care, directed you to move forward on an initiative aimed at reducing health care costs.  Specifically, he stated:

..., many in this chamber - particularly on the Republican side of the aisle - have long insisted that reforming our medical malpractice laws can help bring down the cost of health care. I don't believe malpractice reform is a silver bullet, but I have talked to enough doctors to know that defensive medicine may be contributing to unnecessary costs.  So I am proposing that we move forward on a range of ideas about how to put patient safety first and let doctors focus on practicing medicine.  I know that the Bush Administration considered authorizing demonstration projects in individual states to test these issues.  It's a good idea, and I am directing my Secretary of Health and Human Services to move forward on this initiative today. (Emphasis added).

On June 11, 2010, pursuant to the President's orders, the HHS, through the Agency for Healthcare Research and Quality (AHRQ), awarded $23.2 million to fund demonstration and planning projects.  The AHRQ's press release confirmed that the "grants [we]re part of the patient safety and medical liability initiative that President Obama announced during a September 9, 2009, address to a joint session of Congress."[2] Specifically, the AHRQ has funded seven demonstration grants for a total amount of $19.7 million and 13 planning grants for a total amount of $3.5 million.  The demonstration projects are scheduled to take three years to complete and the planning projects are scheduled to take one year to complete.  According to the AHRQ, the projects are supposed to allow States and health care systems to develop, implement and evaluate medical liability models that "(1) put patient safety first and work to reduce preventable injuries; (2) foster better communication between doctors and their patients; (3) ensure that patients are compensated in a fair and timely manner for medical injuries, while also reducing the incidence of frivolous lawsuits; and (4) reduce liability premiums."[3]

Frivolous lawsuits, the high cost of malpractice insurance and excessive damages awards are dragging down our health care system.

 

The goal of "traditional" medical malpractice reforms is not to hinder meritorious lawsuits, but rather to reduce the incidence of frivolous lawsuits, inflated awards and inflated attorneys' fees.  Generally speaking, traditional malpractice reforms seek practical solutions to combatting frivolous lawsuits, such as caps on punitive damages, caps on noneconomic damages and limits on the percentage of an award that can be taken by a plaintiff's attorney under a contingency fee agreement.  Thus, traditional reforms are necessarily aimed at dealing with the medical system as it exists and influencing the behavior of lawyers and courts by altering legal parameters--substantive and procedural.  Correspondingly, research on traditional reforms should be aimed at assessing the effects of specific legal changes on claims, lawsuits, awards and settlements, either through mathematical models, simulated jury studies or real data.

 

However, the AHRQ's description of the research being funded does not mention, much less emphasize, reforms to medical malpractice laws, as was clearly implied by the President's speech.  Indeed, it does not appear that any of the entities that have received the $23.2 million in grants have the expertise necessary to examine the effects of changes in substantive legal standards and procedural rules on the rate of malpractice claims, lawsuits, and awards.

 

President Obama's September 9, 2009 speech included a reference to "demonstration projects" considered during President George W. Bush's administration.  The day after the President's speech, Tevi Troy, who served as the Deputy Secretary of the HHS, during the Bush Administration, responded to President's Obama's statement.[4] Mr. Troy explained the nature of the demonstration projects considered during the Bush administration.  In particular, he explained the limited purpose of those projects and the fact that they would not solve the crisis created by frivolous lawsuits.  Mr. Troy's article also made it clear that "reducing the incidence of costly and ineffective medical malpractice lawsuits was a high priority of the [Bush] administration."

 

The President's speech gave the clear impression that taxpayers' monies would be spent, in significant part, on projects related to "traditional" medical malpractice reforms.  Contrary to that clear impression, it appears that none of the $23.2 million awarded has

 

gone to researching or implementing "traditional" medical malpractice reforms.  In fact, it appears that all of the research funded by the AHRQ is aimed at proving the obvious:  as the number of adverse events declines, the number of malpractice lawsuits also declines.

 

We are concerned that these developments do not fulfill the President's commitment to move forward on medical malpractice reform.  Accordingly, please respond to the following requests for information:

 

1.      Explain how the HHS' spending $23.2 million on studying "nontraditional" liability reform fulfills the President's promise that his administration would examine a "range of ideas," including the "traditional" malpractice reforms noted above and advocated by Republican Members of Congress?

 

2.      Do you agree that the projects funded by the Patient Safety and Medical Liability Reform Demonstration and Planning grants are not researching "traditional" malpractice reform, but rather are exploring "nontraditional liability reforms"?[5] If you disagree, explain the basis for your disagreement in detail.  Also, identify which projects are researching "traditional" malpractice reforms and how much from the $23.2 million in grants is being spent on studying "traditional" malpractice reforms.

 

3.      Do you agree that the AHRQ is not the most qualified agency to undertake or oversee research related to "traditional" malpractice reforms?  If you disagree, explain in detail how the AHRQ is the most qualified agency within the federal government to undertake or oversee research related to "traditional" malpractice reforms.

 

4.      How, if at all, will the results of each of the 20 demonstration and planning projects directly help to reduce the incidence of frivolous lawsuits and reduce high malpractice insurance premiums, as represented by the AHRQ?  Also, if a project will have no direct impact on reducing frivolous lawsuits and insurance premiums expressly acknowledge that fact.

 

5.      Explain in detail how the results of each of the 20 Patient Safety and Medical Liability Reform Demonstration and Planning projects will directly benefit American taxpayers.  If American taxpayers will benefit from the results of these projects, when will those benefits be seen?

 

6.      Explain in detail how the results of each of the 20 projects will directly contribute to lowering health care costs, as stated by the President?

 

7.      Describe in detail how the HHS and/or the AHRQ will utilize the information generated by each of the 20 Patient Safety and Medical Liability Reform Demonstration and Planning projects?

 

8.      Is each of the 20 Patient Safety and Medical Liability Reform Demonstration and Planning projects unique or are they similar to previous studies?  If any of the current projects are similar to previous studies, explain the HHS's justification for funding that project or projects?

 

9.      When was it decided that the Patient Safety and Medical Liability Reform Demonstration and Planning grants would fund research of "nontraditional liability reforms," as opposed to "traditional" malpractice reforms?  Who made that decision?  If it was a group decision, identify all of the individuals who participated in the group.

 

10.  Did anyone other than an employee of the federal government participate (in any manner whatsoever) in the drafting of the requests for proposals issued in connection with the Patient Safety and Medical Liability Reform Demonstration and Planning grants?  If so, identify the individual(s) and the group he or she was representing.  Also, if applicable, set forth in detail the substance and nature of the individual's participation.

 

11.  Did anyone other than an employee of the federal government participate in the selection of any of the recipients of the Patient Safety and Medical Liability Reform Demonstration and Planning grants?  If so, identify the individual(s) and the group he or she was representing.  Also, if applicable, set forth in detail the substance and nature of each individual's participation.

 

12.  Is one of goals or purposes (official or unofficial) of the Patient Safety and Medical Liability Reform Demonstration and Planning grants to produce studies that will discredit or counter "traditional" malpractice reforms?

 

13.  Is the HHS or any other agency of the federal government currently conducting, participating in or funding research, the (official or unofficial) purpose of which is to discredit or counter "traditional" malpractice reforms?  If so, set forth the details of each such project, including who will conduct the research and who will oversee it.

 

14.  In addition to the $23.2 million being spent on the demonstration and planning projects, another component of the initiative ordered by President Obama is an evaluation project.  JBA/RAND was awarded $2 million for the evaluation project.  According to the AHRQ, the $2 million has been "allocated to evaluate the overall knowledge that is gained from this initiative."[6]

 

(a)    Explain in detail the substance and goals of the evaluation project and explain why it is necessary.

 

(b)   Are salaried federal employees at the AHRQ or in another unit of the HHS capable of understanding and evaluating the results of the demonstration and planning projects?  If so, why weren't they assigned the task of conducting the evaluation project or its equivalent?  If they are not capable, explain how the HHS and the AHRQ will be able to work with any of the information generated by the projects.

 

(c)    How, if at all, will the results of the evaluation project directly benefit American taxpayers?  If American taxpayers will benefit from the results of the evaluation project, when will those benefits be seen?

 

If the HHS and/or the AHRQ possess documents relating to the subject matter of any of the foregoing questions, provide copies of those documents.

 

We ask that you provide written answers and documents by May 3, 2012.

 

Sincerely,

 

 

 

 

 

________________________       ________________________

Charles E. Grassley                       Lamar Smith

Ranking Member                         Chairman

Senate Judiciary Committee                      House Judiciary Committee

 

 

 

 

 

________________________      

Orrin G. Hatch                         

Ranking Member                        

Senate Finance Committee

 

 

1  AHRQ Press Release, "HHS Announces Patient Safety and Medical Liability Demonstration Projects:

Funds Allocated to Develop, Implement, and Evaluate Patient Safety Approaches and Medical Liability Reform Models" (June 11, 2010) (available at http://www.ahrq.gov/news/press/pr2010/hhsliabawpr.htm).

2 AHRQ Press Release, "HHS Announces Patient Safety and Medical Liability Demonstration Projects:

Funds Allocated to Develop, Implement, and Evaluate Patient Safety Approaches and Medical Liability Reform Models" (June 11, 2010) (available at http://www.ahrq.gov/news/press/pr2010/hhsliabawpr.htm).

3  Id.

4 Tevi Troy, "Med Mal Pal?," Critical Condition, NATIONAL REVIEW ONLINE'S HEALTHCARE BLOG (Sept. 10, 2009)(available at  http://www.nationalreview.com/critical-condition/48345/med-mal-pal/tevi-troy).

5 See Allen Kachalia & Michelle M. Mello, New Directions in Medical Liability Reform, 364 N. ENGL. J. MED. 1564 (Apr. 2011) (available at http://www.nejm.org/doi/full/10.1056/NEJMhpr1012821) (acknowledging the definition of "traditional" medical malpractice reforms and confirming that the AHRQ's demonstration and planning projects are studying "nontraditional liability reforms.").

6 Carolyn M. Clancy, AHRQ Commentary, "Patient Safety and Medical Liability Reform: Putting the Patient First" (available at http://www.ahrq.gov/news/commentaries/comptsafty.htm). 

 



[1] AHRQ Press Release, "HHS Announces Patient Safety and Medical Liability Demonstration Projects:

Funds Allocated to Develop, Implement, and Evaluate Patient Safety Approaches and Medical Liability Reform Models" (June 11, 2010) (available at http://www.ahrq.gov/news/press/pr2010/hhsliabawpr.htm).

 

[2] AHRQ Press Release, "HHS Announces Patient Safety and Medical Liability Demonstration Projects:

Funds Allocated to Develop, Implement, and Evaluate Patient Safety Approaches and Medical Liability Reform Models" (June 11, 2010) (available at http://www.ahrq.gov/news/press/pr2010/hhsliabawpr.htm).

 

[3] Id.

[4] Tevi Troy, "Med Mal Pal?," Critical Condition, National Review Online's Healthcare Blog (Sept. 10, 2009)(available at  http://www.nationalreview.com/critical-condition/48345/med-mal-pal/tevi-troy).

[5] See Allen Kachalia & Michelle M. Mello, New Directions in Medical Liability Reform, 364 N. Engl. J. Med. 1564 (Apr. 2011) (available at http://www.nejm.org/doi/full/10.1056/NEJMhpr1012821) (acknowledging the definition of "traditional" medical malpractice reforms and confirming that the AHRQ's demonstration and planning projects are studying "nontraditional liability reforms.").

[6] Carolyn M. Clancy, AHRQ Commentary, "Patient Safety and Medical Liability Reform: Putting the Patient First" (available at http://www.ahrq.gov/news/commentaries/comptsafty.htm). 
16 Oct 2012

A123 bankruptcy filing

By Grassley Press
Tuesday, Oct. 16, 2012

Electric car battery manufacturer A123 Systems Inc., awarded nearly $250 million in government stimulus grants, filed for Chapter 11 bankruptcy protection this morning.   U.S. Senators Chuck Grassley (R-Iowa) and John Thune (R-S.D.) have expressed concern about the grants and pressed the U.S. Department of Energy for answers about potential taxpayer losses and national security risks about the possible sale of the company to a Chinese investor.  A123 holds several Department of Defense contracts.  Now, the company plans to sell its automotive business operations to U.S.-based Johnson Controls while pursuing other deals regarding its remaining assets and business units.

Grassley and Thune made the following comments about the A123 bankruptcy.

Grassley comment:

"The bankruptcy raises the prospect that the taxpayers will get little or no return on their investment in A123 and will lose millions of dollars.  A123 has been struggling for some time.  Was the company struggling when the Energy Department decided to award it a federal grant?   Did the Energy Department perform enough due diligence before making this award?   Were there any contingencies for this possibility?  The Administration needs to answer for this.  The taxpayers shouldn't have to subsidize poor investments in failed energy companies.  If there is something positive to be taken from this, it's that A123 has decided to sell a major part of its business to Johnson Controls, a U.S. company, rather than Chinese-owned Wanxiang.  That transaction raised concerns about national security because A123 has several Defense Department contracts.  Sen. Thune and I expressed concern about the potential sale to a Chinese company, most recently last week.  But the sale to an American company is small comfort, given the hundreds of millions of dollars wasted on this firm."

Thune comment:

"A123 is yet another example of President Obama gambling with taxpayer dollars and picking winners and losers in the green energy world.  There were clear warning signs that A123 was having financial problems even as the administration continued pouring millions of taxpayer dollars into this failing company.  As the stimulus-funded A123 reorganizes under Chapter 11 bankruptcy, we will continue to press the Obama administration for answers regarding the millions of taxpayer dollars given to A123, and we will continue our oversight to ensure more taxpayer dollars aren't wasted going forward."

The text of the latest Grassley-Thune letter is available here.  The text of their August letter to the Department of Energy is available here.

 

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16 Oct 2012

Grassley, Heller, Amodei Press for Answers on Impact of Reno US Attorney/ATF Rift

By Grassley Press

WASHINGTON - Senators Chuck Grassley and Dean Heller and Representative Mark Amodei are pressing Attorney General Eric Holder for information about the cases that were not prosecuted during a fall-out between the Reno, Nevada offices of the U.S. Attorney and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF).

 

A recent article in the Reno Gazette Journal indicated that the U.S. Attorney's office may have declined or dismissed as many as a dozen cases that were submitted by the ATF.

 

"The Justice Department has yet to respond to any of Congress' questions about what happened in Reno for more than a year.  It's an abdication of responsibility on the part of the Justice Department, and if these crimes weren't prosecuted, whether because of actions of the U.S. Attorney or the ATF, the people of Nevada should know why," Grassley said.

 

"This breakdown within the Department of Justice is a threat to public safety. There is no question this problem should have been addressed some time ago. The Department of Justice needs to explain why they allowed this problem to fester. I will continue to work with Senator Grassley and Congressman Amodei to get answers and hold the Department of Justice accountable," said Heller.

 

"The Department of Justice owes Nevadans an explanation and a solution. That it has failed to provide either, let alone demonstrate a sense of concern or urgency, is disappointing. I will continue to work with Senators Grassley and Heller to ensure this problem receives the attention it deserves," Amodei said.

 

A copy of the text of the letter is below.  A signed copy of the letter can be found here.

 

VIA ELECTRONIC TRANSMISSION

 

The Honorable Eric H. Holder, Jr.

Attorney General

U.S. Department of Justice

950 Pennsylvania Avenue, NW

Washington, DC 20530

 

Dear Attorney General Holder:

 

We are in receipt of the Department's October 12, 2012, letter regarding the U.S. Attorney's Office for the District of Nevada and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) in Reno.

 

On September 28, 2012, we understand that ATF Acting Director B. Todd Jones and U.S. Attorney Daniel Bogden released a public statement, although neither the Justice Department nor ATF took any steps to notify any of our offices about the statement before we learned about it from public news accounts.  In that statement, Acting Director Jones and U.S. Attorney Bogden reportedly said: "The United States Attorney's Office in Nevada is accepting, for review and potential prosecution, all cases and matters referred to it by ATF.  The United States Attorney's Office and ATF are reviewing the allegations and will work to address any issues that could impact the effectiveness of their law enforcement efforts to protect the public from violent crime."

 

According to recent accounts by the Reno Gazette Journal, the U.S. Attorney's Office for the District of Nevada may have declined or dismissed as many as a dozen cases that had been submitted to it by ATF.[1] Therefore, please provide answers to the following questions:

 

1)      Is the U.S. Attorney's Office re-considering the cases that it formerly declined when submitted to it by ATF?

 

2)      If so, how long will it take to conduct reviews of those cases?

3)      Who within the U.S. Attorney's Office would conduct the review?

4)      In the course of the U.S. Attorney's Office's dispute with ATF, how many of the ATF cases declined by the U.S. Attorney's Office would be barred within the next six months by statutes of limitations?  For each such case, precisely when would the statute of limitations expire?

 

Please provide a response and produce these documents by Thursday, October 25, 2012.  If you have any questions concerning this matter, please contact Senator Grassley's staff at (202) 224-5225, Senator Heller's staff at (202) 224-6244, or Representative Amodei's staff at (202) 225-6155.

 

Sincerely,

Chuck Grassley

Dean Heller

Mark Amodei

 

 

cc:       The Honorable Michael E. Horowitz, Inspector General

U.S. Department of Justice

 

B. Todd Jones, Acting Director

Bureau of Alcohol, Tobacco, Firearms, and Explosives

 

The Honorable Daniel G. Bogden, U.S. Attorney for the District of Nevada

U.S. Department of Justice

 

[1] Martha Bellisle, ATF cases U.S. Attorney's office in Reno refused to prosecute, Reno Gazette Journal (Oct. 9, 2012), available at http://www.rgj.com/interactive/article/20121009/NEWS01/121009018/RGJ-Investigates-ATF-cases-U-S-Attorney-s-office-Reno-refused-prosecute.

16 Oct 2012

Sen. Chuck Grassley issued the following comment about Sen. Arlen Specter (1930-2012):

By Grassley Press

"Arlen Specter and I were first elected to the United States Senate the same year, and I served with him on the Judiciary Committee for 30 years.  We came from very different places, an Iowa farmer and a Philadelphia lawyer, and we had different views, but we shared a commitment to making the legislative process work in the Senate.  Sen. Specter was a friend to his colleagues, and he served Pennsylvanians with his tenacity and willingness to fight hard no matter what the challenge."

15 Oct 2012

Federal dollars to battery company with Chinese investor

By Grassley Press

Thursday, Oct. 11, 2012

Grassley, Thune Continue to Seek Answers on Federal Money to Battery Company with Chinese Investor

WASHINGTON - U.S. Senators Chuck Grassley (R-Iowa) and John Thune (R-S.D.) continue to press for answers about a $249.1 million federal grant awarded by the U.S. Department of Energy through the controversial 2009 stimulus bill to a battery manufacturer that could soon be owned by a Chinese investor.  Grassley and Thune sent a letter this week to the chief executive officer of A123 Systems based in Massachusetts questioning whether U.S. tax dollars are going to benefit a Chinese company rather than U.S. taxpayers and express concern about national security risks.

"We need to be sure that when the federal government invests close to a quarter of a billion dollars in grants to a company, that the technology developed as a result of this taxpayer support doesn't end up in China," Grassley said.  "We'll continue to press for answers and for a full accounting from the Administration on how these grants are made and whether any measures are taken to prevent tax dollars from being wasted.  This situation requires transparency and accountability."

"With over 23 million Americans unemployed or underemployed and struggling to make ends meet, the federal government should not be sending millions of U.S. taxpayer dollars to a Chinese company to support Chinese jobs," said Thune.  "The president promised his stimulus bill would reduce unemployment to 6 percent by now, but instead, unemployment just dropped below 8 percent for the first time since the president took office nearly four years ago.  The American people have a right to know whether stimulus dollars will be used to support the creation of Chinese jobs."

In August, Grassley and Thune wrote to the Department of Energy after the company was faltering and had just announced a $450 million investment deal with a Chinese company to express concern about tax dollars going to a struggling company.

Grassley and Thune said their concerns continue, in part because the Department of Energy has not answered basic questions.  Because of the way the deal is structured, China-based Wanxiang can transfer some of A123's debt into ownership.  The China-based company could end up owning 80 percent of A123. Billions of tax dollars already have flowed to foreign companies through stimulus bill spending.  This deal could lead to foreign government access to technology that A123 has described as "innovative" and "next generation."  A123 holds several multi-million dollar contracts with the Department of Defense and is pursuing more defense contracts for military vehicles, power grids, high energy lasers, advanced armor, and unmanned defense vehicles.

Grassley and Thune said that if A123 is close to being owned by a Chinese company, then the public deserves to know:  how much of the federal stimulus grant the company has yet to receive; what safeguards are in place for taxpayer-funded intellectual property; if taxpayer-funded jobs will stay in the United States; if the Energy Department raised any objections to the financing deal and if it didn't, why not?  In addition, the Administration must account for what protections are in place for classified information of the Department of Defense, Grassley and Thune said.

The text of the latest Grassley-Thune letter is available here.  The text of their August letter to the Department of Energy is available here.

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05 Oct 2012

Keeping Government Accountable

By Grassley Press

by U.S. Senator Chuck Grassley

Civics 101 teaches students about the three branches of the federal government.  Representing Iowans in the United States Senate, I enjoy meeting with students during my annual meetings in Iowa's 99 counties or when youth groups make a trip to Washington, D.C.

Students ask informed questions.  They understand that Congress writes legislation and holds the tax-and-spending powers of the federal government.  They know the President is America's commander-in-chief of the U.S. military and has the authority to sign legislation into the law of the land or send it back to Congress with a veto.  But one key function of Congress doesn't usually register as much attention.  And that is congressional oversight.

Oversight is an essential function of the legislative branch authorized by the Constitution to help keep the federal government accountable to the people.  It requires vigilance and stewardship to keep tabs on a federal bureaucracy that has grown to roughly 500 departments, agencies, administrations, and authorities.  While the President, as chief executive, is ultimately responsible for managing the federal bureaucracy, Congress holds sway through its funding, lawmaking and oversight duties.

The federal government is reaching into more Americans' lives, especially as social safety nets capture a greater share of the population in our aging society.  The President's health care law that was steamrolled through Congress in 2010 has cast an even wider federal entitlement net across the country.  Its rulemaking and regulatory policies also impact the hiring decisions of businesses from Main Street to Wall Street.  From administering tax laws to implementing immigration policies, managing food, drug and aviation safety, setting school lunch guidelines, enforcing nursing home standards, and defending national security, Uncle Sam wears a lot of hats in the 21st century.

I made a commitment long ago to keep up a crusade on behalf of taxpayers to bring more transparency, accountability and efficiency to the federal bureaucracy.  It can be a lonely battle, and resolution often takes a long time.

Consider my decade-long effort to secure better management controls for government-issued charge cards used by federal workers.  With oversight work over the years, I exposed fraudulent, wasteful purchases made on Uncle Sam's tab, from jewelry to gambling to cruises.  Spending abuses occurred within the Department of Defense, the Department of Housing and Urban Development, the U.S. Forest Service and the U.S. Aviation Administration, and elsewhere.  This year, the reform bill sent to the President's desk in September strengthens measures to thwart misuse of government-issued cards and penalize those who do, including loss of their jobs.

As a fighter for whistleblowers and independent watchdogs within the federal bureaucracy, I continue to shine a bright light on wrongdoing in Washington.  Tragically, it can mean the difference between life and death.

Consider my two-year investigation into a botched gun-walking operation that exposed what can happen when the federal bureaucracy puts itself above the law.  A U.S. border patrol agent's murder at the U.S.-Mexico border was linked to guns sold illegally under the Justice Department's "Fast and Furious" program.  Stonewalling and denial by the Attorney General, the nation's top law enforcement official, reflects poorly on the administration's allegiance to upholding the public trust and thumbing its nose at the rule of law.

There's more.  This time the questionable use of tax dollars is occurring at the Department of Health and Human Services.  Revelations of expenses for a public relations firm in California indicate the administration has the audacity to pay Hollywood to promote the controversial 2010 health care law on network television.  I've called upon the Department of Health and Human Services to account for the $1 billion awarded to states to establish the new health care exchanges across the country.

Congressional oversight is a vitally important responsibility of the legislative branch of government in our system of checks and balances.  It helps to uphold the public trust and unlock mismanagement in the executive branch of our government, which has become massive in scale and scope.

Friday, October 5, 2012
02 Oct 2012

Grassley, Kirk Question Treasury Secretary Inaction on LIBOR, Impact on U.S. Borrowers

By Grassley Press
WASHINGTON - Sen. Chuck Grassley of Iowa and Sen. Mark Kirk of Illinois today asked Treasury Secretary Timothy Geithner to explain his apparent inaction to stem the dominance and inform the public of a rigged interest rate that affects interest rates on mortgages, student loans, credit cards and other loans.
"Taxpayers need to know there's a cop on the beat at the Treasury Department, making sure the interest rates they pay on everything from home loans to retirement investments aren't rigged," Grassley said.  "If the attitude of the Treasury Secretary is that it isn't his responsibility to take action or to tell the public, that's going to harm confidence in our financial system and create a lack of certainty."
"We need the Treasury Department to take swift action to inform consumers, homeowners, students and other borrowers about potential impacts of faulty interest rates," said Kirk, a member of the Senate Committee on Banking, Housing and Urban Affairs.  "We cannot expect confidence in our financial system to last without this crucial information, and the Treasury should consider alternative solutions to boost confidence in the marketplace."
The London interbank offered rate, or LIBOR, is the average interest rate that banks use to borrow from each other.  Set in London, the rate is one of the main rates that determine the cost of interest for trillions of dollars of loans on a variety of everyday consumer loans such as mortgages and more complicated financial instruments such as derivatives.
In recent testimony before Congress, Geithner said that when as president of the Federal Reserve Bank of New York, he became aware of concerns that the LIBOR rate was being rigged, he deferred to the British central bankers to fix the problem.  Despite those concerns, Geithner appears not to have taken action "to diminish use of this flawed index in U.S. financial markets; to the contrary, Treasury's use of LIBOR has increased," Grassley and Kirk wrote in a letter to Geithner.
Grassley and Kirk asked Geithner to answer questions including whether the Treasury Department considered the risk to U.S. borrowers, including state, municipal, and local governments facing higher debt burdens as a result of the LIBOR scandal; whether U.S. officials considered the litigation risks to U.S. borrowers in deciding to raise the LIBOR scandal only to the attention of British central banks rather than U.S. lenders and borrowers; and whether the Treasury Department's continued reliance on LIBOR is affecting borrower access to Small Business Administration loans.
Grassley and Kirk concluded, "In the wake of this scandal, we believe that it is essential to undertake steps to consider the creation of an American-based interest rate index. If U.S. investors and borrowers have suffered financial harm from our dependence on an index set in London, they have the right to expect the country's leaders to support better alternatives. Complacency in the wake of losses and lawsuits will diminish both investor and borrower confidence regarding debt securities issued in U.S. financial markets."
The text of the Grassley-Kirk letter to Geithner is available here.
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01 Oct 2012

Grassley Questions Deputy Attorney General About Reno ATF/US Attorney Rift

By Grassley Press

Friday, September 28, 2012

WASHINGTON - Senator Chuck Grassley is asking Deputy Attorney General James Cole about his office's knowledge about the falling-out between the Reno, NV offices for the U.S. Attorney and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF).

In a letter sent late last night, Grassley wrote, and provided documents, that ATF agents in Reno notified the Office of Professional Responsibility nearly one year ago, yet the breakdown between the two offices continued.

"It appears the ATF and the US Attorney's Office may finally be stepping up to resolve the problem in Reno, but we need to learn how it got to this point.  It's inexcusable that it festered for more than a year," Grassley said.

Here's a copy of the text of Grassley's letter.  A signed copy can be found here.

 

September 27, 2012

Via Electronic Transmission

The Honorable James M. Cole

Deputy Attorney General

U.S. Department of Justice

950 Pennsylvania Avenue, NW

Washington, DC 20530

 

Dear Deputy Attorney General Cole:

As you may be aware, I recently contacted both Nevada U.S. Attorney Daniel Bogden and Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Acting Director B. Todd Jones about allegations from whistleblowers that a breakdown in relations had occurred between ATF and the U.S. Attorney's Office (USAO) in Reno, Nevada.[1] I have not yet received a briefing from either of their offices.

The alleged breakdown is illustrated in a declination memorandum from the Reno USAO, which indicates that as of September 29, 2011, the Reno USAO categorically refused to accept any cases submitted by Reno ATF.  The declination memo states, "We are willing to consider your cases again when your management addresses and resolves the issues at hand."[2] Apparently as a consequence, ATF's Reno Field Office has only opened one case in 2012, as the attached chart indicates.[3]

I have since obtained documents from whistleblowers which indicate that these issues were raised with ATF headquarters and the Justice Department's Office of Professional Responsibility (OPR) almost a year ago.  According to one document, ATF agents in Reno notified ATF's Internal Affairs Division of the issue on October 13, 2011.[4] According to a second document, an ATF agent in Reno notified OPR on October 25, 2011.[5] As you may know, because of ATF and the Reno USAO's inability to resolve these issues, three ATF line agents and a supervisor were transferred out of Reno in April 2012.

In light of these facts, I am seeking to understand whether Justice Department management was also notified of the problems between ATF and the USAO in Reno, and if so, what actions were taken to rectify these issues.  Your office, the Office of the Deputy Attorney General (ODAG), is responsible for overseeing both ATF and U.S. Attorneys.  Therefore, please answer the following questions:

 

1)      Was anyone in ODAG notified in any way of these problems prior to my letters to ATF and U.S. Attorney Bogden on September 17, 2012?

a.      If so, when were individuals in ODAG first notified?

b.      What actions did they take to inquire into the situation?

c.       What actions did they take to address the situation?

2)     Were you aware of these problems prior to my letters to ATF and U.S. Attorney Bogden on September 17, 2012?

a.      If so, when were you first notified?

b.      What actions did you take to inquire into the situation?

c.       What actions did you take to address the situation?

3)     Was anyone in the Office of the Attorney General notified in any way of these problems prior to my letters to ATF and U.S. Attorney Bogden on September 17, 2012?

a.      If so, when were they first notified?

b.      What actions did they take to inquire into the situation?

c.       What actions did they take to address the situation?

Please also provide the following documents:

4)     All emails pertaining to anyone at Justice Department headquarters becoming aware of these issues prior to my letters to ATF and U.S. Attorney Bogden on September 17, 2012.

5)     All emails pertaining to anyone at Justice Department headquarters responding to these issues prior to my letters to ATF and U.S. Attorney Bogden on September 17, 2012.

Please provide a response and produce these documents by Thursday, October 11, 2012.  If you have any questions concerning this matter, please contact Brian Downey or Tristan Leavitt of my staff at (202) 224-5225.

 

Sincerely,

Charles E. Grassley
Ranking Member

 

Attachments

cc:       The Honorable Michael E. Horowitz, Inspector General

U.S. Department of Justice

B. Todd Jones, Acting Director

Bureau of Alcohol, Tobacco, Firearms, and Explosives

[1] Letter from Senator Grassley to U.S. Attorney for the District of Nevada Daniel G. Bogden (Sep. 17, 2012) (Attachment 1); Letter from Senator Grassley to ATF Acting Director B. Todd Jones (Sep. 17, 2012) (Attachment 2).

2 Letter from Assistant U.S. Attorney Sue Fahami to ATF Special Agent (Sep. 29, 2011) (Attachment 3).

3 "Cases Initiated by Program Area," ATF Reno Field Office (Attachment 4).

4 Memorandum from ATF Internal Affairs Division to ATF Assistant Director for the Office of Professional Responsibility and Security Operations, "Request to Close Investigation" (Feb. 10, 2012) (Attachment 5).

5 Letter from Justice Department Office of Professional Responsibility to ATF Special Agent (Dec. 12, 2011) (Attachment 6).


[1] Letter from Senator Grassley to U.S. Attorney for the District of Nevada Daniel G. Bogden (Sep. 17, 2012) (Attachment 1); Letter from Senator Grassley to ATF Acting Director B. Todd Jones (Sep. 17, 2012) (Attachment 2).

[2] Letter from Assistant U.S. Attorney Sue Fahami to ATF Special Agent (Sep. 29, 2011) (Attachment 3).

[3] "Cases Initiated by Program Area," ATF Reno Field Office (Attachment 4).

[4] Memorandum from ATF Internal Affairs Division to ATF Assistant Director for the Office of Professional Responsibility and Security Operations, "Request to Close Investigation" (Feb. 10, 2012) (Attachment 5).

[5] Letter from Justice Department Office of Professional Responsibility to ATF Special Agent (Dec. 12, 2011) (Attachment 6).
01 Oct 2012

Grassley, Upton Seek HHS Answers on Questionable Grants for Health Care Exchanges

By Grassley Press

Leaders Concerned With Reports of Taxpayer Dollars Paying for the Inclusion of Health Law Promotion in Network TV Shows

WASHINGTON - Sen. Chuck Grassley of Iowa and Rep. Fred Upton of Michigan today asked the Department of Health and Human Services to explain waste and what appears to be inadequate or non-existent oversight of the open-ended federal checks awarded to states to establish health care exchanges through the President's health care law.  More than $1 billion has been awarded to date, and revelations of questionable expenses, such as a public relations contract in California to promote the health care exchanges on primetime network television shows, continue to surface.

Grassley and Upton expressed concern over an unlimited budget and little or no restrictions and accountability for federal dollars to help states establish health care exchanges under the new federal health care law, especially in light of looming mandatory budget cuts of $1.2 trillion.  News reports have detailed the state of California's contract with a public relations firm to "tap major network TV shows like 'Grey's Anatomy' and 'Modern Family' to sell Americans on the health care law."

"HHS has failed to provide substantive guidance to states on how the money is to be used," Grassley and Upton wrote in a letter to HHS Secretary Kathleen Sebelius.  "Unsurprisingly given these facts, news reports have shown how states have engaged in questionable contracts with taxpayer dollars. ... Ensuring proper use of American taxpayer dollars is of the upmost importance, and we trust that you share our concerns."

Grassley is ranking member of the Judiciary Committee.  Upton is chairman of the House Energy and Commerce Committee.

The text of their letter is available here.

 

-30-

28 Sep 2012

Grassley Presses for Answers About Alleged FBI Prostitution Case

By Grassley Press
WASHINGTON - Senator Chuck Grassley is pressing FBI Director Robert Mueller for information about taxpayer dollars possibly being spent on prostitutes for an FBI agent and several cooperating witnesses in the Philippines.

Grassley's questions come after a motion outlining the allegations was filed in a California federal district court.  The motion alleges that an undercover agent "invited [the cooperating individuals] to . . . brothels in and around Manila in order to reward them for their efforts and encourage them to continue looking for weapons.  [The undercover agent] ordered prostitutes, and paid for himself and others to have sex with the prostitutes."  The motion also provides correspondence from the Justice Department which confirms that the undercover FBI agent made reimbursement requests totaling $14,500 in expenses incurred by the undercover agent at clubs in the Philippines.  In addition, the motion claims that many of the prostitutes at one of the brothels the FBI agent frequented were likely minors.

Grassley said that U.S. federal law enforcement personnel must be beyond reproach and that this type of behavior cannot be condoned by FBI leadership.  Grassley has requested the FBI to provide responses to questions, a briefing and documents by October 10, 2012, regarding this situation.

The text of the letter to Mueller is below.  A signed copy of the letter can be found here.

 

September 27, 2012

 

Via Electronic Transmission

 

The Honorable Robert S. Mueller, III

Director, Federal Bureau of Investigation

U.S. Department of Justice

J. Edgar Hoover Building

935 Pennsylvania Avenue, NW

Washington, DC 20535

 

Dear Director Mueller:

Recently, I became aware of disturbing allegations regarding an undercover Federal Bureau of Investigation (FBI) agent in the Philippines.  A motion filed in the United States District Court for the Central District of California last week alleges that the undercover FBI agent spent thousands of taxpayer dollars on prostitutes in the Philippines for himself and three other individuals cooperating with the FBI.[1] If true, this story raises serious questions about the behavior of this agent and the FBI's knowledge of this matter.

The motion alleges that the undercover agent and another FBI agent, both based out of West Covina, California, were in the Philippines as part of a weapons-trafficking investigation.  The undercover agent was reportedly posing as a weapons broker for Mexican drug cartels.[2] According to the motion: "On several occasions, the undercover agent invited [the cooperating individuals] to . . . brothels in and around Manila in order to reward them for their efforts and encourage them to continue looking for weapons.  [The undercover agent] ordered prostitutes, and paid for himself and others to have sex with the prostitutes."[3] It is unclear whether the second FBI agent was ever also present.

The motion attaches a declaration from a federal public defender investigator, who traveled to the Philippines in May 2012 to interview witnesses.[4] The motion also provides correspondence from Justice Department trial attorneys dated August 23, 2012, which confirms that the undercover FBI agent did indeed make "several requests for reimbursement . . . for the time period November 15, 2010 to September 27, 2011 that may relate to expenses incurred by the undercover agent at clubs in the Philippines" when the three individuals cooperating with the FBI were present.[5] The requested reimbursements total $14,500.  The Justice Department's correspondence is attached to this letter.

The motion claims that many of the prostitutes at one of the brothels the FBI agent frequented were likely minors.  It attaches documentation that on May 5, 2012, the Philippine government raided the brothel and rescued 60 victims of human trafficking, 20 of whom were minors.[6] The aforementioned letter from Justice Department trial attorneys acknowledges that the undercover FBI agent submitted a request for reimbursement based on expenses at the brothel on September 26 and 27, 2011.[7] The motion also identifies at least four other dates on which discovery produced by the government indicates the FBI agent visited the brothel.[8]

In light of this information, I ask that you provide a briefing to my staff on this issue as soon as possible.  I also request that you come prepared to answer the following questions:

1)      Of the $14,500 requested by the undercover agent for reimbursement, how much was the agent actually reimbursed by the FBI?

2)      Was the undercover FBI agent the case agent for this weapons-trafficking investigation?  If not, did the case agent authorize the expenses at the brothels in this undercover operation?

3)      Did any other U.S. law enforcement or embassy personnel visit these brothels with the undercover FBI agent?  Please list each agency, the number of employees involved, each individual's role, and whether they were a recipient of the services for which reimbursement was requested of the FBI.

4)      Was any of the activity for which reimbursement was requested recorded by wire or video surveillance?  If so, which activity?  Please provide all recordings.

5)      What other U.S. law enforcement or embassy personnel participated in the Philippines in the overall weapons-trafficking investigation?  Please list each agency, the number of employees involved, and their role.

6)      Was the first-line supervisor of the undercover FBI agent and/or case agent aware of the undercover agent's visits to brothels?  What other supervisors were informed?

7)      When and how did FBI headquarters become aware of these allegations against this FBI agent working in the Philippines?

8)      What actions were taken by FBI headquarters to investigate these allegations?

9)      Has discipline been proposed for any FBI employees (agents or other personnel) in connection with this?  If so, please describe the circumstances and procedural standing of the proposed discipline.

10)  When did FBI supervisors become aware that minors may have been involved at these brothels?

11)  Did the U.S. Attorney's Office (USAO) running the undercover operation receive notification of and/or authorize the undercover activity at the brothels?

12)  Was the USAO running the undercover operation provided notes or other materials (e.g. 302's) regarding the events in question?  If so, please provide these documents.

13)  Is the FBI aware of any other instances of similar behavior occurring by other agents stationed around the world?  If so, please describe them.

14)  How many FBI employees (agents or other personnel) have been disciplined in the last eight years, including those terminated or voluntarily separated from the FBI, for soliciting, hiring, procuring the services of, or other inappropriate behavior involving prostitutes?  Include all instances in which the FBI's Office of Professional Responsibility (OPR) reviewed allegations that FBI agents were involved with prostitutes, including a detailed summary of the allegations, the findings of investigation, the pay grade and rank of the employee, the proposed punishment (administrative or otherwise), the location where the incident(s) occurred, and whether the employee is still employed by the FBI.

15)  How many FBI employees (agents or other personnel) have been terminated by the FBI following an investigation or allegations of inappropriate involvement with prostitutes?

16)  How many FBI employees (agents or other personnel) remain employed by the FBI following an investigation or allegations of inappropriate involvement with prostitutes?

Finally, please also provide the following documents:

17)  Any case notes or briefing plan regarding the undercover activity, including how the undercover activity was monitored or details on surveillance by agents in the brothels.

18)  All emails pertaining to FBI becoming aware of any of the above allegations.

19)  All emails demonstrating the FBI's response to the above allegations.

Thank you in advance for your prompt attention to this matter.  I would appreciate receiving your response to this matter by October 10, 2012.  Should you have any questions regarding this matter, please do not hesitate to contact my staff at (202) 224-5225.

Sincerely,

Charles E. Grassley
Ranking Member

Attachment

cc:        The Honorable Eric H. Holder, Jr.

Attorney General of the United States

U.S. Department of Justice

 

The Honorable Michael E. Horowitz

Inspector General

U.S. Department of Justice

 

[1] Motion to Dismiss Indictment Because of Outrageous Government Conduct, United States v. Syjuco, Case No. CR 12-37-RGK (C.D. Cal., Sept. 17, 2012).

2 Id. at 4.

3 Id. at 10-11.

4 Id. at 50-55 (Declaration of Richard Goff (Sept. 14, 2012)).

5 Id. at 114-115 (Letter on behalf of Assistant Attorney General Lanny Breuer to John Littrell, et al. (Aug. 23, 2012), at 1) (Attachment 1).

6 Id. at 116-127, Exhibit F (Recommendation for Prosecution, National Bureau of Investigation, Republic of the Philippines (May 7, 2012)).

7 Id. at 113-115, Exhibit E (Letter on behalf of Assistant Attorney General Lanny Breuer to John Littrell, et al. (Aug. 23, 2012), at 1).

8 Id. at 11.  The dates are October 5, 2010; November 16, 2010; February 22, 2011; and September 23, 2011.

 


[1] Motion to Dismiss Indictment Because of Outrageous Government Conduct, United States v. Syjuco, Case No. CR 12-37-RGK (C.D. Cal., Sept. 17, 2012).

[2] Id. at 4.

[3] Id. at 10-11.

[4] Id. at 50-55 (Declaration of Richard Goff (Sept. 14, 2012)).

[5] Id. at 114-115 (Letter on behalf of Assistant Attorney General Lanny Breuer to John Littrell, et al. (Aug. 23, 2012), at 1) (Attachment 1).

[6] Id. at 116-127, Exhibit F (Recommendation for Prosecution, National Bureau of Investigation, Republic of the Philippines (May 7, 2012)).

[7] Id. at 113-115, Exhibit E (Letter on behalf of Assistant Attorney General Lanny Breuer to John Littrell, et al. (Aug. 23, 2012), at 1).

[8] Id. at 11.  The dates are October 5, 2010; November 16, 2010; February 22, 2011; and September 23, 2011.

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