Legislators continue to look out for their own bottom lines

March 27, 2019

Investigative Reports

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SC budget process

By RICK BRUNDRETT

Another year, another round of state lawmakers supporting legislation that could fatten their wallets.

Just this month alone, at least two House bills and a Senate bill were introduced, while separate legislation passed the Senate, that pose potential conflicts of interest for lawmakers who authored or co-sponsored the proposals.

State ethics law bans public officials from using their positions to “obtain an economic interest for himself, a family member, an individual with whom he is associated, or a business with which he is associated.”

But under a longstanding legal loophole known as the “large-class exception,” lawmakers can sponsor bills that benefit their businesses if the legislation also would help similar businesses equally.

“Any legislator can propose a bill, and it’s not a conflict within his profession,” said Sen. Ronnie Cromer, R-Newberry, when contacted Tuesday by The Nerve.

Cromer, a licensed pharmacist and local independent pharmacy owner, is the co-sponsor of legislation that would regulate “pharmacy benefits managers,” who typically contract with pharmacies on behalf of insurers to process claims for prescriptions drugs or medical supplies.

The bill, introduced by Sen. Michael Gambrell, R-Anderson, who is not a pharmacist, and co-sponsored by five other lawmakers, including Cromer, passed the full Senate on March 7 after getting approved by Senate Banking and Insurance Committee, which is chaired by Cromer. Gambrell also is a committee member.

Among other things, the legislation would ban pharmacy benefits managers from engaging in a “pattern or practice of reimbursing independent pharmacies or pharmacists in this State consistently less than the amount” paid to a “pharmacy benefits manager affiliate for providing the same pharmacist services.”

“They pay the chain (drug stores) more money,” said Cromer.

Cromer contended, though, the bill is “not so much for the benefit to the pharmacists as it is trying to get some sort of oversight” over pharmacy benefits managers “so that these (drug) prices are not so exorbitant.” The National Council of Insurance Legislators proposed a bill last year that could be used in each state to “rein in” pharmacy benefits managers, he added.

Asked if he believed his support of the bill, which is before the House Labor, Commerce and Industry Committee, posed a conflict of interest for him, Cromer replied, “Absolutely not.”

In comparison, he said, “Any time a lawyer introduces a bill and it affects the legal profession – if you couldn’t allow them to do that, they never could introduce a bill.”

Since March 12, lawyer-legislators have introduced at least two bills that could increase attorneys’ paychecks. One bill, sponsored by Sen. Brad Hutto, D-Orangeburg, would change the state workers’ compensation law to allow medical records and opinions of medical providers to be “admissible without regard to the rules of evidence,” which, in theory, would make it easier for attorneys representing workers injured on the job to make their legal cases.

Hutto and three other lawyer-legislators who co-sponsored the bill reported earning legal fees, either individually or through their law firms, from workers’ compensation cases in 2017, according to their annual income-disclosure statements filed with the State Ethics Commission.

That included Sen. Luke Rankin, R-Horry, who reported receiving a total of $540,948 in legal fees that year, according to his income-disclosure statement. The Nerve revealed last year that Rankin was among 21 lawyer-legislators or their law firms that collectively received about $4 million in legal fees in 2017 from workers’ compensation cases.

Rankin is chairman of the Senate Judiciary Committee, which will consider the bill introduced earlier this month. Hutto and the other three lawyer-lawmakers who co-sponsored the legislation also serve on the committee.

Under state law, the governor appoints the seven-member Workers’ Compensation Commission – which approves legal fees in cases it decides – with consent of the Senate. The commission chairman’s annual salary is $125,208; other commissioners make $120,153, according to the state salary database.

Neither Rankin nor Hutto returned phone messages Tuesday from The Nerve.

Another lawyer-legislator, Rep. Weston Newton, R-Beaufort, sponsored a bill, which was introduced last week, that would allow courts to assess attorney fees and costs in cases involving “conveyances to defraud creditors.” The bill is co-sponsored by 15 other attorney-lawmakers, including Rep. Murrell Smith, R-Sumter, who is chairman of the House Ethics and Ways and Means committees.

A type of fraudulent conveyance occurs when a debtor intentionally donates or rids himself of property as part of an asset-protection scheme, according to Investopedia, an online investing and financial education site.

Newton, who is chairman of the House Legislative Oversight Committee, did not return a phone message Tuesday from The Nerve. The bill was referred to the House Judiciary Committee, chaired by Rep. Peter McCoy, R-Charleston, who is an attorney. Newton also serves on that committee.

Attorney-legislators aren’t the only lawmakers with ties to certain occupations sponsoring bills affecting those areas. A bill introduced last week and sponsored solely by Rep. Bill Sandifer, R-Oconee, who is a licensed funeral director and embalmer, would, among other things, ban licensed funeral directors from splitting “any portion of a fee or any compensation” for funeral services with another “person, partnership, corporation, association, or legal entity.”

On his online legislative biography, Sandifer lists his occupation as “businessman,” though the summary also notes he previously served on the state Board of Funeral Service, which oversees funeral directors; was president of the South Carolina Funeral Directors Association; and received “Legislator of the Year” honors from the funeral directors association and the South Carolina Cemetery Association.

Sandifer’s income-disclosure statements in recent years don’t show any direct income from the funeral industry, though his 2017 report filed with the State Ethics Commission listed “family income” from a cemetery in Pickens County.

On Tuesday – just a week after it was introduced – the bill, which would reorganize the governor-appointed, 11-member state Board of Funeral Service and stiffen criminal and civil penalties for violators of state law, passed the House Labor, Commerce and Industry Committee, which is chaired by Sandifer.

Sandifer did not return a phone message Tuesday from The Nerve.

Brundrett is the news editor of The Nerve (www.thenerve.org). Contact him at 803-254-4411 or rick@thenerve.org. Follow him on Twitter @RickBrundrett. Follow The Nerve on Facebook and Twitter @thenervesc.

Nerve stories are free to reprint and repost with permission by and credit to The Nerve.

 

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