Millions Flow to Senators’ Businesses

January 6, 2011

Investigative Reports

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The NerveFor some S.C. senators, it pays to have connections with state government.

From 2007 through 2009, S.C. Sen. Kevin Bryant’s pharmacy earned $5 million in payments through the state health plan and Medicaid programs, according to his statements of economic interests filed with the S.C. Ethics Commission.

During that same period, state Sen. John Land’s law firm received $4.4 million in legal fees, mainly from worker injury awards approved by the S.C. Workers’ Compensation Commission, Land’s statements of economic interests show.

Individually, Land, D-Clarendon, received nearly $2.3 million during the period, or about 52 percent of the firm’s total earnings reported in his statements.

The two senators in 2009 had the highest reported public income or state-approved fees for their businesses, according to The Nerve’s review of statements of economic interests filed by 46 current or former senators. The 2010 statements are due by April 15.

All of the payments to Bryant and Land were legal under state law.

Annual statements of economic interests must include all salaries or wages received in the previous calendar year by lawmakers and their immediate families from government agencies, plus any income from contracts between a lawmaker’s employer and public agencies.

The disclosures are aimed at keeping lawmakers from engaging in potential conflicts of interest resulting from their employment.

In a recent interview with The Nerve, Bryant, R-Anderson and a pharmacist, said he doesn’t know how much he personally earned off the state. His statements of economic interests list him as the president of the pharmacy and an approximate 25 percent shareholder.

“That money goes directly to the store, not my pocket,” he said. “We’ve got over 30 employees in our store.”

Land, the Senate minority leader and currently the longest-serving member in the Legislature, told The Nerve that the fees paid to him were not tax dollars, but came out of awards paid by insurance companies and approved by the Workers’ Compensation Commission.

“The simple question is this: Do you want lawyers in the General Assembly?” Land said. “If you do, then you have to let us do our business.”

State ethics law bans Land and Bryant from voting on the section of the state budget appropriating tax dollars to the agencies doing business with them.

Land also is prohibited from casting confirmation votes for Workers’ Compensation commissioners – the quasi-judicial hearing officers who decide whether to approve worker injury awards.

But the state ethics law doesn’t ban the senators from voting on the state budget as a whole, or on other bills that could affect their businesses.

State Sen. Phillip Shoopman, R-Greenville, wants to change that. He prefiled a bill (S. 161) last month that he says would ban any state lawmaker employed by or under contract with a state agency from voting on any legislation affecting the agency.

“If you’re under contract with an agency, then you can’t be sitting there voting for more money for that agency,” Shoopman told The Nerve recently. “I’m trying to make it a simple, broad-brush, across-the-board bill.”

Shoopman said he got the idea for the bill after talking to constituents who made it clear to him that they were tired of the “good-ol’-boy” culture of the Legislature.

“Sunshine is the best disinfectant,” Shoopman said. “There is not a high level of trust, and we need to rebuild that trust.”

Shoopman, an engineer, said he doesn’t have any contracts with the state. His statement of economic interests for 2009 listed $22,400 in legislative salary and in-district expense payments.

A separate bill (S. 212) sponsored by Senate President Pro Tempore Glenn McConnell, R-Charleston, and co-sponsored by Shoopman and others would allow lawmakers to recuse themselves from voting on a bill on the floor of the House or Senate only if they had withdrawn earlier from votes on that bill in committee and subcommittee hearings.

“You can’t have somebody shaping a bill at the subcommittee or committee level, and say on the floor, ‘I can’t touch this,’” Shoopman said.

In addition, a bill (S. 71) prefiled last month by Sen. David Thomas, R-Greenville, would require lawmakers to disclose all private sources of annual income of more than $200, though the amounts would not have to be revealed. State law generally doesn’t require lawmakers to reveal their private income sources.

All three bills were sent to the Senate Judiciary Committee, chaired by McConnell and of which Shoopman is a member. The General Assembly reconvenes Tuesday.

Land, a member of the Senate Finance and Ethics committees, told The Nerve that he recuses himself from all confirmation votes on Workers’ Compensation commissioners and also from votes on the section of the budget bill dealing with the commission’s funding.

Still, Land said he participates in debates on the commission’s budget.

“I probably do more workers’ compensation work than any other lawyer in the General Assembly,” he said. “But I probably have been doing it longer than any other lawyer in the General Assembly.”

Besides Land, two other attorney-senators reporting workers’ compensation earnings for 2009 were Luke Rankin, R-Horry, ($543,809); and Creighton Coleman, D-Fairfield, ($80,924), The Nerve’s review found.

Last year’s Democratic gubernatorial candidate, Sen. Vincent Sheheen of Kershaw County, reported $98,796 in workers’ compensation fees for 2009, though his statement of economic interests indicated the money went to his law firm and not directly to him. Sheheen reported $23,173 in legal fees from other sources as personal income in 2009.

Sheheen during the gubernatorial campaign reported his law firm has earned more than $756,000 in workers’ compensation fees since 2004, and that his 2009 income as his share of the firm’s earnings was $372,509, according to an October article in The State newspaper.

Although Bryant’s pharmacy has received millions in state payments in recent years, Bryant, who serves on the Senate Medical Affairs Committee, told The Nerve that he voted against the 50-cent state cigarette tax increase, which is projected to generate about $125 million for a new Medicaid trust fund.

“I either needed to vote ‘no’ or recuse myself,” he said. “I’m against socialized medicine.”

Bryant acknowledged that the state law dealing with conflict-of-interest situations is weak. He noted, for example, that lawmakers generally are not required to recuse themselves when a bill is in committee, regardless of whether it poses a potential conflict for them.

“I think we need to revisit the recusal process,” Bryant said.

Contacted by The Nerve recently, Cathy Hazelwood, attorney for the S.C. Ethics Commission, cited the state ethics law dealing with lawmakers, though she declined further comment when asked if any legislators recently had been cited for violating income disclosure laws, directing those questions to the House and Senate Ethics committees.

Under state law, ethical complaints against lawmakers are dealt through the House and Senate Ethics committees, which means legislators essentially police themselves.

“The (S.C. Ethics) Commission doesn’t enforce those sections (of the law), and I don’t interpret them,” Hazelwood said in a written response to The Nerve.

Sen. Wes Hayes, R-York and the Senate Ethics Committee chairman, did not respond to recent written and phone messages from The Nerve.

The Nerve’s review found that of the 46 current or former senators who filed statements of economic interests for 2009, 31, or 67 percent, reported no other income besides their Senate salary or benefits. The Nerve in a special series in October reported that the average annual cost of a state lawmaker was about $32,000, based on House and Senate salary and expense records.

In the latest review, three senators who didn’t report any legislative salaries in 2009 had state pensions: Senate Finance Committee Chairman Hugh Leatherman, R-Florence ($36,148); Thomas, the Senate Banking and Insurance Committee chairman, ($32,390); and Yancey McGill, D-Williamsburg ($27,859).

Research assistants Matthew Snider and Hal Peters contributed to this story. Reach Brundrett at (803) 254-4411 or rick@thenerve.org.