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Jack Walker, the man who won’t audit North Carolina’s contracts with Blue Cross Blue Shield (BCBS) to control what the State spends on health care wants to audit every teacher and state employee who pays for dependent health coverage and their dependents on the State Health Plan. In a letter to health plan members sent out this week, just on the heels of the decision to audit State Health Plan members for obesity and tobacco, Jack Walker warns that the State Health Plan will audit all dependents covered under the Plan during the 2009 benefit year.

Dependents determined to be ineligible for the Plan will be removed from the Plan. In addition, the Plan may pursue reimbursement for claims paid for ineligible dependents.

Jack Walker, the man with a questionable PhD from a defunct online college, who can’t provide documentation of a dissertation, wants members who pay for dependent coverage to “begin to collect the required documents” to provide evidence to confirm eligibility. Documents include marriage certificates, birth certificate and, tax returns. Eligible dependents under GS 135 are, generally:

Legal spouse
Unmarried children under 19
Unmarried children with disability developed before 19 (or 26 if full time student)
Unmarried children 19-26 who are full time students at a school or college accredited by the state of jurisdiction.

If you take care of nieces, nephews, grandchildren or other kids, they are not covered unless they are legally adopted or foster children. No apparent exception for guardianship or other forms of custody.

I am aghast at Walker’s bravado and the relentless pursuit of remedies for the mismanagement of the State Health Plan on the backs of state employees especially when the buzzards of furloughs and lay-offs are circling over the legislature. Shrinking the pool by scaring off paying customers hardly seems wise unless there is some evidence of massive abuse. I still can’t wrap my brain around the third-party administrator status of BCBS when the plan depends on BCBS’s Preferred Provider Network. Millions are paid out to BCBS with limited oversight yet the people who pay into the Plan for dependent coverage are now to be audited. Just pray that the “College” your child is attending “full-time” has better credentials than “Columbia Pacific University“.

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Yesterday in the House Finance Committee, Minority Leader Paul “Skip” Stam tried derailing the Transit Bill H148 by referring to sales tax as an inefficient tax. He claimed that sales tax was not deductible from Federal taxes, as property tax is, and that the effect was to send 15 cents of every dollar in sales tax to the Federal Government. He exchanged words with Rep Deborah Ross, a sponsor of the bill and did not offer an amendment in committee but promised to introduce one on the House floor when the bill is considered. Mr Stam should check with the IRS first.

According to the Internal Revenue Service Topic 503 – Deductible Taxes:

There are four types of deductible nonbusiness taxes:

  • State, local and foreign income taxes;
  • Real estate taxes;
  • Personal property taxes; and
  • State and local sales taxes.
  • It is a conservative mantra at the local level that sales tax is better than property tax because everybody pays sales tax. Now we are to believe that property tax is better than sales tax because sales tax is supposedly not deductible on Federal tax returns. The various criticisms are intended to erode taxation anywhere for any reason. In this case the reasoning is wrong.

    Generally, sales taxes are not deductible on Schedule A. However, for Tax Years 2005, 2006, 2007, 2008, and 2009 if you file a Form 1040 and itemize deductions on Schedule A, you have the option of claiming either state and local income taxes or state and local sales taxes (you can’t claim both). If you saved your receipts throughout the year, you can add up the total amount of sales taxes you actually paid and claim that amount. If you didn’t save all your receipts, you can choose to claim a standard amount for state and local sales taxes. Its easy if you use the Sales Tax Deduction Calculator on IRS.gov for either year (refer to Publication 600 and Form 1040 Instructions).

    Update: For taxpayers using the Standard Deduction, there is an additional property tax deduction. However, the maximum additional deduction is $1,000 for married, filing jointly ($500 for singles). As the average property tax bill in Wake County is about $2,000, an increase would not be deductible. Regardless of the merits of property tax versus sales tax as a funding mechanism for transit or other transportation, the federal deductibility argument is a spurious one.

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    Jack WalkerAccording to the State Health Plan website Jack W. Walker, PhD, “previously served as executive administrator from November 1999 to March 2005″. According to the NC Secretary of State’s Office, Jack W. Walker was also the President of “Benefit Plans of America, Inc.” a North Carolina Corporation, from September 1999 through December 2001.

    Little is known about the NC corporation “Benefit Plans of America, Inc.” Walker’s wife Janice was a Director and Secretary/Treasurer. An annual report was filed April 2000. Another filed February 2001 was rejected. Articles of dissolution were filed January 2002. The firm is not listed in Walker’s online biography. By unfortunate coincidence another firm of the same name was operating in North Carolina during the same time period.

    “Benefit Plans of America, Inc.” a Mississippi not for profit corporation was providing unlicensed dental insurance plans in North Carolina and was the subject of complaints to the NC Department of Insurance. It had used the name “Benefit Plans of America, Inc.” since June 1995 and in February 2004 was issued a Cease and Desist letter by the NC Department of Insurance.

    There is no reason to believe that there is any connection between “Benefit Plans of America, Inc.” a North Carolina Corporation and “Benefit Plans of America, Inc.” a Mississippi not for profit corporation. The striking similarity of the names could lead a reasonable person to confuse them.

    It is not unreasonable to ask why Walker maintained this corporation while serving as executive administrator of the State Health Plan. It is not unreasonable to ask why someone with responsibility for validating and reimbursing millions in State health care benefits could be oblivious to a dubious health benefits corporation with a name identical to his personal corporation.

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    Another potential conflict of interest that Lanier Cansler will have to negotiate as Secretary of DHHS is his association with the nursing home industry. His firm Cansler Fuquay Solutions represented the North Carolina Health Care Facilities Association (NCHCFA) until December 23, 2008 when his partner Gary Fuquay resigned as a lobbyist for the trade organization.

    Medicaid billing is a huge factor in nursing home operations as Medicaid represents up to 75% of revenues. Nursing home reimbursements are a small but significant of all Medicaid spending in the State which now will be managed by another company which was represented until recently by Lanier Cansler.

    Cansler is one of just two people still listed on the NCHCFA website as directors of the organization’s subsidiary FutureCare NC. The other director is J Craig Souza, Executive Director of NCHCFA. Directorship of a non-profit might seem unremarkable except that Souza earns annual compensation in excess of $500,000 to represent an industry that gets much of its revenue through State government from the Federal government.

    Souza may be the most influential person in NC you have never heard of. He got his start in the 1970’s in the Holshouser administration working under Dave Flaherty, head of the DHHS precursor known as the Department of Human Resources. Flaherty went on to run unsuccessfully for Governor against Jim Hunt. Souza’s career since has involved representing and lobbying of health care industry interests.

    Souza is an Eastern North Carolinian who became an ECU Trustee and has been a member of the UNC Board of Governors for several years. He is credited with bringing a School of Nursing to ECU. The new School of Dentistry at ECU is a client of Cansler Fuquay Solutions which has been researching potential locations for community dental clinics in Eastern NC.

    Souza is not known to make political contributions but is associated with lobbying and politics. He is the owner of Vinnie’s Steakhouse & Tavern in Raleigh, scene of Jim Black’s “last supper”, a private dinner attended by 20 Democratic House members and several lobbyists where Black announced his decision not to run for Speaker. The restaurant has private rooms named “The Caucus Room”, The Chamber” and “The Gallery” and was popular with lobbyists at least until spending restrictions triggered in part by Black’s excesses.

    Cansler may well be qualified to run DHHS but he’ll have to work extra hard to avoid conflicts of interest with the private sector he’ll be charged with overseeing.

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    PPD CEO Fred Eshelman’s animosity towards federal oversight might be explained by his having to appear at a Congressional hearing earlier this year to explain why his company, PPD Inc, did not inform the FDA about fraud in a clinical study overseen by PPD for $20 million. The antibiotic drug Ketek, made by Aventis, received FDA approval, based in part on the fraudulent study, even though the FDA had become aware of the fraud through its own inspections. Use of Ketek was restricted after some patients experienced serious liver problems, some fatal. Eshelman claimed that PPD had no obligation to inform the FDA of the fraud due to its contractual relationship with Aventis now known as Sanofi-Aventis. Chris Fitzsimon wrote yesterday about RightChange the 527 founded and funded by Fred Eshelman: A strange 527 in North Carolina. Eshelman owns 8.6 million shares of PPD Inc (PPDI). A rise of just 33 cents in PPD stock (1%) pays for the $2.73 million he has put into RightChange. It’s not small change and it may be his right but that doesn’t make it right.

    YouTube Preview Image Fred Eshelman Congressional Testimony 1 of 3

    Not much in the first clip. It gets more interesting in the second two clips:
    YouTube Preview Image Fred Eshelman Congressional Testimony 2 of 3

    YouTube Preview Image Fred Eshelman Congressional Testimony 3 of 3