Health-Data Watchdog Company Has a Powerful Adviser
March 24 2017 - 10:15AM
Dow Jones News
By Anna Wilde Mathews and Alexandra Berzon
A little-known health company says it has scored a high-profile
new board member: Michael D. Cohen, a close associate of President
Donald Trump who serves as the president's personal attorney.
4C Health Solutions focuses on detecting fraudulent or
questionable health-care billings sent to insurers. The closely
held company based in Midlothian, Va. -- whose corporate name is
HealthcarePays Network LLC -- brought in less than $2 million in
revenue last year and currently has around 20 employees, according
to Chief Executive David J. Adams.
The 4C board also includes well-connected former Republican
Cabinet officials Tommy G. Thompson, the company's chairman and a
former U.S. Secretary of Health and Human Services, and former
Treasury Secretary John W. Snow. Another board member is Bill
Fields, a former high-ranking executive at Wal-Mart Stores Inc.
Mr. Adams said he hopes they can help 4C achieve ambitious
growth, fueled by business from government programs such as
Medicare, Medicaid and the Veterans Health Administration, as well
as from corporate employers.
Mr. Adams said he doesn't expect Mr. Cohen to promote the firm
to the president or others in the Trump administration. "I don't
want Mr. Cohen to say, 'Mr. Trump, you ought to do this with' " 4C,
Mr. Adams said. "If Mr. Cohen wants to talk to Mr. Trump about the
problem of health-care fraud, that's fine."
He said Mr. Cohen is a valuable board member because of his
relationships with top corporate executives and expertise in
employment law.
Mr. Cohen declined to comment about 4C, referring questions to
the company. He said he had been "asked to join many boards."
Mr. Cohen is a longtime troubleshooter for Mr. Trump and has
called himself "the fix-it guy" for the president. He served in
that role as a Trump Organization employee and resigned from the
company when Mr. Trump became president. He has said he is paid
privately by Mr. Trump and isn't part of the government.
Some previous presidents, including Bill Clinton, have had
personal attorneys to address legal matters that fall outside their
government duties. Ethics experts said Mr. Cohen's role on a
corporate board of directors could present some
conflict-of-interest challenges, even though he doesn't face the
restrictions a government employee would face in personal business
matters.
Mr. Cohen "is free legally to pursue his own business interests,
but his role as Mr. Trump's personal employee gives him a unique
access point," said Kathleen Clark, a professor at Washington
University School of Law, in St. Louis.
As an attorney, Mr. Cohen has to serve his client's interests:
One question that could arise is whether that responsibility would
conflict with his obligations as a corporate board member, Prof.
Clark said. And Mr. Cohen's proximity to the president could lead
to a perception of favoritism if a company where he is on the board
attempts to win business with government agencies or influence
policy, ethics experts said.
A White House official didn't respond to a request for comment.
In an email, Mr. Cohen dismissed a question about ethics and
potential conflicts of interest as "fundamentally flawed and
biased" and said he did not see the benefit of engaging in a
conversation about it.
Mr. Thompson said he doesn't expect Mr. Cohen to discuss the
company with Mr. Trump or federal officials, though Mr. Thompson
said he himself has spoken about the costs of health-care fraud
with Trump administration officials. "I hope once he's on the
board, he helps us make our agenda apparent to people," Mr.
Thompson said. "I hope he will do his part with his connections,"
including in the business sector.
Mr. Adams said board members have invested their own money in
4C. Mr. Cohen hasn't done so, but will receive options to purchase
shares as part of his board service, the CEO said.
4C has been aggressively pitching its services to large
companies, saying it can save them money that they currently spend
on questionable health claims through employee health plans. 4C
says it can scan large volumes of claims and detect patterns that
may signal fraud. Other companies compete with 4C in offering such
services to employers.
4C wasn't profitable last year, Mr. Adams said. He said the
company aims to be in the black in 2017 when he projects revenue
will grow to around $17 million. The CEO said his company is
working with several large customers and potential customers but he
said he couldn't name them publicly due to confidentiality
requirements. 4C charges clients a set monthly fee for each person
covered by the health plan.
4C says it aims to prevent questionable payments before they are
made. Getting access midstream to large health insurers' systems to
intervene and stop allegedly problematic payments is likely to be
an uphill battle, industry experts said. Mr. Adams said 4C believes
employers have the legal right to block payments of their own money
for questionable claims.
Write to Anna Wilde Mathews at anna.mathews@wsj.com and
Alexandra Berzon at alexandra.berzon@wsj.com
(END) Dow Jones Newswires
March 24, 2017 10:00 ET (14:00 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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