Scully: Critics Have Political Motives

Posted October 8, 2004 at 6:11pm

Embattled former Bush administration Medicare chief Thomas Scully says he is deeply dismayed by ongoing Congressional attacks on his role in last year’s Medicare reform debate and suggested the entire controversy has been ginned up by those seeking to discredit the new prescription drug benefit during an election year.

“In a political year, people will look for any nugget they can find, and I’m that nugget,” Scully said in an interview Friday. “And it’s been very painful for me personally.”

Scully said that even his own mother — on the basis of news reports — has wondered whether he did something wrong and should do penance for it.

“It has not been fun,” Scully said, adding that he has sought to cultivate a reputation for honesty over the years and prides himself on his “bluntness” and forthrightness.

Democrats allege that Scully, who left his job as the administrator at the Center for Medicare and Medicaid Services in December, suppressed information that showed the prescription drug benefit would cost at least $100 billion more than advertised — a charge Scully adamantly denies.

Nevertheless, Democrats have demanded in recent weeks that the Department of Health and Human Services take steps to “recover” more than half the salary Scully collected last year at CMS. They have cited a little-known appropriations rider that forbids payment of salary to any Executive Branch official who prevents a staffer from communicating with Congress.

HHS so far has refused to comply with the demands.

The stakes were raised further last week, however, when Sen. Frank Lautenberg (D-N.J.) indicated that he may block the appointment of a new inspector general at HHS unless the department takes action.

Lautenberg issued his threat in a private meeting Wednesday with the acting inspector general at HHS, Daniel Levinson, who is currently awaiting Senate confirmation.

“Until we understand that [HHS is] going to take action like that, we are considering holding up Levinson’s nomination,” Lautenberg aide Daniel Katz said.

Judy Holtz, a spokeswoman for the inspector general’s office at HHS, said Levinson would not have any comment on the meeting.

A spokesman at HHS said Friday that the department has no intention of revisiting the Scully matter. “It’s a shame that Senator Lautenberg would threaten to hold up the nomination of the inspector general for purely partisan reasons,” said the spokesman, Bill Pierce. “We think the inspector general is an important position to have filled.”

Controversy has never seemed to be far from Scully, who is known in the lobbying world and on Capitol Hill for his quick wit and sharp tongue — a “swashbuckler,” in the description of one friend and fellow lobbyist. During his time at CMS, Scully became renowned for caustic exchanges — many by e-mail — with contractors and others who did not please him.

The current controversy surrounding Scully stems specifically from allegations that he threatened to fire Medicare’s chief actuary, Richard Foster, if the career government employee yielded information to Congress that suggested the prescription drug plan would cost more over 10 years than had been projected by the Congressional Budget Office, which fixed the price tag at $395 billion.

Scully’s alleged role in suppressing the actuarial estimates transformed him into the bete noire of the Medicare debate — a target for GOP conservatives who were already leery of what they considered an unwarranted expansion of entitlements, as well as for Democrats who believed that the administration had fudged the numbers in a willful effort to deceive Congress.

The controversy reignited last month, when the Government Accountability Office issued its own report in the matter. Basing its findings on an internal review by the inspector general at HHS, the report recommended that Scully, now a lobbyist with Alston & Bird, be compelled to return roughly $85,000 of the salary he received as CMS administrator in 2003.

The figure represents the amount of government salary Scully collected from May of last year — when he allegedly threatened Foster — to December, when he stepped down as the administrator at CMS.

Though beset by controversy and stalked by Congressional critics, Scully has nonetheless thrived since his return to K Street — a development that admirers chalk up to what they consider a nearly unrivaled expertise in the complex Medicare program.

“He’s forgotten more about Medicare than I’ll ever know,” said Fred Graefe, a Democratic health care lobbyist who considers Scully a close friend.

Such is Scully’s level of expertise and access, lobbyists say, that some organizations will likely put him on retainer simply to avoid the risk that Scully might sign up with a competitor.

“He’s one of only a very, very select few in Washington who can get [Ways and Means Committee chairman] Bill Thomas [R-Calif.] to do what he asks,” one GOP health care lobbyist said. This access, combined with Scully’s Medicare expertise, can be “intimidating,” the lobbyist added.

Some doors won’t be open, however.

“I would not let him in my office,” said Rep. John Dingell (D-Mich.), the ranking member on the Energy and Commerce Committee. “The truth is not in him.”

Such animus notwithstanding, insiders say Scully has continued to maintain strong ties with key Democrats in the Senate, including Finance Committee chairman Max Baucus (Mont.) and Sen. Jay Rockefeller (W.Va.).

Scully himself points to efforts he made while CMS administrator to provide equal access to Members from both parties, citing town hall meetings he attended with Democratic lawmakers such as Reps. Stephanie Tubbs Jones (Ohio) and Earl Pomeroy (N.D.).

“I do appreciate that many of my Democratic friends have not taken shots at me,” Scully said.

Since May, Scully’s Medicare practice at Alston & Bird has signed up nearly a dozen clients, including such industry leaders as Aventis Pharmaceuticals, Ford Motor Co. and HealthSouth Corp.

His other clients include Caremark RX Inc., Fresenius Medical Care, Heritage Provider Networks, Mylan Laboratories, NDCHealth Corp., Paramount Capital Inc., the Renal Leadership Council (which runs its operations from Scully’s office) and Washington2 Advocates LLC.

The former Medicare administrator has also been a magnet for lobbying talent. Among Scully’s hires have been Colin Roskey, who was the Senate Finance Committee’s top health care adviser, and David Hebert, a seasoned health care lobbyist who most recently served a stint as chief of staff to House Majority Whip Roy Blunt (R-Mo.).

In perhaps the ultimate sign of Scully’s resurrection, President Bush’s re-election campaign has tapped him to be its chief surrogate on Medicare policy.

Scully is billed as the keynote speaker for a major industry breakfast Oct. 19, where experts aligned with the Bush and Kerry campaigns will lay out “competing visions” on the future of the health care entitlement.

“That wouldn’t happen if he was tainted,” one Scully ally noted.