Legislators Ask Insurance Chief Nominee About Cigna Ties

April 03--HARTFORD -- Legislators on Thursday asked the governor's choice for insurance commissioner, Katharine L. Wade, about her connections to Cigna Corp., where she once worked and where her husband now works.

The questions came up during her hearing before the nominations committee. Gov. Dannel P. Malloy nominated Wade, 49, of Simsbury, on March 20, pending legislative approval.

Wade, who in the meantime is acting insurance commissioner, worked at Cigna Corp. from 1992 to 2013, where she held various positions, most recently as a lobbyist with the title of vice president of Public Policy, Government Affairs and U.S. Compliance. The Insurance Department regulates the industry on such matters as price increases proposed by health insurers.

Sen. Martin Looney, D-New Haven, and Rep. Cecilia Buck-Taylor, R-New Milford, compared Wade's transition as a former-lobbyist-turned-insurance-commissioner to a prosecutor becoming a judge. Buck-Taylor added that she would like to see Wade consider her new role as a change from prosecutor to defense attorney.

Wade said: "I advocated for a company for a very long time, but that was my employer. I now have a different employer, and I take that job very seriously."

Looney asked Wade what she will do "to help change the perception that the Insurance Department is primarily an advocate for the insurance industry ... ?"

Wade responded: "The role of the insurance commissioner and the Insurance Department is first and foremost to protect consumers, and I take that duty very seriously."

She added that her background in the industry will help with "calling a foul when you see a foul."

Sen. Robert Kane, R-Watertown, said he spoke to Wade previously about her husband, Michael Wade, who works as an attorney for Cigna. "If Cigna came in front of you, would you recuse yourself?" Kane asked.

Wade said her husband is an associate chief counsel in the litigation department at Cigna and is not an officer or director of Cigna. "Despite the fact that he is not an officer or director, Cigna has taken an additional step to wall him off from anything related to the Connecticut Insurance Department," Wade said.

She added later: "Under the ethics law, I can either recuse myself from a matter related to Cigna, and anything that I work directly on, I will do that, or, I can write a letter to the Office of State Ethics and explain why I feel that I'm impartial."

Wade added that she will determine whether to recuse herself, or write a letter, based on the facts of each situation.

No one on the committee asked about Wade's father-in-law, James A. Wade, a top Democrat fundraiser and an attorney for Robinson+Cole, the lobbying law firm for health insurance companies in Connecticut. James Wade is an occasional lunch companion of the governor's.

James Wade established a political action committee called Prosperity for Connecticut in 2011, Malloy's first year as governor. Malloy has helped it to raise hundreds of thousands of dollars for the Democratic Party</org>, candidates and causes. Malloy has been a speaker at Wade's fundraising events.

When asked after the hearing what role Wade's father-in-law had in her nomination, Insurance Department spokeswoman Donna Tommelleo said in a statement: "The commissioner was chosen for her professional credentials and more than 20 years of experience in the insurance industry. She looks forward to upholding the mission of the Insurance Department in protecting Connecticut consumers and regulating the industry in a fair and consistent manner."

At the hearing, Looney asked the nominee for her position regarding public hearings when health insurers ask the Insurance Department to approve higher prices on the health plans they sell. Looney also asked Wade's opinion about making the process more transparent.

"What drives health care rate increases are health care costs, and [what] we ... as regulators of the industry, need to do is better educate consumers about what exactly is driving health care costs," Wade said.

She added later: "It's important to make sure that consumers are protected, but it's also important to make sure that adequate rates are collected by the carriers because another important role that we serve is making sure that companies are solvent, and making sure that they're capitalized appropriately, and they need to be charging an adequate rate."

Wade mentioned a provision in the Affordable Care Act that requires health insurers to spend a minimum percentage of premium revenue on medical costs for patients. It's called the medical-loss ratio, and it requires insurers to spend 80 percent of revenue on expenses for small-group and individual health plans, or 85 percent for large-group health plans.

Later in the hearing, Sen. Joseph J. Crisco Jr., D-Woodbridge, asked about health insurance rates.

"You mentioned earlier about increasing health care costs, and yet I see quarterly reports on the net income of our insurance companies ... and except for one situation every insurance company in the state of Connecticut has experienced good growth in net income. So, I'm concerned when I hear that it's because of cost increasing," Crisco said.

Crisco added that health insurers use the rising cost of medical expenses as an excuse when asking regulators such as the Insurance Department to approve higher prices.

Wade responded to questions from some of the half-dozen legislators on the committee who were present for about 40 minutes on subjects ranging from flood insurance to rooftop ice dams.

Wade's nomination was approved unanimously by the nominations committee on Thursday and was sent to the Senate. Votes by committee members were still being tallied early Thursday afternoon. A final tally is expected by 4 p.m.

As commissioner, Wade would make $160,000 annually to oversee a department of 159 employees and an annual budget of $28 million. The department's budget is funded exclusively by an assessment on insurers based on their premium revenue.

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