Sen. Frist sells HCA stock; then price falls |
Aide says he couldn't control timing; move may temper conflict-of-interest concerns
By MIKE MADDEN
Tennessean Washington Bureau
September 21, 2005
WASHINGTON — Senate Majority Leader Bill Frist sold his stock in HCA Inc., the Nashville-based hospital chain his family founded, shortly before the stock took almost a 9% dive in mid-July.
The sale helps minimize allegations that he has a conflict of interest on health-care issues as he considers a run for president. Frist's brother, Thomas, is a former chief executive officer and current director of the company.
Frist spokeswoman Amy Call said the senator had no knowledge of when the stock actually sold. He requested the sale June 13, but the execution of the sale was up to the blind trust that manages his holdings.
"Frist had no control over when the stocks were sold. The trustee could have chosen to hold them or sell at any time. Also, we don't know when the stock was sold, only when we were notified."
She said Frist was notified of sales on July 1 and July 8.
An HCA spokesman said the company had no part in Frist's decision.
"He never had any relationship to the company to begin with. ... He never even practiced here," said HCA spokesman Jeff Prescott, who added that the Nashville-based company has had no legislative relationship with the majority leader. "We specifically never lobby him."
Until the sale, Frist, his wife and their three sons owned an undisclosed amount of HCA stock in blind trusts.
On July 13, HCA warned shareholders that second-quarter earnings would fall short of Wall Street's expectations. The company's shares fell 8.8% that day.
A California-based watchdog group, the Foundation for Taxpayer and Consumer Rights, had complained to the Senate Ethics Committee last year that Frist's holdings posed a conflict because of his support for legislation limiting medical-malpractice lawsuits, which could benefit HCA and its subsidiaries if it passed.
The Ethics Committee dismissed that complaint because the Tennessee Republican never worked for HCA, but his office said he chose to sell the stock anyway.
"There was no compelling reason for him to do it because it's not a conflict," Call said. "He wanted to ensure that in the future there were no appearance issues. He went ahead and just decided that it was the best thing to do."
Frist is considering a run for the GOP's 2008 presidential nomination, and some observers suggested Monday that selling the stock was designed to head off scrutiny of his relationship with HCA during the primary campaign.
"This is preemptive damage control for his presidential campaign," said Phil Singer, a spokesman for the Democratic Senatorial Campaign Committee. "It should have been done when he first started working on legislation that impacted the company."
If he does run, the sale could help blunt attacks by GOP rivals, said Jack Pitney, a professor of government at Claremont McKenna College and a former Republican operative.
"He does remove a potential conflict, as well as a potential political problem. Managed care is not real popular, and he probably doesn't want to remind people of his association with it."
In his last annual personal financial disclosure statement, filed in May, Frist reported a net worth of $15 million-$45 million, mostly in blind trusts created when he entered politics in 1994. Senate ethics rules allowed him to direct the sale, even though he could not know how much HCA stock he still owned. The rules say he cannot be notified of how much money the sale made.
Frist's late father, Thomas Frist, founded the company in 1968.
His brother, Thomas Frist Jr., is still the largest shareholder, owning more than $271 million in stock. Government filings indicate Thomas Frist Jr. last sold HCA stock on March 7.
The company has posed a political problem for Frist for years. In 1999, U.S. Rep. Harold Ford Jr., a Memphis Democrat then considering a challenge to Frist in the 2000 election, asked the Senate ethics panel to rule on the Republican's holdings. It found no conflict.
HCA employees and its political-action committee have given Frist $83,450 — more money in campaign contributions over his career than any other donor, according to the Center for Responsive Politics, a nonpartisan watchdog group.
But although Frist's position on medical malpractice changes prompted last year's ethics complaint from the California group, major physician groups such as the American Medical Association also have pressed the majority leader — a former heart and lung transplant surgeon at Vanderbilt University Medical Center — to push that legislation.
Under Senate rules, lawmakers can support legislation that would benefit themselves or their family, as long as it has a broad impact on the rest of the nation.