Conn. Review Of Insurers' Deal Faces Scrutiny -- WSJ

By Joseph De Avila 

A Connecticut ethics board voted Thursday to open an inquiry on whether the state's insurance commissioner should recuse herself from leading a review of the proposed merger between Anthem Inc. and Cigna Corp.

Commissioner Katharine Wade was a vice president at Cigna, based in Bloomfield, Conn., until 2013, and her husband works for the company as associate chief counsel.

Common Cause Connecticut, a government watchdog group, asked the state's Citizen's Ethics Advisory Board Monday to rule on whether Ms. Wade has a conflict of interest because she is now leading the multistate review of the proposed tie-up of the two insurance companies.

Common Cause Connecticut said it "questions the ability of Ms. Wade to conduct a review of the merger of Anthem and Cigna in an unbiased way." Anthem notified Connecticut of its intent to acquire Cigna in September.

Some of the state's top Republicans and the Democratic speaker of the House have asked Ms Wade to recuse herself, though Democratic Gov. Dannel Malloy, who appointed Ms. Wade in 2015, has said she could conduct a fair review

The state Department of Insurance is coordinating a 27-state review of the merger because Cigna is based in Connecticut. Ms. Wade has said she has no conflict in leading the review.

"The commissioner has sought [the Office of State Ethics'] guidance throughout the process," a spokeswoman for the insurance department said. "Should that guidance change, she will follow that instead."

A spokesman for Mr. Malloy said his administration would abide by whatever guidance the ethics board issues.

Ms. Wade, who earns $160,000 a year as insurance commissioner, sent the Office of State Ethics a letter in September stating no conflict would be posed by her previous employment at Cigna and her husband's current position with the company. She and her counsel later met with staff from the Office of State Ethics, said Carol Carson, the office's executive director.

he commissioner didn't have a conflict because he placed most of his stock options from the company in a blind trust, and he agreed to postpone vesting rights for other stock options. He took part in the hearing.

Ms. Wade stated in her September letter to the Office of State Ethics that she and her husband had put their assets into a blind trust and that her husband's unvested Cigna stock would also go into the blind trust when it is vested.

The ethics board typically has 30 days to reach a decision, but it could choose a later date, Ms. Carson said. Its rulings are legally binding but appealable in state court.

Write to Joseph De Avila at [e-mail]

(END) Dow Jones Newswires

June 17, 2016 02:49 ET (06:49 GMT)

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