Rep. Randy Davis, R-Daphne, was indicted Wednesday on charges of conspiracy and bribery over what prosecutors describe as an attempt to pressure Blue Cross Blue Shield (BCBS) to cover insulin therapies offered in health clinics in which he had a financial interest.
The clinics, operated by Trina Health, offered an intravenous insulin treatment known as OIVIT for diabetes that insurers stopped covering following a 2009 decision from the federal Centers for Medicare and Medicaid Services (CMS).
The indictment accuses Davis of working with former Rep. Micky Hammon, R-Decatur, an investor in the clinics, to recruit investors, from which he received finders’ fees. Prosecutors also accused Davis of trying to lobby BCBS on behalf of Trina Health. Later, the indictment alleges, Davis and Hammon worked together to push a bill through the 2016 session of the Alabama Legislature that would have forced coverage of the insulin treatment offered at the clinics.
A message left with Davis was not immediately returned Wednesday afternoon.
Trina Health CEO Greg Gilbert and Rep. Jack Williams, R-Vestavia Hills, were indicted in April over the alleged scheme. Williams is accused of holding a public hearing on the bill to try to push it through while knowing of Hammon’s financial commitments in the clinic. Williams maintains his innocence.
The Baldwin County legislator, first elected in 2002, is not seeking re-election. He announced a bid for Baldwin County Probate Judge last year, but later dropped it.
Hammon pleaded guilty to two counts of mail fraud last year and was sentenced to three months in a federal prison. He was released late last month.
The 57-page indictment outlines both Hammon and Davis’ alleged involvement in Trina Health, and also a wildly improbable attempt to pressure Blue Cross Blue Shield, the state’s dominant insurer and a major political force, into reversing a coverage decision.
According to the indictment, an individual named “C.B.” who knew both Gilbert and Hammon approached Hammon in 2014 with a proposal to give an ownership stake in a Trina Health Clinic if Hammon could recruit investors. Hammon, prosecutors say, brought Davis on board. The indictment cites a May 26, 2014 email from Davis to Hammon expressing a hope that they “could make millions on this deal.”
Hammon later received payments from C.B. and ownership stake in a Birmingham clinic. According to the indictment, Hammon asked that the ownership stake be lowered from 5 percent to 4 percent to avoid disclosure thresholds under Alabama ethics laws.
The indictment says Davis was recruiting investors, and cited an email in June 2015 where he said he had a meeting with then-Gov. Robert Bentley and “two potential investors” that afternoon.
Meanwhile, BCBS was investigating billing practices in the clinics; according to the indictment, Trina’s Foley clinic was fragmenting the non-covered insulin treatment into component parts to get the insurer to cover the costs. Gilbert in May 2015 told the Foley clinic that he expected the Alabama Legislature to pass a bill to legalize the treatment; by July of that year, BCBS was demanding refunds from the clinic.
The indictment said Gilbert offered Hammon and Davis financial incentives to pressure BCBS to drop its demands from the Foley clinics and to voluntarily cover the treatment offered.
“Davis assured Hammon he would do anything he could to help Trina Health in persuading BCBS-AL to reconsider its position regarding coverage of OIVIT,” the indictment says.
The company also launched a campaign called “BlueGate” that, among other items, included an attempt to draft a bill forcing Blue Cross Blue Shield to cover the treatment. Hammon, who still had an ownership stake in a clinic, was referred to as “Bill Johnson” in the documents. Davis later contacted a fellow representative, named as “State Representative C” in the indictment, and asked if the representative could persuade BCBS to change its position on OIVIT.
“Aware of Representative Hammon’s previous involvement with BCBS-AL and Davis’ close relationship with Hammon, State Representative C asked whether Davis was acting for the purpose of benefitting Hammon,” the indictment says. “Davis replied that he was motivated only by a desire to help the diabetic patients who resided in his legislative district.”
In 2016, Hammon and Davis participated in an effort to pass a bill that would force BCBS to cover the services offered. At one point, according to the indictment, Gilbert and a lobbyist referred to as “Lobbyist C” talked about a bill to disband BCBS — an extraordinarily unlikely occurrence — to pressure the insurer to accept the coverage bill. Davis later spoke in support of the bill before a legislative committee. It did not become law.
The U.S. Attorney’s Office for the Middle District of Alabama, which brought the charges, said defendants could see a maximum of 10 years in prison.
Five state legislators have been indicted or pleaded guilty in several cases in the last year. Besides Hammon and Williams,, Rep. Oliver Robinson, D-Birmingham, pleaded guilty to bribery charges last year. Rep. Ed Henry, R-Hartselle, was indicted last month on charges of accepting kickbacks from what prosecutors dub a “pill mill.” Henry maintains his innocence.