Gannett News Service
WASHINGTON, D.C. — Senate Majority Leader Bill Frist has sold his stock in HCA Inc., the Nashville, Tenn.-based hospital chain his family founded, in an effort to shake charges of a conflict of interest that have followed him throughout his political career.
Until earlier this year, Frist, his wife and their three sons owned an undisclosed amount of HCA stock in blind trusts. 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 panel dismissed that complaint, because the Tennessee Republican never worked for HCA, but his office said Monday that he chose to sell the stock anyway.
“There was no compelling reason for him to do it, because it’s not a conflict,” said Frist spokeswoman Amy Call. “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.”
HCA shares hit a 52-week high of $58.60 in June, not long before Frist was told his stock had been liquidated. The stock lost about 10 percent of its value on July 13 after a weak earnings report, and is now worth $48.76 per share.
Call said Frist was notified that the stock had been sold, but she did not know when the stock was sold. He made his decision to sell June 13, she said.
“Frist had no control over when the stocks were sold,” she said. “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.”
The sale was first reported Monday by Congressional Quarterly’s CQ Today.
CQ reported Frist was notified on July 1 that one trust had sold its HCA shares and on July 8 that a second one had done so.
Frist aides did not directly address questions about whether the majority leader knew the company would report it had missed its earnings targets before he requested the sale.
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.
“Frist is trying to sweep the dirt in his record under the rug in advance of 2008,” said Phil Singer, a spokesman for the Democratic Senatorial Campaign Committee. “This is preemptive damage control for his presidential campaign. 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,” Pitney said. “Managed care is not real popular, and he probably doesn’t want to remind people of his association with it. His opponents will have plenty of ammunition, but he doesn’t want to give them any freebies.”
In his last annual personal financial disclosure statement, filed in May, Frist reported a net worth of between $15 million and $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., was the company’s CEO and now sits on its board of directors. He 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, 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. The panel found no conflict.
In 2000 and 2002, HCA paid the federal government of $1.7 billion in fines to settle charges that it overcharged Medicare.
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 though Frist’s position on medical malpractice reform prompted last year’s ethics complaint from the California group, major physician groups like the American Medical Association have also pressed the majority leader — a former heart and lung transplant surgeon at Vanderbilt 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 as well.
The president of the Foundation for Taxpayer and Consumer Rights said he thought Frist should recuse himself from voting on the malpractice legislation as it makes its way through Congress, because his family still stands to benefit from it even if he no longer does.
“Obviously, Senator Frist thinks the people of the United States of America will have a higher (ethical) standard in voting for him as president than the people of Tennessee do in voting for him as senator,” said Jamie Court, the group’s president.