Figure at center of D.C. campaign finance probe resigns from health-care company

April 16, 2012

The District businessman at the center of a federal investigation into campaign finance has stepped down as chairman of his health-care firm, and there are indications he is preparing to sell the company.

Jeffrey E. Thompson resigned Friday from the board of D.C. Chartered Health Plan, which holds a lucrative city contract to manage health care for low-income District residents. That contract, worth as much as $322 million yearly, is the city’s largest and accounts for nearly all of Chartered’s business.

David D. Wolf, a former executive vice president of CareFirst BlueCross BlueShield, is replacing Thompson as Chartered’s chairman, the company said.

Thompson, 56, and his intersecting political and business interests have been under a microscope since March 2, when federal agents raided his home and offices. His name was later featured in subpoenas delivered to the campaigns of several D.C. Council members.

Thompson’s decision to withdraw from Chartered, which he continues to wholly own, comes as the District prepares to solicit new bids from companies willing to manage the care of city residents enrolled in the Medicaid and D.C. HealthCare Alliance programs.

Chartered is the largest of two companies that provide those services under a five-year contract set to expire in May 2013. Wayne Turnage, the city’s director of health-care finance, said Monday he expects to invite bids on a new contract in the coming weeks.

Thompson’s attorney, Brendan V. Sullivan Jr., has declined to comment on the investigation and other aspects of his client’s dealings. He did not respond to an e-mail Monday seeking comment on the resignation.

But Thompson’s move could be an attempt to preserve Chartered’s chances of maintaining its business with the District and, given its reliance on that contract, to preserve the overall value of the firm.

“I think he understands he cannot remain on the board or at the helm and stand a chance of keeping this contract when it’s re-competed,” said David A. Catania (I-At Large), chairman of the D.C. Council’s health committee. Catania characterized the move as “an attempt to insulate his asset from himself.”

But the councilman questioned how much distance Thompson can expect to put between himself and his firm. “By virtue of appointing the board members, he still controls the entity,” Catania said.

There is an indication a sale could be in the works.

Turnage said he received a letter from Chartered last week indicating that the company’s chief executive, Maynard G. McAlpin, is seeking to assemble investors to purchase the company. “Things are moving pretty quickly, from what I can tell,” Turnage said, citing conversations with McAlpin. “This is something they’re pursuing very aggressively.”

Karen Dale, a spokeswoman for Chartered, said there were no changes in the company’s ownership “at this time” but confirmed that McAlpin notified city regulators that he is pursuing the company’s purchase.

Thompson’s resignation comes less than a month after he stepped down from Thompson, Cobb, Bazilio & Associates, the accounting firm he established nearly three decades ago. Partner Ralph B. Bazilio assumed Thompson’s former roles as the firm’s chairman and chief executive.

Thompson did not hold an executive role at Chartered.

Numerous partners and employees of both the accounting firm and Chartered Health Plan have donated heavily over the past decade to political campaigns supported by Thompson. Thompson and members of his expansive network have not been accused of any wrongdoing, but the raids and patterns of money-order donations have raised questions about whether he utilized “straw donors” to evade contribution limits.

Chartered has been in Thompson’s hands since 2000, when he purchased the then-struggling firm for $4 million at a bankruptcy sale. In the ensuing years, the company has grown into the city government’s dominant health-care contractor. It paid Thompson dividends of more than $7 million between 2006 and 2008, but its profitability declined after the company settled a lawsuit filed by the city alleging that it had overbilled companies also owned by Thompson.

According to Chartered’s most recent regulatory filings, the company handled the health care of more than 110,000 city residents as of September.

Thompson notified the company’s board and management of his decision to step down Friday, Dale said, but gave no reason for doing so. The remaining board members voted over the weekend to install Wolf as chairman, she added.

Wolf retired from CareFirst in 2010 after serving for a time as the Maryland company’s interim chief executive. Its D.C. subsidiary is the city’s largest health insurer.

“We’re delighted to have someone of Mr. Wolf’s caliber coming on board,” Dale said.

Mike DeBonis covers local politics and government for The Washington Post. He also writes a blog and a political analysis column that runs on Fridays.
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