Senate Finance Committee
Demetrios L. Kouzoukas testifies before the Senate Finance Committee, September 28, 2023, on Capitol Hill.
The Revolving Door Project, a Prospect partner, scrutinizes the executive branch and presidential power. Follow them at therevolvingdoorproject.org.
To succeed at politics, you often need to be “picking fights with specific corporate villains who are profiting off exploiting the public, and using existing regulations within the executive branch to hold them accountable for their abuses,” as my colleague Emma Marsano recently explained in The New Republic. With ongoing budget negotiations raising concerns of government shutdowns and across-the-board austerity, persistent economic pessimism dampening the president’s attempts to sell the public on “Bidenomics,” and an increasingly consequential election season on the horizon, there is no better way for Democrats to prove themselves to voters than by taking a loud stance against the purveyors of corporate misconduct.
Enter Demetrios Kouzoukas, the Republican nominee for the Public Board of Trustees of the immensely popular, yet often attacked, Medicare and Social Security programs. Handpicked by Senate Minority Leader Mitch McConnell (R-KY) for a Republican seat on the board, Kouzoukas’s history in the private sector quite frankly ought to render him ineligible for public office, especially in a position involved with overseeing Medicare. Yet, despite his contrasting allegiances, concerning past, and the efforts of grassroots progressive advocacy groups Be A Hero and Social Security Works, Kouzoukas’s nomination was still advanced to the Senate floor from the Finance Committee on a 23-4 vote, with only Sens. Elizabeth Warren (D-MA), Ben Cardin (D-MD), Sheldon Whitehouse (D-RI), and Bob Menendez (D-NJ) opposing.
If Democrats are serious about their rhetoric of defending earned benefits programs, they should take the opportunity to make this known to the American people by blocking Kouzoukas’s nomination.
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In addition to vying for the public trusteeship, Kouzoukas also currently serves as a member of Clover Health’s board of directors. Clover is a for-profit insurance-tech firm that derives a good portion of its profits from Medicare Advantage, including over $1 billion in 2022. Although originally an appendage to the traditional Medicare program, Medicare Advantage now can be more accurately described as the cannibalization of public health insurance by private firms. Despite routinely overcharging for services through billing code manipulation, these plans regularly deny care to those on them. This ultimately leads to worse health outcomes for Medicare Advantage beneficiaries, especially those of color.
During his nomination hearing in September, Sen. Warren grilled Kouzoukas over trying to simultaneously serve two roles with conflicting interests. Throughout the hearing, Kouzoukas attempted to evade disclosing his earnings from Clover Health. However, research from Warren’s office, both before and after the hearing, uncovered that Kouzoukas was paid $94,000 by Clover in 2022 and received nearly $200,000 worth of stock in 2023. The stock—which would vest in 2024 during Kouzoukas’s tenure as a public trustee if he is confirmed—was nearly ten times the amount he received from Clover in 2021 and 2022.
Put simply, Kouzoukas could be in for a big payday from his private employer at the same time he is in public office. Furthermore, this massive increase in compensation, according to Warren, seems to have come right after Kouzoukas and other Clover officials became aware of his nomination. These revelations weren’t enough to spur Kouzoukas to accept Warren’s proposal to either resign from Clover if confirmed, or rescind his nomination altogether.
Beyond being a textbook example of a conflict of interest, Kouzoukas’s position at, and earnings from, Clover are notable because the firm was also accused of misconduct by the forensic financial analysts at Hindenburg Research.
It’s worth acknowledging that Hindenburg’s efforts often come with a bias, given that the short-selling firm usually bets big against the companies they investigate. Yet, Hindenburg took neither a short or long position on Clover ahead of its report and offered plenty of strong evidence to support its allegations. The researchers found that Clover failed to disclose to investors that it was under active investigation by the Department of Justice for multiple offenses, “ranging from kickbacks to marketing practices to undisclosed third-party deals,” ahead of its initial public offering. It wasn’t until June of last year that Clover finally settled with shareholders that sued the firm over these allegations.
Democrats should take a stand that those who benefit from corporate pillaging of government programs should not be rewarded.
As if charges of scandal at Clover weren’t bad enough, a deeper look into Kouzoukas’s past reveals yet another example of corporate wrongdoing at a firm where he worked.
Earlier in his career, before Clover and in between stints in the Bush and then Trump administrations, Kouzoukas worked at UnitedHealth as general counsel of the Medicare and Retirement business. That’s the same UnitedHealth that, as Krista Brown and Sara Sirota explained in the Prospect a few weeks ago, leveraged a number of previously publicly unreported acquisitions to become “one of the largest and most profitable corporations in U.S. history.”
During Kouzoukas’s time at UnitedHealth, credible reports show that the firm abused the Centers for Medicare and Medicaid Services’ (CMS) hierarchical condition categories coding system to extract overpayments for health services. A 2021 report from the Department of Health and Human Services’ Office of Inspector General (using 2016 data) identified one company as “st[anding] out from its peers in its use of chart reviews and [health reimbursement arrangements] to drive risk-adjusted payments.” That same company, which went unnamed in the report was but was later confirmed to be UnitedHealth Group, “generated 40 percent ($3.7 billion of $9.2 billion) of all payments from diagnoses submitted solely on chart reviews and [health reimbursement arrangements], yet it enrolled only 22 percent of all [Medicare Advantage] beneficiaries.”
It should come as no surprise, then, to learn that UnitedHealth was very aggressive in its efforts to prevent CMS from improving its coding system during this same period. For example, in 2016, UnitedHealth was temporarily successful in challenging a 2014 Medicare Advantage overpayment rule that would have required the return of surplus funds within 60 days of an overpayment being identified. CMS’s attempts to dismiss the challenge were denied in 2017, and in 2018 UnitedHealth was able to convince a district court to vacate the rule. However, a more thorough review of the case by the U.S. Court of Appeals for the District of Columbia in 2021 asserted that UnitedHealth’s arguments—which largely centered around allegations that the rule violated actuarial standards of equivalence between Medicare Advantage and traditional Medicare—had “no legal or factual basis.” The case was ruled in favor of CMS and the overpayment rule was reinstated.
With all this in mind, it seems that Kouzoukas’s only qualifications for potentially becoming an authority on the financial operations of Medicare (and Social Security) stem from the career he’s built undermining the program. This track record is in direct conflict with the public trusteeship, a role that involves “review[ing] policies followed in managing trust funds and recommend[ing] changes.” And while it would be incorrect to assert that he is solely responsible for wrongdoing at UnitedHealth and Clover, it’s telling that such misconduct occurred while he held senior positions at both firms. Kouzoukas’s prior roles in public office never stopped him from revolving to companies that get rich by swindling public institutions. Can someone with such a history truly be trusted to operate in the best interest of earned benefits beneficiaries, primarily the elderly and disabled?
Kouzoukas’s nomination may have come out of committee, but given his deeply concerning past history, it is now up to the Senate Democrats as a whole to keep Kouzoukas from taking public office. In so doing, they would take a stand that those who benefit from corporate pillaging of government programs should not be rewarded. Although a public trustee nomination makes for much less flashy conflict than others in the executive branch, it’s a fight that is absolutely still worth waging if the party is committed to winning over voters.
