By Bill Britt
Alabama Political Reporter
OPELIKA—”A bad day for the defense” is how one prominent defense attorney described Day Two of the Mike Hubbard felony trial.
Hubbard’s former chief of staff, Josh Blades, was the State’s star witness on this second day of testimony. Blades revealed Hubbard’s actions regarding the adding of 23 words into the Medicaid budget, to give his lobbying client, American Pharmacy Cooperative, Inc. (APCI), a monopoly over a proposed Pharmacy Benefits Management (PBM) program.
Hubbard’s scheme would have netted his client upwards of $20 million per year from the Medicaid benefits.
Blades also dropped a bombshell when he revealed, that he believed Hubbard was being paid lavishly for helping CV Holdings’ CEO Bobby Abrams. While Blades said that his former employer was the best boss he’d ever had, he still forthrightly and without hesitation, provided damning testimony for around two hours, under direct questioning by Deputy Attorney General Michael Duffy.
During the 2013 Regular Legislative Session, an idea was floated by Department of Health Chief, Don Williamson, that a potential way to save money in the Medicaid budget was to contract the services of a PBM. As John Ross testified on the first day of trial, his lobbying firm had been hired to stir discontent among small pharmacies, to counter a plan that Williamson had put forward to use one of the national brand named PBMs, such as Walgreen, CVS or Walmart.
Lobbyist Ferrell Patrick hired Ross’ firm, and it was Patrick who was driving new legislation that would favor APCI. As Blades and others testified, they had no knowledge that Hubbard held $10,000 a month with the pharma group. Blades said, the first time he learned of Hubbard’s lucrative agreement was when Ross alerted him to the fact, while the bill was on the floor of the House.
Blades, in his testimony, made it clear that he was worried about the legal implications should Hubbard vote to pass the legislation favorable to his client. He said that his concern was so great, that he actually went into the House Chambers and called Hubbard off of the Floor to talk to him about the situation. When Blades and Ross confronted Hubbard, he admitted that he had a contract with APCI, but assured them it was only to do lobbying outside the State of Alabama.
Blades said, because of the language placed in the legislation that was about the pass, he cautioned the Speaker not to vote for it. Hubbard said that he had to vote for the budget because if he did not, it would raise too many red flags. Hubbard returned to his dais. Blades followed and stood next to him as the vote was about to occur, still urging him to not vote or vote “abstain.” When asked what button did Hubbard push, Blades said he pushed the green button registering a “yes” vote.
Blades said later that evening, he was so distraught that he went to see his friend Phillip Bryan, who serves as chief of staff for President Pro Tem Del Marsh, to discuss the matter. He said that he told Bryan he was upset because he felt he may have taken part in an illegal activity, and that the Speaker might be in trouble.
On cross examination, Bill Baxley once again tried to change the subject, saying that the language placed in the Medicaid budget was just a few small lines in a huge document containing billions of dollars.
He also asked Blades if he was one of the highest paid employees on the legislative staff. Blades said, “Yes.” Baxley then said, “But you kept your comfortable, high-paying job after all of this?”
Blades also gave testimony about another of Hubbard clients, CV Holdings. The company owns several manufacturing concerns in Auburn, and has generated multiple patented technologies over the past 30 plus years. In 2013, the company was having difficulty getting a patent approval through the US Patent Office. Hubbard was asked if he could speed up the process, and he tasked Blades with getting making it happen.
Through friends and acquaintances in Mississippi, Blades was able to make a connection with the Patent Office in DC, and began the process of persuading the Patent Office with moving the process forward. Under oath, Blades said he did not know that Hubbard had a $10,000 contract with Abrams companies. He thought this was an attempt to help a constituent in Hubbard’s district.
Blades admitted that Hubbard was not pleased with his slow progress, which caused him to ask why this was so important. On the stand, he then paused, and said, “The Speaker said, ‘I have a hundred thousand reasons to care.’” When asked did he think Hubbard was referring money he said, “Yes.”
He confessed that the statement worried him, and when the Speaker asked about the patent progress again, he told him he thought he had spent enough administrative time on it, and that he thought it best for Hubbard to handle it moving forward, which he did.
The last witness of the day was Jason Isbell, former chief legislative legal council, who reported directly to Mike Hubbard.
Isbell testified to his involvement in placing language into the Medicaid budget, that would benefit Hubbard’s client, APCI. Isbell recalled how lobbyist Ferrell Patrick and Representative Greg Wren (R-Montgomery) had brought him the language that would later become part of the budget. Isbell stated that the two men brought him the language handwritten on a yellow legal pad. He said he entered it into the computer, cleaned it up for spelling and punctuation, making no further changes.
He recalled that he felt compelled to seek Hubbard’s approval before sending it on to Norris Green, then head of Legislative Fiscal Office (LFO). Given the urgency to have the language vetted before placing it in the budget in the next day’s Ways and Means Committee meeting, Isbell entered the House Chamber during Session and asked for Hubbard’s approval from the dais. Hubbard read the language and gave his approval. Isbell said he was under the impression that Hubbard and others were aware of Wren and Patrick’s plan, and only needed to approve the final language.
Representative Wren later pleaded guilty to using his office for personal gain because he was being paid by a company affiliated with APCI to put language into the Medicaid budget.
As part of his plea agreement, Wren agreed to testify against others who were involved in the scheme. Wren, who was forced from his House seat after his conviction, is set to give testimony against Hubbard later in the trial.
The day’s first witness was the president of Hubbard’s business interest, Craftmaster Printers, who testified about the company’s troubled financial situation.
Former senior vice president of Hubbard’s Auburn Network, Chris Hines, a 15-year employee, testified that he had scant knowledge of Hubbard’s multiple consulting contracts. He was only charged with billing and depositing the checks.
Jeff Woodard, Clerk of the House of Representatives, was called to the witness stand to verify the official records that showed the language favorable to Hubbard’s client, APCI was, in fact, at one time, part of the General Fund Budget voted for by Hubbard and passed by the House.
Court observers agreed that the Prosecution’s case was building witness by witness.
The only notable attendee to the day’s proceedings was Rob Riley, who took copious notes during the trial.
Set to testify on Day Three are: Robert Kammerdi; Representative Steve Clouse (R-Ozark) General Fund Budget Chair; Norris Greene, former director of LFO; Mary Lawrence; Rachel Riddle; and Don Williamson, former Public Health officer.
House passes General Fund Budget
By Brandon Moseley
Alabama Political Reporter
The Alabama House of Representatives passed the state General Fund Budget on Tuesday.
The General Fund Budget for the 2019 fiscal year is Senate Bill 178. It is sponsored by Sen. Trip Pittman, R-Montrose. State Rep. Steve Clouse, R-Ozark, carried the budget on the House floor. Clouse chairs the House Ways and Means General Fund Committee.
Clouse said, “Last year we monetized the BP settlement money and held over $97 million to this year.”
Clouse said that the state is still trying to come up with a solution to the federal lawsuit over the state prisons. The Governor’s Office has made some progress after she took over from Gov. Robert Bentley. The supplemental we just passed added $30 million to prisons.
The budget adds $50 million to the Department of Corrections.
Clouse said that the budget increased the money for prisons by $55,680,000 and includes $4.8 million to buy the privately-owned prison facility in Perry County.
Clouse said that the budget raises funding for the judicial system and raises the appropriation for the Forensic Sciences to $11.7 million.
The House passed a committee substitute so the Senate is either going to have to concur with the changes made by the House or a conference committee will have to be appointed. Clouse told reporters that he hoped that it did not have to go to conference.
Clouse said that the budget had added $860,000 to hire more Juvenile Probation Officers. After talking to officials with the court system that was cut in half in the amendment. The amendment also includes some wording the arbiters in the court lawsuit think we need.
The state General Fund Budget, SB178, passed 98-1.
Both budgets have now passed the Alabama House of Representatives.
The 2019 fiscal year begins on Oct. 1, 2018.
In addition to the SGF, the House also passed a supplemental appropriation for the current 2018 budget year. SB175 is also sponsored by Pittman and was carried by Clouse on the floor of the House.
SB175 includes $30 million in additional 2018 money for the Department of Corrections. The Departmental Emergency Fund, the Examiners of Public Accounts, the Insurance Department and Forensic Sciences received additional money.
Clouse said, “We knew dealing with the federal lawsuit was going to be expensive. We are adding $80 million to the Department of Corrections.”
State Representative Johnny Mack Morrow, R-Red Bay, said that state Department of Forensics was cut from $14 million to $9 million. “Why are we adding money for DA and courts if we don’t have money for forensics to provide evidence? if there is any agency in law enforcement or the court system that should be funded it is Forensics.”
The supplemental 2018 appropriation passed 80 to 1.
The House also passed SB203. It was sponsored by Pittman and was carried in the House by State Rep. Ken Johnson, R-Moulton. It raises securities and registration fees for agents and investment advisors. It increases the filing fees for certain management investment companies. Johnson said that those fees had not been adjusted since 2009.
The House also passed SB176, which is an annual appropriation for the Coalition Against Domestic Violence. The bill requires that the agency have an operations plan, audited financial statement, and quarterly and end of year reports. SB176 is sponsored by Pittman and was carried on the House floor by State Rep. Elaine Beech, D-Chatham.
The House passed Senate Bill 185 which gives state employees a cost of living increase in the 2019 budget beginning on October 1. It was sponsored by Sen. Clyde Chambliss, R-Prattville and was being carried on the House floor by state Rep. Dimitri Polizos, R-Montgomery.
Polizos said that this was the first raise for non-education state employees in nine years. It is a 3 percent raise.
SB185 passed 101-0.
Senate Bill 215 gives retired state employees a one time bonus check. SB215 is sponsored by Senator Gerald Dial, R-Lineville, and was carried on the House floor by state Rep. Kerry Rich, R-Guntersville.
Rich said that retired employees will get a bonus $1 for every month that they worked for the state. For employees who retired with 25 years of service that will be a $300 one time bonus. A 20-year retiree would get $240 and a 35-year employee would get $420.
SB215 passed the House 87-0.
The House passed Senate Bill 231, which is the appropriation bill increase amount to the Emergency Forest Fire and Insect and Disease Fund. SB231 is sponsored by Sen. Steve Livingston, R-Scottsboro, and was carried on the House floor by state Rep. Kyle South, R-Fayette.
State Rep. Elaine Beech, D-Chathom, said, “Thank you for bringing this bill my district is full of trees and you never know when a forest fire will hit.
SB231 passed 87-2.
The state of Alabama is unique among the states in that most of the money is earmarked for specific purposes allowing the Legislature little year-to-year flexibility in moving funds around.
The SGF includes appropriations for the Alabama Medicaid Agency, the courts, the Alabama Law Enforcement Agency, the Alabama Department of Corrections, mental health, and most state agencies that are no education related. The Alabama Department of Transportation gets their funding mostly from state fuel taxes.
The Legislature also gives ALEA a portion of the gas taxes. K-12 education, the two year college system, and all the universities get their state support from the education trust fund (ETF) budget. There are also billions of dollars in revenue that are earmarked for a variety of purposes that does not show up in the SGF or ETF budgets.
Examples of that include the Public Service Commission, which collects utility taxes from the industries that it regulates. The PSC is supported entirely by its own revenue streams and contributes $13 million to the SGF. The Secretary of State’s Office is entirely funded by its corporate filing and other fees and gets no SGF appropriation.
Clouse warned reporters that part of the reason this budget had so much money was due to the BP oil spill settlement that provided money for the 2018 budget and $97 million for the 2019 budget. Clouse said they elected to make a $13 million repayment to the Alabama Trust fund that was not due until 2020 but that is all that was held over for 2020.
Clouse predicted that the Legislature will have to make some hard decisions about revenue in next year’s session.
Day Care bill delayed for second time on Senate floor, may be back Thursday
By Samuel Mattison
Alabama Political Reporter
The day care bill, which would license certain day care centers in Alabama, was once again delayed on the state Senate floor after one lawmaker requested more information.
Its brief appearance Tuesday ended with state Sen. Gerald Dial, R-Lineville, saying a compromise had not yet been worked out with the bill’s detractors.
Alabama’s Senate has been hesitant to act on the legislation because of complaints of state Sen. Shay Shelnutt, R-Trussville, who has been an opponent of the bill since its introduction last year. The bill’s delay on Tuesday marks the second time its been taken off the Senate’s agenda.
The bill has had a rocky time in this year’s session, but the bill’s sponsor state Rep. Pebblin Warren, D-Tuskegee, said she is still confident about its passage out of the Legislature.
Warren, D-Tuskegee, filed the bill this session with the support of influential lawmakers including Gov. Kay Ivey, who told reporters last year that she though all day cares should be licensed.
Mainly sparked by the death of 5-year-old boy in the care of a unlicensed day care worker, the bill had great momentum coming into this year’ session.
Despite the growing support from lawmakers, Religious groups had concerns that the bill would increase state-sponsored reach into religious day cares in churches and non-profit groups.
Spearheading the dissenters was Alabama Citizens Action Program, a conservative religious-based PAC.
Warren, proponents, and ALCAP announced a compromise to the bill while it was still in the Alabama House.
Announced by ALCAP originally, the new bill was a weaker version in that it did not require that all day cares in the state be regulated. Instead, religious-based day cares would only need to be registered if they received federal funds. At a Senate committee meeting in February, Warren said a similar requirement was about to come from federal law in Congress.
The bill moved through the House in a overwhelming vote in favor of the proposal and passed unanimously out of a Senate committee a few weeks ago.
Warren, speaking to reporters after its passage from the House, said she was unsure if the bill would encounter resistance in the upper chamber.
It was the Senate that killed the daycare bill last year amid a cramped last day where senators took the bill off the floor. The bill may face similar complications this year, as lawmakers seem to be preparing to adjourn within a few weeks.
Fantasy sports bill fails on Senate floor
By Samuel Mattison
Alabama Political Reporter
Would-be Fantasy Sports players in Alabama will have to wait to legally play in the state following a Senate vote on Tuesday.
The Alabama Senate decisively killed a bill to exempt fantasy sports from the state’s prohibition on gambling.
Not even entertaining a debate on the Senate floor, the proposal was killed during a vote for the Budget Isolation Resolution, which is usually a formality vote preluding a debate.
Fantasy sports are contests where participants select players from real teams to compete on fantasy teams using the real-world players’ stats.
Since 2016, the practice has been illegal in Alabama following a legal decision by the Attorney General’s Office that categorized it as gambling.
The bill’s sponsor, state Sen. Paul Sanford, R-Huntsville, predicted the bill’s failure during a committee meeting two weeks ago, where the bill passed unanimously.
- Sen. Paul Sanford speaks to reporters after a Senate Committee meeting on Feb. 28, 2018. (Samuel Mattison/APR)
Speaking to reporter’s after the committee meeting, Sanford said the decision to file the bill was mainly a philosophical belief that the practice shouldn’t be illegal.
Sanford, a fantasy sports player before its ban, said that fantasy sports are a way to bring people closer together and not a means to win money. The Huntsville senator is not seeking re-election.
The bill’s failure in the Senate follows its trajectory last year too. A similar version of the bill, also sponsored by Sanford, failed in the Senate during the final days of the 2017 Legislative Session.
Since Sanford is retiring, it is unclear if the bill will even come back next session, or if it will even have a Senate sponsor.
House OKs bill to clarify consulting contracts by state legislators
By Brandon Moseley
Alabama Political Reporter
Tuesday, the Alabama House of Representatives passed a bill to try to clarify how legislators accept consulting contracts under Alabama’s 2010 ethics law. Some pundits have suggested that House Bill 387 is actually designed to weaken the existing ethics law.
Sponsor state Rep. Rich Wingo, R-Tuscaloosa, argues that the legislation is merely a clarification and is intended to prevent legislators from inadvertently crossing the line into illegality.
Wingo said that his bill would require legislators to notify the Alabama Ethics Commission that they have entered into a consulting agreement in an area outside of their normal scope of work.
State Rep. Paul Beckman, R-Prattville, said, “I have never understood why members of this body were allowed to take contracts as consultants or counselors.”
Wingo said, “Never do I use the word counselor in my bill; it is consulting.”
Beckman asked, “Are we going to be getting into an area where every time we turn around we create a bureaucratic nightmare where we have to go get an opinion. These opinions whether it is orally or written don’t hold up in a court of law.” Beckman said, “We are serving the people here but we get this admonition that we can still be a consultant if we get an opinion.”
Wingo said, “This does not apply to professions where a member is currently licensed.”
Beckman said, “I would like to see more opinions coming out of the Ethics Commission. Right now we have the Ethics Commission competing with the Attorney General’s office over who has more authority.”
State Rep. John Rogers, D-Birmingham, said,”This happened to a friend of mine. He just got out of prison. He was a state senator and had a written letter from the Ethics Commission which his lawyer read at trial and the jury convicted him anyway.”
Rogers never named his friend, but reporters think he was talking about former state Sen. Edward Browning ‘E. B.’ McClain who spent over 22 years in the legislature until he was convicted on 47 counts of conspiracy, mail fraud, bribery, and money laundry in 2009.
A federal jury found that McClain and the Rev. Samuel Pettagrue were guilty in a scheme where McClain would secure public funds for Pettagrue’s community programs and then receive a kickback once the funds were in hand. McClain was sentenced to five years and ten months in prison. McClain was not prosecuted under the Alabama ethics law as the state has a much weaker ethics statute then. The current ethics law was passed in 2010.
Rogers said, “If they offer me a consulting contract for a field like aerospace engineering that I know nothing about they are trying to pay me off. If you can already be a consultant for something you know about why would you seek a consulting contract for something you don’t know about.
Rogers this is how they can pay you off for your vote.”
State Rep. Artis “A.J.” McCampbell said, “I don’t like making changes to things like this because we get into things called unintended consequences.”
McCampbell was reading from the bill and Wingo said, “You are reading from the original version it has completely changed.” “We worked tirelessly on this bill with the Ethics Commission this is not a fly by night bill.”
“If a member of the legislature enters into a contract to do a consulting contract outside of their normal field of work this bill requires that they consult with the Ethics Commission first,” Wingo said. “It is up to the member to notify the Ethics Commission not to the company or person offering them the money.”
State Representative Pebblin Warren, D-Tuskegee, said, “Everybody but legislators are allowed to do contract work up to $30,000.”
Rep. Wingo said, “This is not intended to be a roadblock.”
State Representative Arnold Mooney, R-Indian Springs, said, “The whole purpose of this is not to prevent members from doing work in your field.” “What you are doing is offering to protect me.”
State Representative John Knight, D-Montgomery, asked Wingo what the Alabama Attorney General said about this legislation.
Wingo replied, “I have not contacted the Attorney General.”
Knight responded, “Something from the Ethics Commission does not carry a lot of protection from the Attorney General. We have seen that in the past. I think the Attorney General and the Ethics Commission should be in agreement in the working on this.”
Wingo answered, “Maybe this is a first step.”
Rep. Laura Hall, D-Huntsville, asked, “Do we have anybody doing work outside of their regular scope of work?”
Wingo answered, “Yes I think so.”
Wingo said, “If we had had this bill four or five years ago maybe we could have been spared the embarrassment that this body experienced with the former Speaker.”
Wingo was referring to former Speaker of the House Mike Hubbard who was convicted of 12 counts of felony ethics violations in June 2016. Ironically, Hubbard is largely responsible for creating the ethics law that he was found guilty of violating 11 times in his relentless pursuit of outside contracts and personal wealth.
Unlike McClain, however, Hubbard has not yet served any of this sentence.
House Bill 387 passed 67-0 with 26 legislators abstaining.
The bill now moves to the Senate for its consideration.
(Original reporting by the Alabama Media Group’s Lisa Osborn in 2009 was consulted in this report.)
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