As a successful surgeon, Sen. Bill Frist has perhaps the most prominent voice in Congress when it comes to medical matters and health care legislation. For that reason, there have long been calls for him to divest himself of stock in the family business – a huge, for-profit hospital chain.
He always denied any conflict of interest and refused to sell his stock in Hospital Corp. of America Inc., until he quietly did so in June. It was shrewd timing. Just two weeks later, the value of HCA stock plummeted – sinking 9 percent in just one day – as the company warned of weak earnings. Insiders dumped more than $112 million of HCA stock from January to June.
Now, the Senate majority leader faces an investigation by the Justice Department and the Securities Exchange Commission, and no wonder. You don’t have to be Martha Stewart’s best friend to catch a whiff of what sounds like insider trading.
Frist maintains he’s done nothing wrong, but he never should have held the stock to begin with. It’s hard to see anything except a direct conflict of interest between his Senate duties and his ownership of the HCA stock. HCA was founded by Frist’s father and brother and is the largest for-profit hospital chain in the country. The senator’s brother, Thomas Frist Jr., is a director and HCA’s largest individual shareholder.
Frist has held his investments in blind trust since he was elected to the Senate in 1995. A disclosure earlier this year showed the value between $7 million and $25 million. But how “blind” is the trust if Frist can order the sale of certain stocks?
According to documents obtained by The Associated Press, Frist was told about stock trades in his “blind” trust in 2002.
In 2003, Frist maintained in an interview that he didn’t know how much HCA stock he had, if any.
A Frist spokeswoman last Thursday said the senator had not discussed the stock sale with any HCA officials. A day later, according to The Washington Post, his office would only say Frist “had no information about the company or its performance that was not available to the public when he directed the trustees to sell the HCA stock. His only objective in selling … was to eliminate the appearance of a conflict of interest.”
Yet, according to the same story, it had been well over a year since anyone publicly criticized him for his holdings.
Frist can’t help but be thinking of Martha Stewart. She was never charged directly with insider trading, but in prosecuting her, federal officials sent a clear message that such shenanigans will not be tolerated.
