Washington – Senate Majority Leader Bill Frist, R-Tenn., was given considerable information about his stake in his family’s hospital company, according to records at odds with his statements that he did not know what was in his stock holdings.
Managers of the trusts that Frist once described as “totally blind” regularly informed him when they added new shares of HCA Inc. or other assets to his holdings, the documents state.
Since 2001, the trustees have written to Frist and the Senate 15 times detailing the sale of assets from or the contribution of assets to trusts of Frist and his family. The letters provided included notice of the addition of HCA shares worth $500,000 to $1 million in 2001 and HCA stock worth $750,000 to $1.5 million in 2002. The trust agreements require the trustees to inform Frist and the Senate whenever assets are added or sold.
The letters seem to undermine one of the major arguments the senator has used throughout his political career to rebut criticism of his ownership in HCA: that the stock was held in blind trusts beyond his control and he had little idea of the extent of those holdings.
The extent of Frist’s knowledge of the inner workings of his trusts and his family’s health care company is related to a recently launched federal investigation of possible insider trading involving the liquidation this summer of Frist’s HCA stock. Within weeks of Frist’s decision to sell his holdings in June, HCA shares fell sharply because of a weak earnings report. Frist has said he possessed only publicly available and not “insider” information about the company when he directed the sale.
Last week, Frist told reporters he is “absolutely confident in the outcome” of the inquiries by the Justice Department and the Securities and Exchange Commission because he “acted properly at every point.” He declined to address specifics about the investigations.
Frist, a heart-surgeon-turned- politician, has been actively involved in shaping national health care legislation, including passage of the Medicare prescription drug benefit, while maintaining a major financial interest in his family-founded health care business.
Two watchdog organizations – Citizens for Responsibility and Ethics in Washington and the Foundation for Taxpayer and Consumer Rights – filed complaints with the Senate Select Committee on Ethics this year charging Frist with having a conflict of interest and questioning why he sold his shares after a decade of saying he did not need to.
Frist and his family have a dozen federal trust accounts, which are essentially piles of stock controlled by professional money managers.
Under the terms of his “qualified” trust agreements set up in 2000, Frist is barred from contacting the managers except under specific circumstances. The managers, however, are required to contact him when the funds they control undergo certain changes – an arrangement similar to those of several other senators.
In January 2003, after winning election as majority leader, Frist was asked on CNBC whether his HCA holdings made it difficult for him to push for changes in Medicare, a federal health program for seniors that added to the hospital company’s revenue.
“I think really for our viewers it should be understood that I put this into a blind trust,” Frist replied. “So as far as I know, I own no HCA stock.”
He added that the trust was “totally blind. I have no control.”
