[House Report 112-716]
[From the U.S. Government Publishing Office]


112th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     112-716
_______________________________________________________________________

                                     

                                                 House Calendar No. 174


                IN THE MATTER OF ALLEGATIONS RELATING TO
                     REPRESENTATIVE SHELLEY BERKLEY

                               ----------                              

                              R E P O R T

                                 of the

                          COMMITTEE ON ETHICS




 December 20, 2012.--Referred to the House Calendar and ordered to be 
                                printed
                 IN THE MATTER OF ALLEGATIONS RELATING

                   TO REPRESENTATIVE SHELLEY BERKLEY


112th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     112-716
_______________________________________________________________________

                                     

                                                 House Calendar No. 174


                IN THE MATTER OF ALLEGATIONS RELATING TO

                     REPRESENTATIVE SHELLEY BERKLEY

                               __________

                              R E P O R T

                                 of the

                          COMMITTEE ON ETHICS




 December 20, 2012.--Referred to the House Calendar and ordered to be 
                                printed


                          COMMITTEE ON ETHICS

JO BONNER, Alabama,                  LINDA T. SANCHEZ, California,
  Chairman                             Ranking Member
MICHAEL McCAUL, Texas                JOHN A. YARMUTH, Kentucky
K. MICHAEL CONAWAY, Texas            DONNA F. EDWARDS, Maryland
CHARLES W. DENT, Pennsylvania        PEDRO R. PIERLUISI, Puerto Rico
GREGG HARPER, Mississippi            JOE COURTNEY, Connecticut


                              REPORT STAFF

          Daniel A. Schwager, Staff Director and Chief Counsel
             Deborah Sue Mayer, Director of Investigations
              Kelle A. Strickland, Counsel to the Chairman
            Daniel J. Taylor, Counsel to the Ranking Member

                       Sheria A. Clarke, Counsel
                      Christopher R. Tate, Counsel
                Brittany M. Bohren, Investigative Clerk


                          LETTER OF SUBMITTAL

                              ----------                              

                          House of Representatives,
                                       Committee on Ethics,
                                 Washington, DC, December 20, 2012.
Hon. Karen L. Haas,
Clerk, House of Representatives,
Washington, DC.
    Dear Ms. Haas: Pursuant to clauses 3(a)(2) and 3(b) of rule 
XI of the Rules of the House of Representatives, we herewith 
transmit the attached Report, ``In the Matter of Allegations 
Related to Representative Shelley Berkley.''
            Sincerely,
                                   Jo Bonner,
                                           Chairman.
                                   Linda T. Sanchez,
                                           Ranking Member.


                            C O N T E N T S

                              ----------                              
                                                                   Page
 I. INTRODUCTION......................................................1
II. PROCEDURAL BACKGROUND.............................................2
III.FINDINGS AND CONCLUSIONS..........................................2

IV. STATEMENT UNDER RULE XIII, CLAUSE 3(c) OF THE RULES OF THE HOUSE OF 
    REPRESENTATIVES...................................................5
APPENDIX A: THE INVESTIGATIVE SUBCOMMITTEE'S REPORT..............     6
APPENDIX B: REPORT AND FINDINGS FROM THE OFFICE OF CONGRESSIONAL 
  ETHICS.........................................................   156
APPENDIX C: REPRESENTATIVE BERKLEY'S RESPONSE TO OCE'S REPORT AND 
  FINDINGS.......................................................   454


                                                 House Calendar No. 174
112th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     112-716

======================================================================



 
IN THE MATTER OF ALLEGATIONS RELATING TO REPRESENTATIVE SHELLEY BERKLEY

                                _______
                                

 December 20, 2012.--Referred to the House Calendar and ordered to be 
                                printed

                                _______
                                

               Mr. Bonner, from the Committee on Ethics, 
                        submitted the following

                              R E P O R T

    In accordance with House Rule XI, clauses 3(a)(2) and 3(b), 
the Committee hereby submits the following Report to the House 
of Representatives:

                            I. INTRODUCTION

    On December 20, 2012, the Committee convened for the 
purpose of considering the Report of the Investigative 
Subcommittee (ISC) in this matter, which the ISC adopted on 
Thursday, December 13, 2012. This Report memorializes the 
Committee's conclusions based on the ISC Report.
    The Committee agrees with the findings and the conclusions 
of the Investigative Subcommittee, which were reached following 
a thorough five-month investigation. Specifically, the 
Committee finds that Representative Berkley violated House 
rules and other laws, rules, and standards of conduct by 
improperly using her official position for her beneficial 
interest by permitting her office to take official action 
specifically on behalf of her husband's medical practice. The 
Committee also finds that Representative Berkley did not, 
however, violate House rules and other laws, rules, and 
standards of conduct by dispensing special favors or privileges 
to her husband, Dr. Lawrence Lehrner, or with respect to her 
husband's contact with her office on behalf of third parties. 
Finally, the Committee agrees with the ISC that the evidence 
did not sufficiently demonstrate a violation of House Rules or 
other laws, rules, and standards of conduct related to 
Representative Berkley's activities on behalf of the kidney 
transplant center at University Medical Center in Las Vegas, 
Nevada (UMC).
    Accordingly, the Committee hereby adopts the ISC's Report, 
which we have transmitted as an appendix hereto. The Committee 
has concluded that no further action is warranted in this 
matter and considers it closed.

                       II. PROCEDURAL BACKGROUND

    In early 2012, following media reports alleging that 
Representative Berkley had improperly used her position in a 
manner that benefited her husband's financial interest, the 
Committee authorized an inquiry into the allegations pursuant 
to Committee Rule 18(a). On February 9, 2012, after that 
inquiry had already begun, the Committee received a referral 
from the Office of Congressional Ethics (OCE), specifically 
recommending further review of allegations that Representative 
Berkley had violated House rules and standards regarding 
conflicts of interest by taking official action on behalf of 
UMC to prevent the United States Centers for Medicare and 
Medicaid Services (CMS) from revoking UMC's kidney transplant 
program's Medicare approval.
    Based on the results of the Committee's 18(a) 
investigation, it voted unanimously on June 29, 2012, to 
empanel an ISC. The ISC met on 16 occasions and interviewed 
nine witnesses, including current and former staff of 
Representative Berkley, current and former officials at 
executive branch agencies including the Department of Veterans 
Affairs (VA) and CMS, the former CEO of UMC, and Representative 
Berkley's husband. The ISC issued three subpoenas for the 
collection of documents, resulting in the production of over 
108,000 pages of materials. On December 4, 2012, Representative 
Berkley voluntarily appeared before the ISC and answered 
questions under oath. In advance of her appearance, 
Representative Berkley, through counsel, submitted a letter and 
additional documentation relevant to the ISC's inquiry.
    On December 13, 2012, the ISC voted to issue its Report, 
finding that Representative Berkley had violated House Rules 
and other laws, rules, and standards of conduct with respect to 
some, but not all, of the allegations it had investigated. The 
ISC did not believe that a sanction requiring the action of the 
House of Representatives was warranted in this case.
    Pursuant to House Rule XI, clause 3(a)(2), which provides 
that the Committee may report to the House its findings and 
conclusions for final disposition of investigative matters only 
after ``notice and hearing,'' the Committee provided 
Representative Berkley with a copy of the ISC Report on 
December 18, 2012, and invited her to appear at a Committee 
hearing on December 20, 2012. After informal discussions with 
Committee staff in which Representative Berkley shared her 
perspective, she declined the Committee's invitation to appear 
at the hearing.

                     III. FINDINGS AND CONCLUSIONS

    The Committee voted unanimously to release this public 
Report finding that Representative Berkley violated House Rules 
and other laws, rules and standards of conduct governing 
conflicts of interest where she permitted her office to take 
official action specifically on behalf of her husband's 
practice pertaining to monetary collections by her husband's 
practice from government agencies. Specifically, in four 
instances from April 2008 through December 2010, Dr. Lehrner 
contacted Representative Berkley's office on behalf of his 
practice, Kidney Specialists of Southern Nevada (KSSN), 
regarding issues KSSN was having with claims filed with VA, 
Medicare, or Medicaid. Dr. Lehrner often referenced specific 
dollar amounts in question that he believed those agencies owed 
to KSSN, and had not paid either through delays in the billing 
process or other problems with the agencies. Representative 
Berkley and her staff took actions in response to these issues 
to assist in KSSN obtaining payment. Because such actions 
caused ``compensation to accrue to the beneficial interest'' of 
Representative Berkley, the Committee finds that they violated 
House Rule XXIII, clause 3; and because such actions resulted 
in a benefit to Representative Berkley ``under circumstances 
which might be construed by reasonable persons as influencing 
the performance of [her] governmental duties,'' the Committee 
finds that they violated Section 5 of the Code of Ethics for 
Government Service. The ISC, in Part V.B of its Report, engaged 
in a fulsome discussion of these rules and the applicable 
precedent, and meticulously applied those standards to the 
facts in question.
    The ISC also noted a number of facts that, in the opinion 
of the Committee, provide context for the disposition of these 
violations. First, the Committee noted that there was no 
evidence that Representative Berkley acted with the intent to 
unduly enrich herself. Representative Berkley had a legitimate 
concern, raised at the time that these issues were ongoing, 
that failures on the part of government insurers to reimburse 
providers in a timely fashion might result in the providers 
opting not to see patients insured by those programs. During a 
House Committee on Veterans' Affairs hearing in which 
Representative Berkley raised the issue of delayed payments to 
her husband's practice, Representative Berkley noted, ``talk 
about people not enlisting and volunteering to serve this 
Nation. If these doctors don't get paid . . . [y]ou are not 
going to get any doctors treating these veterans when they get 
home, especially those that are contracting with the VA.''\1\ 
In fact, Representative Berkley herself noted in her testimony, 
``I got the earmark and the land for a new VA hospital, first 
new facility the VA built in 20 years. . . . My concern was my 
constituents, my veterans, and giving them the best possible 
services that we could.''\2\ Representative Berkley noted that 
the opening of this facility, which included a full-time 
nephrology department, would result in her husband's practice 
losing patients. In sum, Representative Berkley's activities in 
the healthcare policy realm appear to have been motivated by 
factors wholly divorced from her family's financial wellbeing.
---------------------------------------------------------------------------
    \1\Legislative Hearing on H.R. 2818, H.R. 5554, H.R. 5595, H.R. 
5622, H.R. 5729, and H.R. 5730, 110th Congress (2008) (statement of 
Representative Shelley Berkley, from Nevada's 1st district).
    \2\ISC Interview of Representative Shelley Berkley.
---------------------------------------------------------------------------
    Second, Representative Berkley testified credibly that she 
provided her husband with no assistance in seeking future 
benefits (as opposed to assisting with claims for services 
already rendered), and that the level of assistance was not 
unusual when compared to the assistance her office provided to 
other physicians. Ultimately, she was mistaken when she applied 
these facts to the ethics rules and determined that her course 
of action was proper, but the Committee takes note of the lack 
of any corrupt intent and believes that this mitigates the 
severity of the violations in question.
    The Committee also agrees with the conclusion of the ISC 
that there is insufficient evidence to determine that 
Representative Berkley violated House Rules or other laws, 
rules, and standards of conflict governing conflicts of 
interest with respect to the UMC kidney transplant center. In 
late October 2008, Representative Berkley received a telephone 
call from Kathy Silver, then-CEO of UMC, a county hospital in 
Representative Berkley's district. This sort of call is 
unremarkable in Member offices, and would have been 
unremarkable in this case as well, were it not for a contract 
between UMC and KSSN to provide services, some of which were 
related to the program in question. Once Ms. Silver made this 
telephone call to Representative Berkley, the Nevada delegation 
engaged on the issue for approximately eight days, writing a 
letter to former CMS Acting Administrator Kerry Weems and 
making telephone calls (including one call between Mr. Weems 
and Representative Berkley). The Committee could not determine 
the precise consequences of the kidney transplant center's 
continued operations on KSSN's existing contract, and concluded 
that whatever those consequences, they did not factor into 
Representative Berkley's decision making at the time. In 
another case, with a different set of facts, the Committee 
might have reached a different conclusion on this matter, but 
ultimately it was unable to conclude that such contact 
constituted a violation. As stated by the ISC:

          While the ISC has concerns about the appearance 
        created by the renewal of KSSN's contract with UMC, and 
        the fact that KSSN's bid proposal mentioned the 
        intercession of the congressional delegation as a 
        reason why its contract should be renewed, the ISC was 
        simply unable to establish that Representative Berkley, 
        when she participated in a delegation-wide effort to 
        save a program which had a connection to her husband 
        she did not fully understand, violated the conflict of 
        interest rules. None of the above factors was in itself 
        dispositive to the ISC's conclusion, and the ISC limits 
        its findings to the facts of this case.\3\
---------------------------------------------------------------------------
    \3\ISC Report at 45.

    The ISC recommended that the issuance of its Report should 
serve as a reproval of Representative Berkley for the 
violations described herein. The ISC was unable, however, to 
reach a consensus as to whether a formal letter of reproval 
should be issued to Representative Berkley. The ISC noted for 
the record that Representative Berkley was entirely cooperative 
with the investigation, and credits her testimony both in terms 
of candor, and in terms of her objective lack of malicious 
intent in violating the rules. The Committee, having reviewed 
the transcript of her testimony, concurs in that positive 
assessment of Representative Berkley's candor and cooperative 
nature. The Committee wishes to thank Representative Berkley 
for her forthright and proactive participation in this process.
    The Committee accepts the recommendations of the ISC and 
adopts its report. In no small part based upon Representative 
Berkley's cooperative approach to this process and her candor, 
the Committee finds that no further action is necessary. 
Therefore, upon the submission of this report and the 
attachments thereto, the Committee considers this matter 
closed.
    The ISC highlighted its own view, concurring in the view of 
the Committee in resolving the recent Waters\4\ case, that the 
House should create much clearer guidance for the community and 
the public on conflicts of interest rules. The Committee 
certainly agrees with the ISC's recommendation, and believes 
the time has come to engage in comprehensive review of the 
House's conflicts standards so that they are clearer and more 
easily digested by the House community.
---------------------------------------------------------------------------
    \4\See Comm. on Ethics, In the Matter of Allegations Related to 
Representative Maxine Waters, H. Rep. 112-690, 112th Cong. 2d Sess. 
(2012).
---------------------------------------------------------------------------

IV. STATEMENT UNDER RULE XIII, CLAUSE 3(c) OF THE RULES OF THE HOUSE OF 
                            REPRESENTATIVES

    The Committee made no special oversight findings in this 
report. No budget statement is submitted. No funding is 
authorized by any measure in this report.



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