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Letters touch on allegations of blame

Correspondence shows glimpse into Wellmark dispute

Brian Morelli

Iowa City Press-Citizen

January 30, 2007

[Note: This material is copyright by the Press-Citizen, and is reproduced here as a matter of "fair use" for non-commercial, educational purposes only. Any other use may require the prior approval of the Iowa City Press-Citizen.]

Weeks before the University of Iowa notified Wellmark that it intended to terminate its multi-million dollar contract with the health insurance giant, University Hospitals Director Emeritus John Colloton told Regent Bob Downer that the move was "an ill-conceived and counter-productive strategy."

Colloton gave his "personal analysis" in a Jan. 6, 2005, letter he wrote to Downer, taking issue with Downer for "telling people that John Colloton is the prime reason that the problem between the U. of I. and Wellmark has not been resolved." The Press-Citizen obtained the letter under an open records request from the Iowa state Board of Regents.

In the same letter, Colloton described his role in the Wellmark negotiations up to that point as "to provide general oversight; and to occasionally add a non-management perspective to select specific issues that arise. An example of the latter is the U. of I.'s request for dilution of the 365-day termination notice period by 30 days."

The Jan. 6 letter provides a glimpse of the behind-the-scenes decision-making process during the Wellmark controversy, which led to the resignation of three regents -- and the eventual installation of Michael Gartner as regent president -- and continues to overshadow the University of Iowa and the regents even now.

Some people, including Downer, say the departure of former UI President David Skorton was a result of his stance in the Wellmark negotiations. The regents still are searching for Skorton's successor.

At the time of the letter, Colloton had no decision-making authority at the hospital, and Downer was regents president pro tem and in matters concerning Wellmark was the acting president. Then-president John Forsyth had to abstain from Wellmark-related agenda items because he was Wellmark CEO and chairman, posts he still holds.

Neither Colloton, nor his attorney Mark McCormick, responded to e-mails Monday.

Downer's response

Downer responded to Colloton in a Jan. 17, 2005, letter and reiterated Monday that Colloton's assertions were "absolutely untrue."

"I said at the time that was inaccurate, and it was. I am not sure what he heard or whom from," Downer said.

Colloton, who was named director emeritus in 2001, was the University Hospitals director and CEO from 1971 to 1993. He has been on the Wellmark board since 1974, served as the board chair from 1993 to 2000 and as the lead director since 2000. He earns more than $144,000 a year in that role.

While Colloton has no official duties at UI, he maintains office space in the John Colloton Pavilion at University Hospitals, has the use of a UI secretary, UI letterhead and UI e-mail account as well as a free "Lot 1" parking pass, which is reserved for 30 top UI officials.

UI, on the advice of the Iowa Attorney General, has refused open records requests directed at Colloton and his secretary, maintaining Colloton is a private citizen with no public duties.

The Press-Citizen began seeking access to Colloton's correspondence after it anonymously received documents that Colloton appeared to have authored and sent to key officials such as former Gov. Tom Vilsack, Gartner, Skorton and others concerning Wellmark, the UI presidential search, UI and hospital restructuring and other topics.

While the correspondence between Colloton and Downer weren't included in the documents the Press-Citizen anonymously received, it did have some of the same features, including the initials "nlk," indicating it was typed by Colloton's secretary, the salutation "Warm regards" and its tone.

In the Jan. 6, 2005, letter, Colloton also accused Downer of blaming UI donor, former regents president and current Wellmark board member Marvin Pomerantz for the Wellmark controversy.

"For you to be now attempting to put the onus of the unfavorable outcome of this dispute to date on the shoulders of Marvin Pomerantz and yours truly, both of whom have worked diligently and devotedly for a full half-century in enhancing the U. of I. is beneath your dignity!"

Who was to blame?

Colloton wrote that the blame was with "those who, starting back in early 2004 and even before, conceived and implemented a flawed strategy for dealing with Wellmark -- not those of us who have been peripherally involved as members of the Wellmark Board."

Negotiations with Wellmark began with University Hospitals CEO and Director Donna Katen-Bahensky, Carver College of Medicine Dean Jean Robillard and then-CFO Anthony Defurio.

Skorton stepped into the dispute and appointed UI Provost Michael Hogan and UI Vice President for Finance Doug True as lead negotiators.

Pomerantz had little reaction to the comments in Colloton's letter when contacted Monday.

"My recollection is that he must have said what he meant," Pomerantz said regarding Colloton's letter, and added, "I know zero."

Downer, both in the letter and on Monday, disputed Colloton's claim that Downer had bad-mouthed Pomerantz, instead crediting Pomerantz for providing advice.

The letters originated days after UI had given notice that it was terminating its contract with Wellmark so it could renegotiate. UI had been asking for an additional $39 million annually from the health insurer, which serves all of Iowa's 115 hospitals, 98 percent of the state's physicians and 1.3 million Iowans.

Wellmark was paying the university $200 million on behalf of the patients, the single largest payment from Wellmark to any one hospital in the state. The annual contract was slated to end Jan. 1, 2006.

Within weeks of the Colloton letter, Forsyth and two other regents, Dave Neil, also a Wellmark board member, and Sue Nieland, resigned.

They were replaced on the Board of Regents by Gartner, a friend and ally of Forsyth's, Teresa Wahlert, a former Wellmark board member who works for Pomerantz, and Ruth Harkin. Gartner was named president in April 2005.

UI and Wellmark agreed to a new contract that would pay UI an additional $8.6 million in June 2005.

Despite the settlement, the dispute from more than two years ago still lingers, including the current UI presidential search controversy, Downer said.

"I never would have seen some of things I've seen in the intervening two plus years," Downer said Monday. "This has been a very distressing and unpleasant experience and mired in constant controversy. It is beyond dispute there have been numerous significant controversies."