(I have no legal training. The analysis that follows is the analysis of a lay person. Anyone with legal training that can provide clarity, context, or corrections would be welcome.)
It's been well documented the amount of money spent in ID-01 by The Club for Growth. What has not been documented are any of the large individual contributions made to Bill Sali's campaign. The focus of this diary will be one of those, or rather a number of those made by the employees of one company, Employers Resource Management Company (ERM). Combined, ERM employees' contributions to Sali total more than any other company--in fact more than double. So who is Employers Resource, how much did ERM employees contribute to Sali and why?
The Company
Employers Resource Management is headquartered in Boise, Idaho with branch offices throughout the nation. ERM describes the company as a Professional Employers Organization (PEO), and its business function this way:
The administrative company offers services including benefits administration, risk management, payroll processing and a wide variety of human resource services focused on effective employee management.
Basically, ERM provides HR and benefits services to small employers who might not otherwise be able to provide benefits, such as insurance and retirement, for their employees. The technical term for such companies is Multiple Employer Welfare Arrangements (MEWAs). The U.S. Department of Labor describes them as follows:
Multiple Employer Welfare Arrangements (MEWAs) provide health and welfare benefits to employees of two or more unrelated employers who are not parties to bona fide collective bargaining agreements. In concept, MEWAs are designed to give small employers access to low cost health coverage on terms similar to those available to large employers. For certain employers they represent the only available option for providing employees with health care because insurance companies often will not insure small employers who do not fall within their desirable risk category.
Although MEWAs can be provided through legitimate organizations, they are sometimes marketed using attractive but actuarially unsound premium structures that generate large administrative fees for the promoters. In addition, certain promoters will set up arrangements that they claim are established pursuant to a collective bargaining agreement and, therefore, are not MEWAs but legitimate benefit plans free from state insurance regulations. Often, however, these collective bargaining agreements are nothing more than shams designed to avoid state insurance regulation.
MEWAs fall into two categories. Employee welfare benefit plans (see definition at Health Plan Law) which are governed by the Employee Retirement Income Security Act of 1974 (ERISA), and any other arrangement which are not. If a MEWA is not an employee welfare benefit plan, it is subject to state regulation. I'll not bore you any further here with MEWAs, but if you are curious Health Plan Law has more. (I've learned much more than I ever cared to in researching this story and I'm still not sure I fully understand.)
So, who are the people behind Employers Resource? From their website we find this history:
In 1985, George Gersema founded Employers Resources Management Company with his wife Mary, his brother Duke, and his college roommate Ray O'Leary. For the past 20 years, Employers Resource has been a recognized leader in the PEO services industry, ranking among the top 15 PEOs in the nation.
And their Management team:
Executive Committee
George Gersema, Chairman of the Board & Chief Executive Officer
Ray O'Leary, President
Mary Gersema, CPP, Director of Operations
Douglas Gersema, CFP, Executive Vice President
Employers Resource Management Team
Rod Diekema, Vice President, Sales
Greg Feeler, Information Technology Manager
Robert Henbest, Administrative Services and Underwriting
Andy Loyst, Health Benefits Director
Greg Rutherford, CPA, Chief Financial Officer
Kathleen Pidjeon, SPHR, Special Projects
Dale Seay, SPHR, Human Resources
Lori Schwind, Marketing Communications
Margo Wyman, Risk Management
The Contributions
Now let's look at the contributions made by employees of Employers Resource to Bill Sali. From the FEC Disclosure Report for Sali for Congress:
GERSEMA, DOUGLAS 06/30/2006 2000.00 EMPLOYERS RESOURCE/ACCOUNTING MANA
GERSEMA, DOUGLAS 11/02/2005 2000.00 EMPLOYERS RESOURCE/ACCOUNTING MANA
GERSEMA, GEORGE 11/02/2005 2000.00 EMPLOYERS RESOURCE/GENERAL MANAGER
GERSEMA, GEORGE 06/14/2006 2000.00 EMPLOYERS RESOURCE/GENERAL MANAGER
GERSEMA, MARY 11/02/2005 2000.00 EMPLOYERS RESOURCE/PAYROLL MANAGER
HENBEST, ROBERT 11/02/2005 2000.00 EMPLOYERS RESOURCE/ADMINISTRATOR
PAYNTER, CHRISTINE 06/30/2006 2000.00 EMPLOYERS RESOURCE/EXECUTIVE ASSIS
PAYNTER, CHRISTINE 12/30/2005 1625.00 EMPLOYERS RESOURCE/EXECUTIVE ASSIS
RUTHERFORD, GREGORY 11/02/2005 2000.00 EMPLOYERS RESOURCE/TREASURY MANAGE
RUTHERFORD, GREGORY 06/14/2006 2000.00 EMPLOYERS RESOURCE/TREASURY MANAGE
Then we add in two more from American Employers Benefit Trust, an
affiliate of Employers Resource.
LOYST, ANDREW 12/30/2005 2000.00 AMERICAN EMPLOYERS/CORPORATE BENEF
LOYST, ANDREW 06/14/2006 2000.00 AMERICAN EMPLOYERS/CORPORATE BENEF
And we get a combined total of $23,625 from Employers Resource Management employees to Sali's campaign. This is the largest sum of individual contributions to come from one company. In fact the next largest is only $10,000.
There is nothing illegal about employees from a company deciding to contribute to the same campaign. Some things that would make it illegal are if company funds were used or if the company urged employees to contribute. Keeping that in mind, there are several interesting things to note about these contributions.
* The dates for the primary contributions are either 11/02/05 or 12/30/05 and contributions for the general are either 6/14/06 or 6/30/06.
* All the contributions are in $2000 amounts except for the 12/30/05 contribution of Christine Paynter which is $1626. (Maybe she didn't get the memo?)
* All but one of the employees are part of the management team. The other is an executive assistant.
* Douglas Gersema, the CFP and Executive VP, lists his title as Accounting Manager.
* If you go back to the FEC report and look at the scanned file, George Gersema lists his address as the corporate headquarters address.
Now I am not suggesting that there is anything untoward going on here, just noting that there are some interesting facts.
The Conclusions
So what are the employees of ERM hoping to get for their money? The company apparently has an interest in social issues--they gave $5,000 to Idaho Chooses Life Pac this year along with contributions to various local and statewide candidates. The founder and CEO, George Gersema, wants to repeal the Endangered Species Act. All of that may play a role, but there may be something more. Over the years ERM has faced a large number of documented legal problems. We'll look at a few.
In March of this year Employers Resource Management was engaged in civil litigation with the U.S. Department of Labor.
Employers Resource Management, Inc. -- On March 16, 2006, a final judgment and consent order was filed in Chao v. Employers Resource Management Company, Inc. (ERM). ERM, headquartered in Boise, ID, sponsors a self-funded multiple employer welfare arrangement for small employers located in several states. The consent order requires that ERM maintain a minimum level of reserves for the payment of medical claims. ERM has contributed approximately $588,000 to fund such a reserve pursuant to the agreement reached with the Department. ERM also agreed to hire qualified professionals to annually compute the amount the claims reserves must hold. The settlement also provides that ERM will forward employer and employee premiums to the health plan as soon as those monies can be segregated from its general assets, will separately hold in trust and account for the health plan's assets and will use the plan's assets only to pay proper claims and expenses. ERM also agreed to invest the plan's assets prudently and reimburse itself only for direct expenses in accordance with federal law. (emphasis added)
They were also fined last year by the
Texas Department of Insurance.
The Texas Department of Insurance announced enforcement actions taken by Commissioner Mike Geeslin that became final during December 2005. The actions include...a $1 million fine against Employers Resource Mangement Company of Boise, Idaho, for attempting to sell unauthorized insurance. (emphasis added)
They were prohibited from practicing as a PEO in Utah in 2003.
EMPLOYERS RESOURCE MANAGEMENT
COMPANY, INC.
Unlicensed Professional Employer Org.
Boise, Idaho
Cause of Action: Respondent was engaged in practice as a professional employer organization when they are not licensed to do so in Utah. Without admitting or denying any of the Division's allegations, respondent agreed to the following:
Order: Respondent was ordered to cease and desist from practicing as a professional employer organization in Utah.
Date: January 2, 2003 (emphasis added)
The Idaho Department of Insurance had a case against ERM that was decided by the Idaho Supreme Court in May 2006. Among the Supreme Court findings was that ERM had improperly transacted insurance in Idaho. In fact prior to this, ERM has had plenty of legal trouble including in Idaho and Washington. This article from The Spokesman-Review sums it up nicely. Here's a snip:
If Employers Resource Management Co. Inc. had not tarried paying a health insurance claim submitted by an Anacortes woman, the company might have stayed under the radar of Washington Insurance Commissioner Mike Kreidler.
But the delay prompted a complaint to Kreidler's office that late last month resulted in a cease-and-desist order against ERM. So far, the insurance commissioner has found just the one Anacortes business, with its 52 employees, that has purchased insurance from ERM.
But ERM has drawn the attention of plenty of other federal and state officials, who have engaged the Boise company in regulatory and court skirmishes for at least 12 years.
The company's chief executive officer, George Gersema, says he would have relented years ago if he were not so stubborn. From his point of view, ERM offers a benefit package like that of any other employer up to the size of a General Motors. Washington and Idaho are among the few states that have a problem with how ERM operates. (emphasis added)
So by contributing such a large sum of money to Bill Sali, are the employees/owners of Employers Resource Management Company hoping to get an advocate for their business in Congress? Are they hoping to change how MEWAs are regulated? These could be a logical assumptions--only time and careful monitoring will tell.