September 28, 2023

Ahead of Nomination Hearing, Senator Warren Raises Ethics Concerns with Medicare and Social Security Public Trustee Nominee

Demetrios Kouzoukas Currently Serves on Board of For-Profit Private Health Insurer Selling Medicare Advantage Plans; “(Public) Trustees play an obvious and significant role in protecting the Medicare program — a role that, in your case, will be compromised by your financial conflicts of interest. … It will be impossible for you to serve as a full member of the Boards of Trustees while also complying with federal ethics law.”

Text of Letter (PDF)

Washington, D.C.  – United States Senator Elizabeth Warren (D-Mass.) sent a letter to Demetrios Kouzoukas, President Biden’s nominee to serve as Public Trustee on the Boards of Trustees for the Social Security and Medicare trust funds, raising concerns about financial conflicts of interest arising from his position on the Board of Directors of Clover Health, a private health insurer that derives a significant portion of its revenue from Medicare Advantage. 

“Your role on the board of directors for the for-profit health insurer Clover Health – a company that derives nearly all of its revenue from Medicare, including a substantial share of its total revenue from Medicare Advantage – gives you an inseparable personal financial stake in the Trustees’ Medicare projections and should disqualify you from the role of Public Trustee,” wrote Senator Warren.

In the 1980s, Congress created two Public Trustee positions and required that the Public Trustees belong to different political parties. In January, President Biden nominated Demetrios Kouzoukas to serve as the Republican Public Trustee for the Social Security and Medicare trust funds, a role that involves reporting to Congress each year on the past and future status of the Social Security and Medicare trust funds and recommending policy changes to preserve and extend the solvency of the program. The Public Trustee positions were created in 1983 to “represent the public in the report development process,” and help establish the underlying assumptions of the Social Security and Medicare Trustees Reports. 

Senator Warren highlighted her particular concerns that Mr. Kouzoukas’s role on the Board of Directors for Clover Health, which he commits to retain if confirmed, would create personal and financial pressures to downplay the fiscal threat that Medicare Advantage poses to the financial health of the Medicare Trust Funds, and potentially recommend policy changes that would serve to further entrench the program’s hold over Medicare, thereby perverting the impartial nature of the position.  

Senator Warren noted that Kouzoukas owns 25,000 shares of Clover stock, and in 2022 received $100,000 in compensation for his Board service. “Federal ethics law bars any government official, ‘including a special Government employee’ such as a Public Trustee, from ‘participat(ing) personally and substantially’ in any ‘particular matter in which … he (or an) … organization in which he is serving as … director … has a financial interest,’” wrote Senator Warren. “(I)t will be impossible for you to serve as a full member of the Boards of Trustees while also complying with federal ethics law.”

“While I am supportive of President Biden’s efforts to fill the roles of Public Trustees, which have been vacant since 2015,  I believe your service on Clover Health’s Board of Directors presents an unavoidable conflict of interest that would prevent you from effectively serving as a Public Trustee,” concluded Senator Warren. “I ask that you come prepared to discuss these conflicts at your September 28, 2023 nomination hearing before the Senate Finance Committee.”  

Senator Warren has long advocated for strong ethics standards for public officials, including ending financial conflicts of interest and protecting vital health care programs for seniors and people with disabilities:

  • On August 29, 2023, Senator Warren announced that she has secured historic ethics commitments from Dr. Monica Bertagnolli, President Biden’s nominee for director of the National Institutes of Health (NIH), to halt the revolving door between former federal employees and giant pharmaceutical companies.
  • In July 2023, at a hearing of the Senate Armed Services Committee, Senator Warren secured ethics commitments from General Charles Q. Brown, Jr., President Biden’s nominee to be the next Chairman of the Joint Chiefs of Staff. When asked if he would agree not to become a defense industry lobbyist or receive compensation from a defense contractor for four years General Brown said he did not “intend to pursue opportunities in the defense sector or a lobbyist upon retirement from military service.”
  • In June 2023, Senator Warren announced that she secured another historic ethics commitment from Federal Reserve Board nominee Dr. Adrianna Kugler, the same one that she previously secured from Vice Chair for Supervision Michael Barr, Dr. Lisa Jefferson, and Dr. Phillip Cook. These nominees’ ethics commitments – to a four year recusal period from matters which they oversee on the Board of Governors, not to seek a waiver from these recusals, and not to seek employment or compensation from financial services companies for four year after leaving government service – are the strongest ethics standards in the history of the Fed.
  • On March 22, 2023, at a hearing of the Senate Finance Committee, Senator Warren defended the Centers for Medicare and Medicaid Services’s (CMS) proposed adjustments to the Calendar Year 2024 Medicare Advantage (MA) payment rates, pushing back against giant insurance companies and their lobbyists who are peddling misinformation to protect their billions in profits and scare beneficiaries into opposing the rule. 
  • On February 2, 2022, during a hearing of the Senate Finance Subcommittee on Fiscal Responsibility and Economic Growth, Senator Warren questioned witnesses about how corporate profiteering in the pharmaceutical, insurance, and financial industries is contributing to excessive costs for Medicare. 
  • In January 2022, Senator Warren secured a commitment from then-FDA Commissioner nominee Dr. Robert Califf to recuse himself from matters involving his former employers and clients for four years, two years longer than what is required in the Biden administration’s Ethics Pledge.