A commonwealth Justice Department investigation concluded that former La Fortaleza Public Policy and Organization Secretary Alejandro Figueroa could have had a conflict of interest and possibly violated ethics and canon laws when favoring a pharmacy benefit management firm owned by his father.

While the investigation determined that Figueroa did not commit any criminal violations in the case, Justice Secretary Antonio Sagardía said Monday that it was being referred to the Government Ethics Office and the Office of the Solicitor General to determine whether the former Fortuño administration official violated conflict of interest rules.

Figueroa faces fines of up to $20,000 for each ethics violation and could lose his license to practice law. Sagardía said the Solicitor General’s Office, which he called “the investigative arm” of the Puerto Rico Supreme Court, has the authority to disbar attorneys.
The three-month Justice probe, which included testimony from Gov. Fortuño, found that Figueroa could have incurred in a conflict of interest by participating in meetings in which a proposal from PharmPix to serve as pharmacy benefit manager for the Health Reform program was discussed. 
Figueroa's father – Jaime Figueroa Sr. -- is a minority shareholder and chief executive of the company. Such conduct could have violated Article 3.2 (h) of the Government Ethics Law and regulations 21 and 38 of the Canon Law governing attorneys, which establish prohibitions against public officials participating in matters in which they or related people could face a conflict of interest, the report said.

“Regardless of whether his participation was active or passive in these meetings, [Figueroa’s] mere presence implied the presence of the secretary of public policy and organization with all the power and influence inherent to the post – and that’s a conflict of interest,” Prosecutor Ignacio Morales, head of Justice's Public Integrity Division, said during a press conference Monday morning at Justice Department headquarters in Miramar.

In a written statement, Jaime Figueroa, PharmPix’s chief executive, rejected that his firm could have benefited from his son’s position.

“At no time did I ask for an undue intervention or much less use the public position of my son in the current administration to benefit the business,” he said. “In fact, I never intervened directly in the presentations made to La Fortaleza or to the Health Insurance Administration … whose only purposes have been to offer an alternative to the government that can put a brake on excessive costs in [prescription] medicine as well as in the visibility and control in the handling of several pharmacy benefit programs.”

Figueroa could not immediately be reached for comment.

The investigation concluded that Figueroa and former health advisers Diego Loinaz and Johan Serrano did not commit any crimes when they allegedly pushed for private insurer Cosvi to get contracts in the $1.5 billion Health Reform program.

“The testimony and documentary evidence examined by prosecutors was insufficient to conclude that that [Figueroa, Loinaz and Serrano committed a crime] allegedly exercised undue or illegal pressures outside of the normal procedures carried out by officials to achieve aims inherent in the area of health,” said Morales, who noted that Loinaz’s connections to MOCS, another Health Reform insurer, were not explored.

“The conclusion reached by the investigation is that the alleged pressures did not constitute anything other than efforts normally carried out by officials to achieve government aims … within the functions and duties inherent to the area of health they were assigned,” Morales said.

While these officials may not have committed crimes, they “deviated from the governor's public policy and instructions, by unsuccessfully trying to change the initial policy that contracts for Health Reform regions be awarded through a competitive process involving [request for proposals],” said Sagardía, quoting from the report.

Fortuño ordered the probe on Aug.13, after reports surfaced that Figueroa, Loinaz and Serrano were allegedly pressuring Health Insurance Administration, or ASES, officials to change policy for selecting Health Reform insurers without approval of ASES' board of directors to favor insurer Cosvi.

The former La Fortaleza officials sought to have Cosvi either continue or be selected as third party administrator for the Health Reform direct-contract program in the southeast and northeast regions three areas without going through a bidding process. ASES runs the Health Reform program covering 1.4 million indigent patients.

The three La Fortaleza aides, along with former Chief of Staff Juan Carlos Blanco, eventually resigned weeks after the governor, under pressure from Senate President Thomas Rivera Schatz, immediately relieved them of handling any matter related to health policy when the scandal broke out in mid-August.

Morales said that there were no findings against Cosvi executives and representatives, or against ASES Director Domingo Nevárez.
The investigation's analysis found that articles 253 and 254 of the 2004 Penal Code prohibiting illicit enrichment and improper interventions in government operations did not apply in the case involving alleged attempts to favor Cosvi. It also found that Government Ethics Code articles 3.2 9 (c) and 3.2 (g) did not apply.
Morales said the investigation involved the examination of 9,000 documents and that 38 people were interviewed. While the governor signed his sworn testimony, which Morales declined to describe, both Figueroa and Loinaz declined to sign theirs.
Public Integrity Division Deputy Director Yolanda Morales Ramos and prosecutors Jimara Gabriel Maysonet and Diana Avilés Mangual participated in the probe, which resulted in a 250-page report. Sagardía declined to give copies to reporters.
Morales, who has been a prosecutor for 12 years, acknowledged that he was seeking a judicial appointment, but that he applied for the position in March. He said the process was halted with the probe. He acknowledged he was still interested in being a judge.
“We came to the conclusion that there was no conflict of interest because, simply, all prosecutors ... and the Justice secretary himself, are confirmed by the Puerto Rico Senate, and all prosecutors would then have to inhibit themselves,” said Morales, who was called by Sagardía “an honest prosecutor.”

Former Health Secretary Iván González Cancel said Monday that he was pleased with the results of the investigation, but regretted the fact that Insurance Commissioner Ramón Cruz, whom he called “incompetent,” was still in his post.

González Cancel said after he was fired by the governor on Aug. 10 that Cruz as well as the former Fortuño aides pressured him, as president of the ASES board of directors, to fire Domingo Nevárez after he refused to give in to their demands. He said they wanted to replace him with Johan Serrano, an aide to Loinaz. Cruz is a member of the board.

The former Health chief testified extensively in the Justice probe.

“I don’t understand how the insurance commissioner is still in this administration,” he said. “The insurance companies are free to do as they wish. They are using the money from insurance premium hikes to enrich themselves because they are not paying health service suppliers or hospitals well.”

Senate Health Commission Chairman Angel “Chayanne” Martínez  said the Justice probe’s results confirm the Senate’s previous concerns with the Health Reform program’s process to hire private insurers.

But while Martínez congratulated the governor for having referred the accusations to Justice, the lawmaker added in a press release that Sagardía should have referred the case to a SIP panel because “the mere preliminary conclusions ratify the accusations.”

Popular Democratic Party Rep. Luis Vega Ramos denounced that Sagardía “threw in the towel” with the findings exonerating Figueroa and Loinaz.
He said that the former administration officials may have committed at least four crimes, including illicit and unjustified enrichment, illegal use of public work and services, and undue intervention in government operations.

The lawmaker called on Sagardía to submit the case to the Special Independent Prosecutor’s Panel, noting that “the negotiations affected by Figueroa and Loinaz involved multi-million dollar amounts and services to the medically indigent population.”

The Associated Press contributed to this report.