Groton — Freshman state Rep. John Scott, a Republican representing Groton and Ledyard, introduced a health insurance coverage bill for university students in the current session that could have financially benefited his insurance company.

The legislation died in committee after objections from a Democratic co-chair about a possible conflict of interest.

Scott is president of Bailey Insurance Agencies Inc. in Groton, which acts as broker between the University of Connecticut and Consolidated Health Plans, Inc.

Consolidated, along with Nationwide, provides university-sponsored health insurance to students, according to a copy of the contract obtained from UConn. Students are not required to enroll in the university plan, but they must have health insurance of some kind or Medicaid. If UConn undergraduate students want university-sponsored health coverage, the plan by Consolidated Health is the only plan and Scott's agency is the broker.

Under the current fee arrangement, Bailey Agencies receives about $330,000 a year. The total includes $70 per student for about 2,200 students enrolled in the Student Health Insurance Plan, which covers undergraduates and dental and medical school students and others who are not graduate assistants; and $80 per student for 2,200 graduate assistants, some of whom are enrolled part of the year or enrolled as a family.

Scott introduced HB 5354, under which Medicaid-covered students would not be able to decline the university's health coverage. About 1,000 UConn students receive Medicaid, according to Michael Kurland, director of student health services for UConn. Scott also introduced HB 5355, which would require a study of the use of Medicaid to pay the cost of premiums for health insurance sponsored by public colleges and universities.

Scott said he introduced the bills to save taxpayers money and provide better health care for students. He said Medicaid is expensive for the state to provide and its coverage is often more limited than university-sponsored plans.

"The problem with Medicaid is that a lot of doctors don't take it because of lower reimbursement and there are some higher deductables," Scott said. "The other thing about Medicaid is it's only good in the state of Connecticut unless you have a life-threatening emergency. So in the college population, they're transient, you might have a student who is on Medicaid and is going to do a semester at George Washington University, for example." They wouldn't be covered if something happened, he said.

Students pay a yearly charge of $2,628 for the Student Health Insurance Plan, which includes the $70 fee for Bailey Agencies and a $25 charge for the university's administrative costs. The undergraduate plan is not subsidized by the university.

Students who are graduate assistants and are paid by the university are covered by a different plan with a full premium cost of $4,257. However, the plan is heavily subsidized so the student pays $200.

But Scott said students would not have seen an increase in costs under the bill that died, because Medicaid could have paid for the student health plan.

"Legally, I've done nothing wrong," he said. "It just boils down to perception. People think that I've done something wrong. My intent was not to benefit myself, but to save the taxpayers significant dollars and provide those students with better health care coverage."

The bill would have affected various colleges and universities in Connecticut. All but a few of the public institutions have insurance relationships with brokers or direct relationships with insurance companies, Scott said.

State Rep. Roberta Willis, D-Salisbury, co-chair of the higher education and employment advancement committee, said lawmakers discussed student insurance last year. Willis said committee members wanted to know if college students were receiving the best health care for the best price, or whether students on Medicaid would be better off with university-sponsored insurance.

A different bill, HB 864, still pending, would require the state Department of Social Services, state Board of Regents for Higher Education and UConn to study the use of Medicaid to pay health insurance premiums offered by public colleges and universities.

Willis said Scott's bill caught her eye because it dealt with the same topic but had a different take on it: The proposal would have required a student to pay for UConn's plan even if the student were eligible for Medicaid, Willis said.

"So that's where I found out what the gentleman did for a living," she said.

She said she went to the ranking member on the committee, Rep. Whit Betts, (R-Bristol), and suggested that Scott "may want to think twice about introducing a bill that benefits his business."

She said Betts spoke to Scott and returned to her saying they understood her concern and the two would not pursue the legislation. Willis said she never scheduled the bill for public hearing and never heard from Scott. The bill effectively died, she said.

Scott said others with no connection to the insurance industry have suggested looking at Medicaid in prior years, and his proposal would not have affected him any more than other brokers involved in student health.

E-mails provided by UConn show that before Scott was elected, he asked Student Health Director Kurland whether running for office would affect Bailey Agencies' contract with UConn. Kurland referred him to Kimberly Fearney, director of compliance in the UConn office of Audit, Compliance and Ethics.

"As a small business owner, I value the contract I have with the university and I don't want to do something politically that would cause me to either lose the contract or prevent me from participating in future bids," Scott wrote to Fearney, the emails show. Fearney sought the advice of the Office of State Ethics.

Cynthia Isales, assistant general counsel for the agency, replied that there was nothing that prohibited Scott from running for office, and if he won, he could serve as state representative and keep his contract with UConn.

But she wrote that "he may need to recuse himself if a conflict should arise."

She cited a section of the law that says a public official, including an elected state official, has an interest that "is in substantial conflict with the proper discharge of his duties" if he has reason to believe or expect that he, a spouse, child or business "will derive a direct monetary gain or suffer a direct monetary loss" as a result of his official activity.

But a benefit to an official does not constitute a "substantial conflict" if it benefits others in a profession the same way, said Carol Carson, director of the Office of State Ethics.

"...If you're voting on a matter that would affect lawyers and you're a lawyer and it's going to affect every lawyer in the state the same way, it wouldn't be a substantial conflict of interest," Carson said. But if the benefit or loss would be greater to the lawmaker than to others, the conflict could be considered substantial, she said.

Scott said he asked the university whether there would be a conflict before he ran for state representative because 12 employees depend on him, the UConn contract is an important part of his business and he must make his business work.

Scott said if the ethics office told him he couldn't run for state representative and keep the contract, he wouldn't have run. He also sought the advice of lawyers for the Republican caucus before he introduced the bill, he said. They advised him that the bill was legal but he'd have to recuse himself if it came to a vote, which he would have, Scott said.

"There are gray areas with certain things and in reality, the bills that I put in, if they had gone to the House floor I probably would have recused myself just out of caution. But in reality there is no legal conflict because I am not the only beneficiary," he said.

Bailey Agencies has been a broker of UConn contracts for university-sponsored health insurance for at least 20 years, university spokeswoman Stephanie Reitz wrote in an email. Scott said the university typically enters five-year contracts with vendors.

The legislature includes people from many professions — doctors, lawyers, nurses and insurance brokers like himself — who bring expertise with them, Scott said. If they see an opportunity to save the state money, they should be able to suggest it, he said.

"When people started to give it pushback, I got worried," he said. "There's legal conflict of interest and the perception of conflict of interest. And what I was concerned about was the perception part. I've done nothing wrong in the eyes of the law, but when I saw that there was pushback, I decided to let the bill die."

Willis said she believes the proposed legislation did present a conflict of interest and she disagrees with that aspect of state ethics law. 

d.straszheim@theday.com

Twitter: @DStraszheim