SEC Charges HHS and Kathleen Sebelius for Botched Rollout of Affordable Care Act


Washington D.C., Dec. 30, 2013

The Securities and Exchange Commission today charged the U.S. Department of Health and Human Services and its Head, Kathleen Sebelius, for their roles in the botched rollout of the Affordable Care Act as well as failure to disclose to regulators and members of Congress the material weaknesses in its website and project design.

An SEC investigation found that  Sebelius failed to comply with U.S. Internet standards and did not exercise appropriate professional care and skepticism in conducting audits and due diligence in managing the rollout. She and her subordinates misled Congress as to the status of the rollout on multiple occasions and also apparently failed to alert her superior, President Barack Obama, about the numerous material weaknesses.

HHS and Sebelius agreed to settle the SEC’s charges.  They will be prohibited from practicing as regulators of the American healthcare system for the next fifty years, and agreed to pay a penalty of $158.4 billion.  This penalty represents 337 million hours wasted by 32.1 million Americans trying to register on the defective website, valuing their time at $85 per hour, plus an additional penalty of $385 per hour wasted.

“Sebelius and HHS failed to subject the project to appropriate and prudent scrutiny and contributed to a debacle that wasted enormous amounts of money and time, for the Federal government and tax payers alike.” said Robert J. Kohn, a Director in the SEC’s Division of Enforcement. “It is the hope of the Commission that this penalty will dissuade other Washington bureaucrats from engaging in such reckless and imprudent interference in the American economy in the future.”


(Extract from AP article on SEC Fine of HHS. . . )

. . . . Commenting on the SEC fine, President Obama, in unscheduled remarks  to the White House Press corps, said,  “The many flaws in the Affordable Care Act are inexcusable and reflect poorly on America’s legislative process. I hope this will be a lesson to Congress, so that in the future it will design better laws for me to sign.  It is particularly unfortunate that Congress did not receive more constructive input from Republicans about how to draft a law that could actually be implemented without disrupting the healthcare coverage and wasting the valuable time of millions of Americans.  I am holding them accountable for the many flaws in so-called ObamaCare.”

Copyright Thomas Doerflinger 2013.  All Rights Reserved.


About tomdoerflinger

Thomas Doerflinger, PhD is a prominent observer of American capitalism – past, present and future.
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