Rodrigues
in conflict
of interest?

The UPW head sat on a
judicial panel screening a
candidate suing his union

By Ian Lind
Star-Bulletin

Gary Rodrigues took part in Judicial Selection Commission deliberations on Insurance Commissioner Rey Graulty's application for appointment to the bench even though Rodrigues was involved in a lawsuit and investigation by Graulty's office.

Graulty, acting as court-appointed liquidator of the failed health insurer Pacific Group Medical Association, has sued Rodrigues' union and is probing questionable payments to a company owned by Rodrigues' daughter.

But when Graulty arrived for his interview with the commission in the latter part of last year, Rodrigues, also state director of the United Public Workers union, was there.

"In light of the fact I had sued Mr. Rodrigues to get my money back, absolutely, it was a little awkward," Graulty said this week.

Commission Chairman B. Martin Luna won't say whether Rodrigues disclosed the conflict of interest, but Graulty said he informed the commission of the situation in advance.

"Through my attorney, I had notified commissioners (David L.) Fairbanks and (James) Kawashima that there was ongoing litigation," Graulty said.

"I took it there was a little discussion among them before I came in," Graulty said. "If there is a problem, it is on their side. I attended the hearing on the date and time appointed. Mr. Rodrigues was there. They asked me all the hard questions that I presume they asked of others."

Graulty was appointed a Circuit Court judge last month by Gov. Ben Cayetano from among six names submitted by the commission. He is now awaiting Senate confirmation.

Luna, a Maui attorney, declined to comment, saying he would have to discuss the matter with the commission, which is not scheduled to meet until early February.

Rodrigues, through a spokesman, denied any wrongdoing in the matter.

The Judicial Selection Commission requires members "to exercise diligence in becoming aware of conflicts of interest" and to disclose "any personal, business or legal relationship" with an applicant.

The rules provide that when a conflict is disclosed, the commission as a whole must decide whether the commissioner should withdraw from further deliberations.

Luna said he was unfamiliar with a commission rule specifically authorizing public disclosure concerning conflicts of interest.

Rep. Cynthia Thielen (R, Kailua) said Rodrigues should have recused himself from anything dealing with Graulty's application.

"That's just wrong," Thielen said of the union leader's participation.

"That's not ethical."

"Graulty as insurance commissioner questioning a transaction that involves Gary's daughter, while Gary votes on his judicial nomination, is as close as kissing cousins," Thielen said. "It's just too close."

PGMA was seized by insurance regulators in March 1997, leaving an estimated $18 million in unpaid bills.

Graulty has a pending lawsuit against the UPW seeking to recover $1.5 million in insurance premiums withheld by the union in the months preceding PGMA's collapse.

The UPW had an agreement to offer a PGMA health plan to its members as an alternative to the plans offered through the state's Public Employees' Health Fund. The union promoted PGMA's plan and accounted for nearly 25 percent of all PGMA members at the beginning of 1997.

Graulty is the named plaintiff, and Rodrigues is a central figure in the case, which so far has focused on the legal nature of the agreement between the union and PGMA.

Graulty also had an ongoing investigation of questionable payments made by PGMA to a company headed by Rodrigues' daughter, court records show.

The payments were disclosed earlier in court files when Graulty issued subpoenaes for records of the company, Four Winds RSK Inc., which provided unspecified services tied to PGMA's coverage of UPW members.

Graulty told the Star-Bulletin in October 1998 that he had at least temporarily dropped his probe into the payments in order to concentrate on areas offering the possibility of recovering larger sums, although potential claims involving Four Winds remain.

The statement came while Graulty was under active consideration by the commission.

"This calls into question the integrity of the judicial selection process," said Ted Hong, assistant corporation counsel for Hawaii County, who has clashed with Rodrigues on several labor matters in the past.