Frist may not have avoided a conflict of interest

Hospital chain founded by brother, father
Thomas Frist founded HCA, the nation’s largest for-profit hospital chain, with his and the senator’s father. He currently is the company’s chairman emeritus.

Frist advisers confirmed the senator’s brother could influence investment decisions in the Bowling Avenue partnership and said the partnership was placed in a Tennessee trust because Senate ethics rules didn’t allow the non-public HCA shares to be included in Senate-approved trusts.

“His interests in the family partnership were not held by his Senate blind trusts because Senate rules did not permit it. Senator Frist did not control the assets in this partnership and he annually disclosed his interests to the public as required,” Frist spokesman Bob Stevenson said.

Thomas Frist did not return repeated phone calls to his office at HCA seeking comment.

Bowling Avenue Partners’ HCA shares became marketable securities when the estate of Frist’s mother was settled in probate. Frist then began transferring those shares in stages from the Tennessee blind trust to the Senate-approved trusts in 2001 and 2002.

The value of all the transferred shares, calculated on the dates they went into the Senate trusts, was between $775,000 and $1.57 million, according to letters the trustees sent to Frist and the Senate. That stock was on top of millions of dollars in various investments Frist already owned in the Senate blind trusts.

A medical background
With his background as a heart surgeon as well as majority leader, Frist has been at the forefront of legislation that would affect the hospital chain. Among the issues: a Medicare prescription drug benefit and limits on medical malpractice lawsuits.

Frist kept HCA stock in Bowling Avenue Partners and the Tennessee blind trust — but outside the Senate-approved trusts — between 1998 and 2002.

His investments in Nashville-based HCA are being investigated by federal prosecutors and the Securities and Exchange Commission after an AP report that the senator had asked administrators of his Senate blind trusts to sell his HCA holdings.

Frist ordered the stock sold June 13 and all sales were completed by July 1. HCA stock peaked on June 22 and then gradually declined. On July 13, it dropped 9 percent.

Reports to the SEC showed insiders sold about 2.3 million shares of HCA stock worth at least $112 million from January through June 2005.

Frist has denied having insider company information when he ordered the stock sold in June. The profit the senator made from the sales is not known.

The Bowling Avenue name came from the street of the Frist family home in Nashville.

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