Sovereign Immunity And Why We Don’t Want Government Running Healthcare

by Rob Roper

As most Vermonters are aware, the EB5 scandal in the Northeast Kingdom involved Jay Peak, Bill Stenger, and Ariel Quiros. The alleged crimes involved securities fraud, misuse of $200 million, kick-back payments, and a Ponzi-like scheme to defraud investors. What’s less clear is the involvement and responsibility of the state government and state officials. Attorney General, T.J. Donovan (D) wants to keep it that way.

Donovan’s argument is that state employees were “acting in good faith,” and are therefore immune from prosecution for negligence, or corruption in their roles in allowing the fraud to occur under rules of “sovereign immunity.” Sovereign immunity is defined as “a legal doctrine by which the sovereign or state cannot commit a legal wrong and is immune from civil suit or criminal prosecution.”

According to a recent article by Vermont Digger, the potential crimes committed by state actors include “falsely claim[ing] the projects were audited by the state, actively promot[ing] the projects to new potential investors after state officials were made aware that investor monies had been misused, and engag[ing] in a cover-up.” Moreover, “The investors say the state ‘directly sold’ the Jay Peak projects to investors by promising faster green card approvals, quarterly reports and an assurance of compliance. Legal agreements between the state and the developers that were given to investors included guarantees that state officials would be responsible for oversight, management and compliance.” And, “They cite an example of the state’s alleged complicity in a new affidavit from an EB-5 expert who claims that the state knew in 2012 about kickbacks to Jay Peak immigration attorneys.”

“Meh,” says Donovan. “Sovereign immunity!” No one will be held accountable. No information will be released. Move along.

Now, this is exactly why we should not want government to be in charge of, well, ANYTHING. Especially things that are important, complicated, and involve lots of money. Think healthcare.

We so often hear that government needs to get involved with this or that because otherwise there would be no accountability to the people. But the opposite is true. If crimes are committed by actors in the private sector, they are investigated, prosecuted, and, if found guilty, punished. They are held accountable, and it is possible for the victims of negligence and fraud to exact some sort of restitution or justice. This is a powerful incentive for private sector entities to truly be responsible act to genuinely in good faith. Those that don’t are weeded out.

Not so when government is in charge.

We may never find out if the state was corrupt or incompetent in regard to the EB5 scandal. We may never know what officials made mistakes or committed crimes. Victims may never get justice. And that’s how the system is set up to work. Is that how we want our healthcare system to work, too?

Rob Roper is president of the Ethan Allen Institute. 

{ 6 comments… read them below or add one }

Dennis Edwards October 27, 2017 at 4:15 pm

Private sector accountability? How do you account then for the wall street firms and executives that got off scott free after virtually ruining the U. S. economy in 2007. Their reckless actions caused millions of lost jobs and thousands of lost businesses. Their irresponsibility was not punished in any meaningful way.


Rob October 27, 2017 at 4:23 pm

The government bailed them out, Dennis. If left to private sector, market forces, those Wall Street folks would have seen justice. Government is the problem, not the solution.


Dennis Edwards October 27, 2017 at 4:50 pm

Just saying government is the problem is an oversimplification that I do not buy into. It sounds like Reganism which I’ve always found to be overly simplistic. Trickle down economics and all that nonsense. Private interests have become too powerful in many respects. The government didn’t bail out wall street, they bailed themselves out. Wall street has pretty much become self regulating, they tell the government what to do which is pretty much backwards. I am by no means defending big government waste and red tape but the private sector should not be running prisons and managing the interstate highway system among other things. Tyranny is tyranny, whether it comes from government or big business.


John McClaughry October 27, 2017 at 9:43 pm

Dig a little further. Gretchen Morgenson and Joshua Rosner’s (NY Times) book “Reckless Endangerment” (2011), augmented by Peter Wallison’s “Hidden in Plain Sight” (2015), explain in excruciating detail how Bill Clinton, Democratic members of Congress (Chris Dodd and barney Frank leading the pack), and to a much lesser extent George W, Bush, deliberately set the subprime alt-A mortgage scam in motion. The Wall Street and other lenders responded to the enthusiastic encouragement from FNMA and FHLMC, and the rest is history. For a quick trip through this sordid jungle, read my reviews of those two books in Reason magazine (at


Dennis Edwards October 27, 2017 at 6:32 pm

While the healthcare industry is not wall street per se it is not your typical market driven business model. If a hospital is wasteful and bureaucratic it’s not like someone is going to open up another one down the street and provide competition with better more efficient service. It is a complex issue. Most people do not have the means to go around and comparison shop for the best hospital to get a procedure done. In the case of an emergency, no one does. Big pharma, corporate healthcare and insurance companies have the power to influence legislation and policy in ways that put consumers at a disadvantage, and they use it.
While I lack the expertise to make an articulate argument about it, I am sure the healthcare industry doesn’t have real market incentives to provide better value and efficiency. The market incentives are to keep things the way they are which is not good for the consumer. This is what drives support for publicly managed healthcare or single payer solutions. If there is no reform in the private sector then support for single payer will continue to grow. Whether it’s a good thing or not will be beside the point.
One example I can think of that drives me crazy is this: If you are a big pharmaceutical company it’s legal to sell heroin as long as you slightly change the compound, patent it and call it something else. If this type moral turpitude is allowed to continue then the private sector will only have itself to blame for the long term consequences.


William Hays October 30, 2017 at 2:33 am

Damn! T. J. Donovan is simply a full-blown Communist in Progressive rags. Scary!


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