Opinion ID: 4468298
Heading Depth: 3
Heading Rank: 2

Heading: The Visium Scheme

Text: Around the same time that Blaszczak was tipping confidential CMS information to his contacts at Deerfield, he also provided similar information to Christopher Plaford, a portfolio manager at the hedge fund Visium. After 9 subsequently pleading guilty pursuant to a cooperation agreement, Plaford testified that he used Blaszczak as a political-intelligence consultant from around 2010 to 2013, during which time Blaszczak would provide him with both public and nonpublic information concerning the healthcare industry. Plaford, like the Deerfield partners, especially valued Blaszczak’s nonpublic CMS information due to the market edge it gave him. Indeed, Plaford considered Blaszczak’s CMS information to be “much more accurate” than the information provided by other consultants, since it came “directly from the horse’s mouth,” meaning Blaszczak’s friends and former colleagues at CMS. App’x at 750–51. In May 2013, for example, Blaszczak tipped Plaford that he expected CMS to propose cutting the reimbursement rate for home healthcare coverage by between three and three-and-a-half percent per year between 2014 and 2017. In the ensuing weeks, Plaford arranged phone calls with Blaszczak to discuss the sources of his information and thus his level of certainty, an issue that Plaford did not want to discuss over email “because it was potentially incriminating.” Id. at 752. On the phone call, Blaszczak told Plaford that he had a “high conviction” that his information was accurate because he was “interacting directly with his counterparties in CMS [who] were working on the rule, and they were telling him 10 . . . [what] the cut would be.” Id. Based on Blaszczak’s information, Plaford directed Visium to maintain its short positions for Amedisys Inc. and Gentiva Health Services Inc., and to buy put-options in those companies. Following CMS’s June 27, 2013 announcement of the proposed home healthcare rule, which included a three-and-a-half percent annual rate cut consistent with Blaszczak’s information, Visium earned approximately $330,000 in trading profits.