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Molina Healthcare GC Had a Backup Plan for a Romney Administration
Molina Healthcare Inc. cracked the Fortune 500 in 2012 literally as the 500th company on the list as it continued to grow its businesses in 15 states including California. The 32-year-old company, which grew from a single family-run clinic serving the indigent in Long Beach, where the company is headquartered, is a leader in providing government-assisted health care services through Medicaid and the State Children's Health Insurance Program and to Medicare patients through its Medicare Advantage plans. The company also owns primary care clinics throughout California and in Florida, New Mexico, Washington and Virginia and through a separate division provides business processing and IT services to Medicaid agencies. The company reported $4.8 billion in 2011 revenue. The founding Molina family owns roughly 38 percent of the company's shares.
THE QUICK BIO
Jeffrey Barlow joined Molina Healthcare in 2004 as vice president and assistant general counsel, becoming GC, senior vice president and secretary in 2010. Born in Salt Lake City, he majored in philosophy with a minor in Latin at the University of Utah, but started out wanting to be a physicist. Barlow says he graduated a few years late "with five quarters of excess credits" because he "cycled through majors of biology, English and economics" before settling on philosophy as "the quickest route to a college exit." "I was definitely a dilettante in matters of learning," he said.
Barlow says he still loves science and avidly reads science magazines and books and "several years ago I took a graduate level biotechnology course (recombinant DNA technology) at UC-Davis." But philosophy led him to the law. "I discovered I was pretty good at crafting persuasive logical arguments. I had not even thought about law school until a few months before I applied. I also thought that with a law degree I would have flexibility about where I would go in my career after that."
After graduating with his bachelor's in 1987, Barlow earned his J.D. from University of Pittsburgh School of Law in 1990. In his third week as a first-year associate at Streich Lang in Phoenix, the firm's three biggest thrift clients were taken over by the Resolution Trust Corp. after the S&L crisis that restructured that industry after 1989. "The firm's bread-and-butter legal work almost instantly dried up. Imagine seeing 30 to 40 of your colleagues and eight partners head out of the door just as you're walking in," said Barlow. "It gives me a lot of sympathy for the kids coming out of law school over the past few years into an abysmal job market I've been there." While Barlow found work in the firm's commercial bankruptcy litigation section, he did not particularly like it. He said he was surprised he was "able to last four years." While working at Streich, Barlow started thinking about making a dramatic change of careers by working for an international relief organization. He left Arizona to obtain his master's at UC-Berkeley in public health with a specialization in maternal and child health. But the nonprofit road was short-lived.
"By then, we had a young daughter and we got cold feet about taking her overseas to a developing nation. So I decided to try the legal world once again, only I switched from litigation to securities law, which I enjoyed so much better," he said. His next two law firm assignments would give him the background he needed to go in house. In 1996 he joined the boutique securities firm of Bartel Eng in Sacramento. From 2000 to 2004, he was a senior associate at DLA Piper, working as the lead associate on Maxtor's $1 billion acquisition of Quantum's hard drive business among other deals.
Barlow first heard of Molina while he was at UC-Berkeley. Deal work had slowed down at DLA in the aftermath of the dot-com bust and Barlow started thinking about going in house. When he saw the opening at Molina in 2004, he answered the ad. "Molina Healthcare had conducted its initial public offering in July 2003, so I wish I had known about the position sooner and could have handled that," he said. He joined what was a three-person staff the then-GC, one other attorney and Barlow.
INside AND OUTSIDE COUNSEL
Today, his staff stands at 13 attorneys including him, four paralegals and eight support workers. The team operates out of the company's Long Beach headquarters and Sacramento, where Barlow is primarily based and where he shares offices with the company's policy, governmental and regulatory affairs functions.
Barlow's first task as GC was to open up his legal office in the company headquarters. "Our Long Beach legal office is only two years old, but with eight attorneys it is now bigger than our Sacramento office," he notes, adding that putting attorneys closer to top officers has changed the cultural perception of his department throughout the company. "It made us much more approachable by the client. It's important that the company feels that they can turn to legal for help and a solution" instead of feeling that they're hearing from the department when there's trouble. Barlow anticipates his department will continue to increase in size to meet the company's growth, so he's always on the lookout for experienced health care attorneys.
The biggest focus for Barlow's team is health care reform and its immediate future. "Over the past several weeks I had given a number of presentations about what a President Romney might do to undermine health reform with executive orders, waivers or budget reconciliation." Now all of that is moot, and it is full-speed ahead to implementation. "No two days or two weeks are entirely alike, and that is likely to continue as health reform is implemented," he adds. Molina operates in markets that are "committed to the Medicaid expansion, such as California and Washington, and also in markets where the governors had said before the election that they would not participate in the Medicaid expansion, such as Texas and Florida," he adds. "Now that the election is in the rear-view mirror, we will need to see if the earlier views of the red state governors might change."
Barlow says he always brings in outside counsel for complex litigation, but in-house attorneys stay closely involved. "At current hourly rates it does not take much time before the outside legal fees are equal to the annual salary of a skilled in-house attorney," Barlow says. "We look for firms that have recognized subject matter expertise, with reasonable rates, and with whom I or my team can develop a good rapport and level of trust. There is no particular checklist we use it is more like you can recognize effective legal representation when you see it. We do not hesitate to use high-quality regional firms such as Boutin or Wilke their rates are generally much lower but we also recognize that for certain matters it makes the most sense to use a big San Francisco or L.A. firm."
Barlow has worked a number of years with Iain Mickle, a former Orrick, Herrington & Sutcliffe securities partner now at Boutin Jones in Sacramento, and continues to work with several of Mickle's former partners at Orrick, including John Cook, James Kramer and Daniel Tyukody, now at Goodwin Procter. Barlow's team also uses the regional Sacramento firm of Wilke Fleury "Curtis Leavitt and Michael Daponde are excellent litigators with a broad knowledge of health care law." Transactional attorney Eric Klein of Sheppard Mullin Richter & Hampton in Los Angeles handles many of Molina's health care deals, Eric Stiff of Locke Lord Bissell & Liddell and his partners handle much of its regulatory work, and for corporate governance and M&A, the company uses Diane Frankle of Kaye Scholer in Palo Alto. "Diane was my supervising partner at DLA 12 years ago, and over the years we have developed a tremendous working relationship," Barlow explains.
With the holidays coming up, the legal staff is planning to spend a day before Thanksgiving delivering turkeys and food to some of Molina's local patients and needy families in Sacramento. In Long Beach, the team participates in corporate volunteer activities. "We do the same a few days before Christmas, delivering toys and gifts to children who otherwise might not receive anything."
Barlow's wife is a licensed social worker and they have three children, ages 22, 15 and 11. His oldest is preparing to go to law school next year. "Most of my free time I spend with my family. We really like to travel and try to go on one big trip a year with the kids before they get to the point where they'd just as soon not spend any more time with Mom and Dad!"
Barlow has always enjoyed running and at age 46 started to compete in Masters Track and Field events. "I was a finalist in the 400 meters at the U.S. Masters National Championships in 2010, and have since moved over to competing in the decathlon. It has been a challenge picking up the pole vault, hurdles and discus with minimal time to train, but I am slowly getting better. I am especially looking forward to turning 50 in January when the hurdles come down 3 inches and all the throwing implements get lighter."
Barlow and his wife saw The Book of Mormon in Los Angeles "and loved it."
"We are both former Utah Mormons, and our families are Mormon, so we have a pretty good understanding of the culture," Barlow said. "I believe Trey Parker had said something like he could tell who the Mormons were in the audience since they are the ones who get all the jokes. We got all the jokes."
This article originally appeared in The Recorder.