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TOM CRANN: Over the past two years, the Republican chairman of the health committee in the Minnesota House ushered through legislation that was backed by health insurance brokers. Now, both he and his Senate counterpart have business links to the insurance industry. And that has some lawmakers asking whether the arrangement violates ethics rules. Tom Scheck has our report.

TOM SCHECK: When Republicans took over control of the legislature two years ago, facing a big budget shortfall, one of the areas where they looked to cut spending was the state's Health and Human Services budget. And one of the people they put in charge of the effort was Steve Gottwalt, a state representative from St. Cloud. Gottwalt was appointed chair of the House Health and Human Services Reform Committee.

STEVE GOTTWALT: Members will call the meeting to order.

TOM SCHECK: One of the first bills he pushed through the committee was designed to take some people out of MinnesotaCare, a program that allowed them to get state subsidized health insurance. As he explained to his colleagues, Gottwalt would move them to a new plan to help them buy private insurance.

STEVE GOTTWALT: This is a new approach. It gives them a subsidy to go buy that coverage in the private marketplace like the rest of us do. And it takes a new role for Minnesota that is both sustainable and healthy for the state in terms of its Health and Human Services programs.

TOM SCHECK: In July of this year, more than 4,000 Minnesotans were dropped from MinnesotaCare and were given the option of enrolling in the Healthy Minnesota Contribution Program. It was Gottwalt's plan which Governor Dayton signed into law as part of the deal that ended the state government shutdown.

Between the time the bill passed and people lost their Minnesota care coverage, Steve Gottwalt became licensed to sell insurance. One of his colleagues in his new line of work is John Tyler. Tyler is an insurance broker who testified in support of Gottwalt's bill in numerous committee hearings like this one in 2011.

JOHN TYLER: The objective here without question is to improve things, to improve access to health care, to improve the quality of the care that they are receiving.

TOM SCHECK: But the new law also opened up a new market for insurance brokers because they receive commissions from HMOs for the insurance that they sell. Gottwalt's bill required the state to create a website to refer applicants to health insurance agents who can help them find coverage. And he's listed as one of those agents.

Tyler's firm, Boys & Tyler, is listed as a broker on the site. The firm's website also lists Gottwalt as an associate. Tyler and Gottwalt say Gottwalt is an independent contractor who shares commissions with the firm on sales. Tyler initially agreed to an interview to discuss his role, but later canceled it.

JOHN TYLER: This is John Tyler calling regarding our appointment today at 4 o'clock. I need to cancel that appointment. I'm just too busy I'm afraid to keep it. It's just not something that I can do, can't do it, and my radar screen is just, just too flooded.

TOM SCHECK: Tyler didn't return calls after that. Gottwalt's involvement with Tyler and his role as an insurance agent were a surprise to some members of the legislature. The arrangement raises questions about disclosure and conflicts of interest when lawmakers push bills from which they could potentially benefit.

Gottwalt never brought up his role as an insurance broker during committee hearings during the 2012 session. And minutes also show he didn't disclose his position during meetings of a health care task force aimed at implementing the federal health care law. The form Gottwalt is required to file with the Minnesota Campaign Finance Board doesn't disclose that he sells insurance. It lists only his role as owner and president of Steve Gottwalt Consulting.

Gottwalt says his page on the social media site LinkedIn shows he sells insurance and has a relationship with Tyler. As for the Healthy Minnesota Contribution Program, Gottwalt says he hasn't sold to those clients. When asked whether he has a conflict of interest, Gottwalt said he sees nothing wrong in working with a business owner who actively lobbied him to pass legislation.

STEVE GOTTWALT: John Tyler and I have been working together on health care reform in Minnesota for almost six years now, and it made sense for us at some point to partner, to work together on some of this stuff. We believe in market-based reform.

The fact that I'm involved in that doesn't mean that we were sneakily trying to come up with something to benefit ourselves. It's actually the other way around because we worked together, built a close partnership around market-based reforms, it made sense for us at some point to do this.

TOM SCHECK: Even after he started selling insurance, Gottwalt authored legislation that would benefit health insurance brokers. Minnesota's conflict of interest laws say elected officials can't act, vote on, or push legislation that directly benefits them or an associated business. Gottwalt says he's no different from legislators who hold jobs as teachers and vote on education-related bills or farmers who shape agricultural policy.

STEVE GOTTWALT: If I were taking in 20 or 30 people and getting lots of commissions off of them, you might have an argument. But you'd still have to argue that we built and passed the legislation to benefit Steve Gottwalt, and that's simply not the case.

It is a market-based reform. It certainly puts people in private health care coverage. I've been making that case since day one. That's no different. It doesn't benefit me uniquely. But the fact is, I haven't made one red cent off of it. Not one.

TOM SCHECK: That's difficult to verify because commissions are private between HMOs and insurance brokers. Gottwalt says the commissions he shares with Tyler come from group health insurance sales unrelated to the Healthy Minnesota Contribution Program. While Gottwalt doesn't see a problem with the business relationship, some other lawmakers say it raises questions. DFLer Tom Huntley of Duluth is the incoming chair of the House Health and Human Services Finance Committee.

TOM HUNTLEY: If these are payoffs, then there's an ethical problem and the Ethics Committee ought to look at it.

TOM SCHECK: Tyler's relationship with legislators goes beyond Gottwalt. He also has a connection to incoming Republican senate minority leader David Hann. Hann was the chief Senate author of the Healthy Minnesota Contribution Program and chair of the Senate Health and Human Services Committee.

Like Gottwalt, Hann renewed his license to sell insurance this past June and listed on his campaign website that he's a partnering agent with Boys & Tyler. Hann also recently joined the board of directors for the Minnesota Association of Health Underwriters, which lobbied for the bill. Tyler is also a board member.

State records show Hann has not been appointed by a company to sell insurance yet. And he says he isn't sure if he will. Hann says he has not received any money from Boys & Tyler.

DAVID HANN: What I did was perfectly legal, legitimate. I had no, at that point-- I did not have a license at the time I did that, was not contemplating having a license at the time I did that. And after the fact I got a license would be no different than anybody else in the state of Minnesota who decided to get a license after the law was passed.

TOM SCHECK: Hann, like Gottwalt, lists his occupation on state forums as a consultant. State law does not require lawmakers who work as consultants to disclose the sources of their compensation. DFL Senator John Marty of Roseville wants to change that. He says legislators should have to disclose their business ties if they list themselves as consultants.

JOHN MARTY: But a case here where the business you're working for is the one that's coming there to the Capitol lobby, something that will particularly help people very much in their very specific line of work-- insurance brokers, insurance agents and so on. Well, I'm saying you can't prevent it. I'm saying the least we could do, though, is have it fully disclosed. Because if it's disclosed, the public might say, I smell a rat.

TOM SCHECK: For his part, Gottwalt says he's been open about his position. He says he sees the criticism from Democrats as politics and a distraction from his work on health care matters.

STEVE GOTTWALT: I haven't made this a mystery. I haven't stood up on a table and yelled it out. But I haven't benefited from it directly or indirectly.

TOM SCHECK: Gottwalt has pushed in the past to expand the Healthy Minnesota Contribution Program to a greater number of Minnesota care recipients. But he now says he isn't interested in doing that. Tom Scheck, Minnesota Public Radio News at the Capitol.