Insurance bid fray gets heated

Harvey — The Jefferson Parish School Board spent the majority of Thursday evening’s special session addressing allegations that the bidding process for teachers’ supplemental insurance benefits was conducted unethically.

Teachers and other members of the Jefferson Federation of Teachers filled the boardroom to tell board members that they prefer to keep their vision, dental, and life insurance benefits with the union-affiliated Jefferson Federation of Teachers Health and Welfare Fund.

After about three hours of sometimes heated discussion and calls for order for board members and audience members, the board voted unanimously to continue the health and welfare fund’s coverage through the end of the school year and then start over on the bidding process.

Acting Superintendent James Meza began the session by explaining what happened over the summer, when the board voted June 6 to allow the collective bargaining agreement with the union to expire on June 30. Later, a 90-day extension was granted for the health and welfare fund, which couldn’t otherwise have provided benefits because of the absence of a collective bargaining agreement. The extension was granted “to ensure teachers would not experience a lapse in benefits,” Meza said.

Union President Meladie Munch said that as the board began to look for other insurance providers, the health and welfare fund was not initially approached to submit a bid. In September, the school board voted to allow more bids, including one from the current provider, the health and welfare fund. The health and welfare fund benefits were then extended through December. The union and the district are currently in contract negotiations, a union official said.

A WDSU story that aired Wednesday night displayed email between Chief Financial Officer Robert Fulton and potential bidders. In the email, which had been requested by Board Member Cedric Floyd, Fulton shared information about the health and welfare fund’s bid with other providers.

In an Aug. 19 email to a provider, Fulton wrote: “We are soliciting bids on a confidential basis for replacing the teacher union benefits... Your 6/27/12 quote on life insurance was inadequate. The comparable benefit from the union (I attached their plan) does not do this.”

According to Floyd, Fulton, who was directed to shop for bidders by the board, “was rigging the bid.”

But according to Meza, soliciting bids did not require a formal bidding process for a professional service, and the board’s attorney advised that it was legal to reach out to the potential providers for additional info. Also at issue were the deadlines for bids. Some quotes were a few minutes late because of a “spam overload” in the email system, Meza said.

Floyd said Fulton engaged in an unfair trade process, sharing information with some of the bidders but not all of them. Once they open for bidding, Floyd said, the entity collecting the bids “must be neutral to all parties involved and not give unfair advantage to any of them.” Floyd cited what he called a violation of Louisiana Revised Statute 51:1405, which states: “an unfair method of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are prohibited and declared unlawful.”

Fulton presented a breakdown of the quotes received from the five bidders, analyzed by differences in one- and two-year contracts and between plans that provided coverage to dependents. The health and welfare fund’s bids were consistently among the lowest, though not always the least expensive.

The lowest bids Fulton presented had an approximate $200,000 difference between AIG and the health and welfare fund, with AIG as the least expensive. The per teacher/per year cost shown was a difference of less than $10.

Thomas Adams, who identified himself as a Tulane scholar who had been observing the board for more than a year, suggested that the board was “getting rid of the Jefferson Federation Teachers Health and Welfare Fund to get rid of the Jefferson Federation of Teachers.”

David Prentice, the next to comment, called the bidding process a “shameful situation.” Prentice, a teacher, said that giving other providers information about what the health and welfare fund was doing was comparable to a teacher holding an essay contest and then showing a favorite student the other students’ essays, telling them “Fix yours so it is better.” Prentice asked that the board “level the playing field and treat us with respect and dignity.”

Robin Dusang of the Segal Company, hired as a consultant for the health and welfare fund, said that a “simple analysis of the rates doesn’t tell the whole story.” Dusang went on to detail some of the areas in which she did not feel Fulton’s analysis numbers were correct and pointed to additional factors that were not taken into consideration.

Munch told the board that it took 30 years to build the fund that currently offers “premier benefits to teachers.” She pointed out that it is a trust fund — a nonprofit, and not an insurance company, an element she felt was being overlooked. Munch also said the fund has “a lot of transparency,” and is subject to following numerous federal and state regulations.

Representatives from two of the insurance providers also spoke, giving more details on the savings and expanded coverage their plans would offer.

A heated exchange began when Floyd began to give his take on the process which he called “so sloppy and illegal.”

Floyd verbally attacked Fulton, after which Board Member Mike Delesdernier told Floyd that it was “unbecoming for a board member to hurl insults at a gentlemen who has brought financial integrity.” Floyd continued to interrupt and disagree, saying he would work to “make sure there are consequences.”

Board President Mark Jacobs said that following the previous evening’s television coverage, he had an attorney look into the matter. Jacobs said he was advised that the collection of bids was “not subject to public bid laws.”

Delesdernier was visibly angry, saying that any suggestion that the process was directed adversely for the health and welfare fund was “flat- out wrong and a lie.”

Board Vice President Mark Morgan said the “allegations concern me.” He said if they were true, it would be a “big problem.” If not, a perception of wrongdoing had been publicized that was “not justified.” Morgan also noted that part of the reason for having the health and welfare fund was to “avoid messes like this,” and to take “politics and jockeying out of the mix.”

Board member Ray St. Pierre said that the proper process was not used. “If you are not willing to negotiate with the union and come up with some kind of contract, then say it,” he told the board.

Board Member Etta Licciardi said that in her eight years on the board, she never had a complaint about the administration of the fund. She repeated a request for an amendment that would continue health and welfare fund coverage through the end of the school year and begin a new Request for Proposals process begin July 1.

Outrage boiled over on the board and among union members when Jacobs started to suggest a vote to accept the AIG proposal presented initially by Fulton. Instead of a vote, Jacobs called for a recess, saying that the board needed to clarify the numbers.

Louisiana’s open meetings law does not allow public bodies to go into executive session in order to clarify information. However, Jacobs did not call for executive session but simply recessed the meeting, at which time board members left the chambers, apparently to meet in private.

Teacher Chris Baker said he didn’t think the board should move forward with implementing changes to the benefits until much of the “gray areas and inconsistencies” were cleared up.

Ultimately, the board agreed. After the recess, Board Member Sandy Denapolis-Bosarge said that she agreed with Licciardi’s request and proposed keeping the contract with the health and welfare through June 30.

After reviewing some of the email between Fulton and the bidders during the recess, Morgan said while there were things that needed to be changed from the first “round” of the process, that in the second round of the process, “Mr. Fulton did nothing but ensure the process was fair,” and made sure “all the bidders had that same information.” Morgan then officially submitted the motion as requested by Denapolis-Bosarge.

Two board members recused themselves from the vote to avoid any appearance of impropriety, and the motion passed, 7-0. The verdict was met with a standing ovation.

“The bottom line is that this process needs to start over so people feel comfortable about it,” Floyd said.