Lafayette board hit with bill for insurance work

Two out-of-state companies whose joint proposal to serve as the Lafayette Parish School Board’s insurance administrator was initially accepted, then rejected, are demanding $93,000 for work done after they were first hired.

The claims include trip expenses to New Orleans to meet with a board consultant who reviewed insurance administrator proposals for the board. The consultant several weeks ago put in a separate demand for a $200,000 payment for her firm’s work.

The $93,000 bill from Key Benefit Administrators and Employee Health Insurance Management Inc. cover work done and expenses incurred between Oct. 2 and Oct. 22.

That covers the period between when the School Board voted to accept the companies’ partnership proposal to administer the district’s self-funded health insurance and prescription program and when the board decided to rescind that vote.

Key Benefit Administrators requests $58,000 and Employee Health Insurance Management requests $35,000, based on a Feb. 21 demand letter addressed to Superintendent Pat Cooper.

“The numbers take into account lost opportunity costs incurred by both companies,” wrote attorney Wallace T. Gray. “We have not yet asked for lost profits but we reserve the right to increase our demand by those amounts should this matter not now be concluded.”

Neither company had a contract with the board, wrote Superintendent Pat Cooper in a memo to board members dated Feb. 27 notifying them of the demand letter.

Board members and reporters received copies of the demand letter, receipts and itemized lists of the expenses during a special board meeting Thursday to discuss the budget for the upcoming school year. The board faces a $10.4 million shortfall as it enters budget planning meetings in April.

In his memo, Cooper wrote that a board member instructed the companies to begin work following the board’s Oct. 2 vote — without a signed contract.

“I recommend we continue to not pay any of these charges,” Cooper wrote in the memo.

A review of a video of the Oct. 2 meeting available online shows no board members making comments about the company immediately following the board’s vote.

At the end of the meeting, during time given to board members to make closing comments, board members Mark Babineaux, Mark Cockerham, Hunter Beasley and Shelton Cobb congratulated Key Benefit. None gave any directives related to the company starting work.

On Friday, Cooper said comments from any board member — during the meeting or elsewhere — carried no authority for the work to get underway.

“They had to start with a contract,” Cooper said.

The demand letter adds to an already odd and complicated selection process that was questioned and sharply criticized by a group of employees and at least two other companies who applied for the job, including the current administrator, Blue Cross Blue Shield of Louisiana.

The board hired Tikia Consulting Group of Metairie in June to issue and vet proposals and make a recommendation to the board. It chose that course rather than relying on a recommendation from a volunteer employee insurance committee, as it had done in past years.

Flip-flop votes followed, with the board rejecting consultant Rina Tikia’s recommendation of Key Benefit and EHIM on Sept. 18, only to revisit the issue on Oct. 2 and approve her recommendation.

The board voted on Oct. 22 to rescind its decision due to a possible violation of the state’s Open Meetings Law. The issue related to failing to give proper notice on the board’s agenda that the board planned to select an administrator at the Oct. 2 meeting.

Meanwhile, based on copies of receipts and related travel expenses, Key Benefits and EHIM employees started trips to New Orleans to meet with Tikia Consulting about the job’s requirement from Oct. 2 through Oct. 22.

The letter is the second demand for money related to the selection process. Earlier this month, the board received a demand letter from Tikia Consulting’s attorney asking for $200,000 for the consulting firm’s services in vetting proposals and making a recommendation to the board.

At its Feb. 13 meeting, the board voted not to respond to Tikia Consulting’s demand letter for $200,000 until the matter goes to court. The consultant was hired by the board in June and no contract was ever signed.

In November, the board voted to extend its contract with Blue Cross Blue Shield and directed its employee insurance advisory committee to start the search and selection process anew.

A recommendation by the committee to continue with Blue Cross in 2015 awaits a board decision next week.