Lobbyist Sterling's Reach Spreads to Controversial Health Insurance Contract
By: Health Insurance
Submitted: 2009-10-15 21:56:16 | Word Count: 790
Lobbyist Neil Sterling was more than just the guy whom construction companies went to when they wanted a multimillion-dollar contract with the Broward County School Board. He was also behind an incredibly lucrative contract last year to make another of his clients, Vista Healthplan Inc., the sole provider of health insurance to School Board employees.
Leading the charge for the contract was School Board Member Stephanie Kraft, who we have learned had a personal financial connection to Sterling at the time of the contract. Her husband, Mitch Kraft, was on Sterling's payroll at his firm SRG Technology.
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The $1.7 billion health insurance contract is stretched out for three years at an average of about $565 million a year. Previous contracts to cover the district's 41,000 eligible employees had cost the district only about $200 million a year. The reason for the huge increase in the contract price hasn't been explained. (The $1.7 billion figure comes directly from the award amount in the RFP documents, but some are saying that has been altered downward. I will update when I get more information.)
And right now, Vista is jacking up rates on employees' children by 45 percent, which will take effect on January 1. The huge rate increase will add hundreds of dollars each month to the bills of many shocked and
dismayed employees. The increase was unanimously approved by the Superintendent's Insurance Advisory Committee, which includes numerous district officials and three School Board members.
Broward Teachers Union President Pat Santeramo said that he was shocked at the increase and that it appears the committee, which he sat on for several years, simply rubberstamped Vista's demand. "Going up that much was a shock," Santeramo told me today. "Normally the committee would look at the rate increases and negotiate the price with the company. If this was the starting point for the rate increase, why wasn't it negotiated down?"
Santeramo was sitting on the committee last year when he says district officials -- starting with three School Board members -- initially decided to go with Vista without even putting out bids. That prompted the union to issue a letter of protest, which forced the district to issue a Request for Proposal.
Five companies made the short list, but Vista was voted number one. The board members sitting on the committee were (and are) Robin Bartelman, Bob Parks, and Stephanie Arma Kraft. All three voted Vista number one, with Kraft giving the company the widest margin. She scored Vista a whopping 95 versus her second-highest score of 81 going to Humana. She never revealed that her husband, Mitch, was on Sterling's payroll during that process or during many votes for other Sterling clients on construction and technology projects.
"Neil Sterling was involved in the process," said Santeramo. "He's not just involved in the construction department. He's the common denominator. His fingers are everywhere."
For several years, the School Board had offered employees a choice between Humana and Vista, but last year, district officials decided to go with Vista as sole provider after Humana attempted a 22 percent rate increase. Santeramo said initially the committee decided to go with Vista without even putting out bids. That prompted the union to issue a letter of protest, which forced the district to issue a Request for Proposal. "It was against the rules not to put out an RFP," Santeramo said.
Amazingly, Superintendent James Notter announced publicly during last week's School Board meeting that while teachers would get no pay increases, the district would pick up the cost of health insurance increases.
"I think what the school district is doing right now is scandalous," says BTU spokesman John Ristow. "[Notter] was talking about how the district is picking up the cost of premiums for individual employees, but in fact, they are diverting the cost of premium increases to employees that pay for dependent coverage. Quite literally, the cost of dependent coverage is going up an average of 40 percent. It's a crime for him to be saying at a public meeting we're doign this when in reality they are doing something completely different."
