We mentioned Teamsters Local 237 union leader Gregory Floyd being on the Board of Directors of Emblem Health seemed like a huge conflict of interest while he had a vote as a union leader on which company would get the giant city retiree Medicare privatization contract. (Medicare Advantage).
The losing company Aetna believes the process was tainted.
From the NY Post:
New York’s largest private Medicare administrator is suing the Big Apple and its local union leaders for allegedly awarding a $34 billion “tainted” contract to an unqualified rival bidder.
Insurance giant Aetna’s bombshell lawsuit against New York City and the Municipal Labor Committee alleges that the bidding process was fixed to favor Alliance, a consortium that includes Emblem Health and Anthem/Blue Cross Blue Shield, to operate the Medicare Advantage Plus program, which administers health benefits to 250,000 retired city workers.“OLR [the city’s Office of Labor Relations] has selected an inexperienced and unqualified bidder through a procurement process that violated New York Procurement law, lacked transparency, and violated principles of public trust and fairness for a procurement that could last up to a minimum of five or as many as eleven years and generate $34 billion dollars in claims revenue,” Aetna alleges in its suit filed in Manhattan Supreme Court earlier this month.
Aetna and Alliance were the two finalists that city officials and union leaders considered for the whopping contract, which is anticipated to save the Big Apple about $3 billion over five years, or roughly $600 million a year.
Aetna is asking the court to nix the contract, which takes effect Jan. 1.
Who is the arbitrator involved in making the recommendation? You would be 100% correct if you answered the one and only Martin Scheinman. We are making this guy quite wealthy.
The parties asked arbitrator Martin Scheinman — who recently ruled that religious exemptions can be granted from COVID vaccine requirements for public-school teachers — to be brought in to issue a recommendation on which final bidder the city and the unions should choose. At the time, Scheinman chaired a city panel to find health-care savings.
Scheinman chose Alliance, arguing that its “familiarity” with providing benefits to the city workforce trumped Aetna’s superior experience in running Medicare programs, the documents say. His voice helped tip the award to the Alliance, the suit says.
But Aetna argues in the court documents that “the Solicitation and applicable procurement law did not provide for this action … and Arbitrator Scheinman’s recommendation was based on a new criterion mentioned nowhere in the procurement documents.”
Aetna also claims that Alliance reps were afforded the opportunity to discuss matters with Scheinman, while its people weren’t.
Aetna received the highest scores during the early phases of the evaluation process, the suit says.
Other sources familiar with the negotiations said it appeared that Alliance had an inside track because of its connections to labor leaders. Teamsters Local 237 President Gregory Floyd, for example, sits on the board of Alliance partner Emblem Health.