Aetna sues NYC, unions over ‘tainted’ health insurance contract

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New York’s largest private Medicare administrator is suing the Big Apple and its local union leaders for allegedly awarding a “flawed” $ 34 billion contract to an unqualified competitor.

Insurance giant Aetna’s explosive lawsuit against New York City and the municipal labor committee alleges the bidding process was set 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 retirees in the city.

“OLR [the city’s Office of Labor Relations] selected an inexperienced and unqualified bidder in a procurement process that violated New York procurement law, lacked transparency, and violated the principles of public trust and fairness for a market that could last up to a minimum of five years or up to eleven years and generate $ 34 billion in claims income, ”Aetna alleges in her suIIt wasn’t filed in Manhattan Supreme Court earlier this month.

Aetna and Alliance were the two finalists that city officials and union leaders considered for the massive contract, which is expected to save the Big Apple around $ 3 billion over five years, or roughly $ 600 million per year. year.

Aetna asks the court to cancel the contract, which takes effect on January 1.

Retired municipal workers are eligible for Medicare, the federally run program that provides health insurance to people who turn 65 – but their union contract also asks the Big Apple to bear the cost. their monthly premiums for Medicare Part B, which covers outpatient care and other additional services not covered by Medicare.

Gregory Floyd, president of Teamsters Local 237, is associated with Alliance partner Emblem Health, which won the city’s Medicare program contract on Aetna.

Aetna argues that she has more experience than Alliance in dealing with these issues. And even city officials acknowledged that Aetna, the country’s third-largest health insurance provider, was clearly the most experienced bidder in running Medicare Advantage programs across the country.

One of the criteria of the proposal was that bidders must have provided service to a customer with at least 50,000 subscribers.

Aetna currently manages the New Jersey Medicare Advantage program for 196,577 retirees, the United Auto Workers Retiree Medical Benefits Trust with 140,305 members, the Ohio State Teachers Retirement System with 96,106, the Pennsylvania Employees Benefit Trust Fund with 75,369 members) and Verizon with 73,176 members, according to the lawsuit.

Aetna alleges that Alliance has failed to meet even this “low bar”.

Alliance noted that one of its partners, Anthem, based in Indiana, manages the Medicare Advantage program for Colorado’s public employee retirement system with 50,000 members. But Aetna says Anthem’s contract only covered 43,000 retirees, which should disqualify the Alliance’s bid for city works.

Other concerns raised in the trial involved:

  • Costs: Aetna claimed her prescription drug plan was at least $ 30 cheaper per worker per month than the Alliance plan and offered free prescriptions for some generic drugs. He also said his plan’s premium was $ 366 a year lower for each worker than the Alliance’s advertised rate.
  • Breach of confidentiality: The insurer said a city assessor falsely disclosed some of its cost proposals during a meeting with union members, which “tainted” the selection process by alerting its rival Alliance on its figures.
  • Arbitrator / Familiarity: The city and unions turned to a state arbitrator to help resolve an impasse over selecting a winning bidder – a decision that was not mentioned as part of the procurement process .

During the early assessment process, City officials favored Aetna because of her experience in managing Medicare Advantage programs, according to the lawsuit. But union leaders preferred the Alliance because GHI / Emblem Health partners and Blue Cross had more of a history of providing medical benefits to city workers, according to newspapers.

The parties have asked arbitrator Martin Scheinman – who recently ruled that religious exemptions can be granted to COVID vaccine requirements for public school teachers – to be asked to issue a recommendation on the final bidder as the city and unions should choose. At the time, Scheinman chaired a municipal panel to find savings on health care.

Scheinman chose Alliance, arguing that his “familiarity” with offering benefits to the city’s workforce outweighed Aetna’s superior experience in managing health insurance programs, according to the documents.

Sanitation workers pick up trash near 675 Central Avenue in Brooklyn on March 10, 2021.
Sanitation workers pick up trash near 675 Central Avenue in Brooklyn on March 10, 2021.
James keivom

Her voice helped rock the price at the Alliance, the costume says.

But Aetna argues in court documents that “the applicable solicitation and procurement law did not provide for this action … and Arbitrator Scheinman’s recommendation was based on a new test mentioned nowhere in the procurement documents.” .

Aetna also claims that Alliance officials have had the opportunity to discuss issues with Scheinman, while his employees have not.

Aetna received the highest scores during the early stages of the assessment process, according to the lawsuit.

Other sources familiar with the negotiations said it seemed Alliance had an internal lead because of its ties to union leaders. Teamsters Local 237 president Gregory Floyd, for example, sits on the board of Alliance partner Emblem Health.

Some retiree advocates have joined Aetna to question the award of the contract.

First responders arrive at a construction site from Hudson Street to Vandam Street in Manhattan after a man fell 20 feet into a well on September 14, 2021.
First responders arrive at a construction site from Hudson Street to Vandam Street in Manhattan after a man fell 20 feet into a well on September 14, 2021.
William Farrington

“There is definitely a bit of fishing going on. This contract makes no sense, ”said Marianne Pizzitola, president of the FDNY EMS Retirees Association and representative of the New York Civil Service Retirees Organization, whose groups are affected by the contract.

Pizzitola said retirees were “kept in the dark” of the deliberations and referred to the appearance of a conflict with Teamsters leader Floyd sitting on the winning bidder’s board of directors.

“How is that not fishy?” ” she said.

Nicholas Paolucci, a representative of the city’s legal department, told The Post in an email: “The city is committed to selecting vendors who are in the best interests of the city and its retirees. We will examine the case.

Meanwhile, union leaders at the City Labor Council have dismissed Aetna’s trial as a sore loser’s desperate bet.

” We did it. It was fair and straight to the point. I didn’t hear anything bad with this particular contract, the way it was done. Everything has been done in T, ”said Harry Nespoli, president of the City Labor Council and president of the Sanitation Workers Union.

“To me it looks like sour grapes. Aetna had her chance. This saves money for New York City. What the hell is wrong with that? I thought it was a spectacular deal. I still think it is, “he said.

Teamsters Local 237 president Floyd said his role on the board of directors of bidder Emblem Health did not pose a conflict. He voted to award Emblem / Anthem-Blue Cross.

“It is only a conflict if I was the only union leader to vote or if I had the most influential vote. This was not the case. I had a voice – that was it, ”Floyd said.

“It’s a stupid trial. Aenta made an offer, and they lost the offer. He’s a sore loser.

Harry Nespoli, president of the sanitation workers union.
Harry Nespoli, president of the sanitation workers union, says insurance company Aetna is acting “like raisins” with their lawsuit against the city.
William Farrington

Noting that Aetna is one of the largest private health insurance companies in the country, Floyd said, “How greedy can you be?

Floyd said contracts expire and there will be opportunities for future business – but added that Aetna is burning her bridges.

“I have a long memory,” Floyd said.

He said Aetna currently administers prescription drug benefits to its members, who work as security guards in schools, homeless shelters and NYCHA complexes.

In this case, Aetna replaced HIP / Emblem Health because the union didn’t like the latter’s performance, and Aetna is doing a “good job,” the Teamsters boss said.


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