PROVIDENCE -- The state Supreme Court ruled today that the state can
award the contract for its employees' health insurance to
UnitedHealthcare of New England, over the objections of competitor Blue
Cross & Blue Shield.
The high court said the state did not manage the bidding process as well
as it could have, but still conducted it in good faith.
"We recognize the unfortunate fact that the state's officials did not
handle the task of awarding the state's health care contract with the
level of expertise that would be desirable," the court said in its
ruling. "Any mistakes made during the process simply do not rise to the
level of palpable abuse of discretion."
Given that, the court said the state's decision to award the contract to
United can stand, reversing a lower court's ruling.
The contract covers some 52,000 state workers, retirees and their
families.
Governor Carcieri called the decision "a victory for Rhode Island
taxpayers."
"The Supreme Court confirmed what we’ve said all along: The state
conducted an extraordinarily fair, transparent and open bidding
process," Carcieri said. "At no time did the state abuse its discretion
in awarding the state employee health care contract to United
HealthCare.”
Budd Fisher, UnitedHealthcare regional CEO for New England, offered a
similar take on the process.
"It's always easy for someone to nitpick a couple of things along the
way and say there were major flaws," he said. "They were scrupulous in
making this a fair and open process."
The United Contract will save Rhode Island taxpayers $25 million over
the next three years, Carcieri said, and also enable Rhode Island cities
and towns to save by contracting with United for the same administrative
rate as the state.
He said the state will move to "quickly implement" the new contract.
Blue Cross held the previous three-year contract, which expired at the
end of the year, and sued after United won the new contract.
Blue Cross spokesman Scott Fraser said the company was disappointed, but
was moving on.
Superior Court Judge Netti Vogel had agreed with Blue Cross that the
bidding process was flawed, saying bid specifications were modified
after the bids were submitted and Blue Cross wasn't given proper notice.
Vogel also said the state wrongly penalized Blue Cross, a Rhode
Island-based nonprofit, for failing to guarantee some quoted fees
because it is subject to different state regulations than is United,
whose parent is based in Minnesota.
The awarding of the contract was suspended while the state appealed.
Blue Cross has continued to insure the state's employees and retirees
during the appeal.
United plans to meet with officials from the Department of
Administration shortly, perhaps as soon as next week. Fisher said United
is ready to take over the state's plan as soon as possible.
"We got pretty far in the implementation process before we were asked to
stop," he said. "That gave us a leg up."
The state must give Blue Cross 60 days notice, so that is the soonest
the switch could happen, Fisher said.
Fisher said those covered by the plan will be getting new enrollment
cards in the mail, and said care for those who are undergoing treatment
or confined to a hospital will be "absolutely seamless."
-- With reports from projo.com staff
CORRECTION: An earlier version of this report incorrectly spelled the
first name of Budd Fisher, the UnitedHealthcare regional CEO for New
England.
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