California's health insurance exchange has awarded $184 million in no-bid contracts, including deals worth millions of dollars to a firm with workers who have strong ties to Covered California's executive director, according to an Associated Press review of contracting records obtained through the state's Public Records Act, AP/U-T San Diego reports.
Competitive bidding is standard practice across the state government as a way to ensure the best possible deal for taxpayers and to avoid conflicts of interest.
No-bid contracts typically occur only in emergencies or when no known competition exists, according to AP/U-T San Diego.
However, Covered California when it was created in 2010 was given the authority to award no-bid contracts to ensure it could meet deadlines for getting the exchange operational in time for the Affordable Care Act's first open enrollment period.
The state law also exempted the exchange from sections of California's public records law, but lawmakers closed the loophole in 2013.
Details of Contracts, Potential Conflict of Interest
According to the AP review, the state insurance exchange awarded no-bid contracts for a variety of services, from public relations to ergonomic adjustments to work stations.
The no-bid contracts represent about $2 of every $10 that Covered California awarded to outside agencies.
A total of $4.2 million in contracts was awarded to The Tori Group, a consulting firm founded by Leesa Tori. Tori worked under Covered California Executive Director Peter Lee when she was a senior executive at Pacific Health Advantage, a small business insurance exchange managed by the Pacific Business Group on Health, where Lee was CEO.
Meanwhile, the Pacific Business Group on Health Negotiating Alliance, a subsidiary of the company Lee once directed, was awarded two no-bid contracts totaling $525,000.
In addition, Tori and some of her firm's employees now hold senior-level positions with Covered California.
Further, at least five other people who have been contracted to work with California's exchange have ties to the Pacific Health Advantage, four of whom work for The Tori Group. For example:
- Corky Goodwin, a principal at The Tori Group, is a consultant on small-business insurance for Covered California;
- Kathleen Solorio, Covered California's operations adviser, is CFO at The Tori Group; and
- Yolanda Richardson, chief deputy executive director of Covered California, was vice president at Pacific Health Advantage.
Lee said Covered California needed to move fast and "needed experienced individuals who could go toe-to-toe with health plans and bring to our consumers the best possible insurance value." He added, "Contractors like The Tori Group possess unique and deep health care experience to help make that happen and get the job done on a tight deadline."
Meanwhile, Tori said that her firm had unique experience that qualified the company for the contracts.
However, Kathay Feng, executive director of California Common Cause, said, "To spend $4.2 million on anything, let alone a contract to a friend and former colleague, raises serious questions." She added that "some accountability and transparency is needed, whether through audits or an alternative oversight body" (Blood, AP/U-T San Diego, 10/12).
On Monday, Consumer Watchdog called on state Attorney General Kamala Harris (D) to launch an investigation into the contract deals. Jamie Court, the group's president, said, "For $4.2 million to flow to a former associate without any oversight is the antithesis of open government and good government" (Miller, "Capitol Alert," Sacramento Bee, 10/14).