United Healthcare Sues City of Warwick
United Healthcare is suing the City of Warwick, as reported by Russell Moore at the Warwick Beacon:
United Healthcare of New England…claim[s the City of Warwick] violated its own ordinances in awarding a healthcare administration contract for its employees without seeking a joint bid with the school department.
The suit asks the State Superior Court to declare the council’s award of the city’s health insurance administration contract to Blue Cross Blue Shield R.I. invalid.
The city council passed an ordinance in September of last year that required the city to go out for a joint bid for a health insurance contract with the school department.
The basis for the ordinance, sponsored by former Councilman Robert Cushman was that the city would save on administration costs if its bid specifications included all of its employees due to economies of scale.
The ordinance was passed by a wide margin.
However, last fall, the School Committee renegotiated a contract extension with the teachers in which Blue Cross was designated as the health care provider. According to United Healthcare, when the Warwick City council requested bids for a health care provider for city-side contracts, they were already in violation of the just-passed ordinance.
“The city has an ordinance that expressly states that all contracts – city and schools – must be bid together to get the best price for the city. We have asked the courts for a declaratory judgment declaring that the city did not comply with this ordinance in the awarding of a contract for health care administrator (insurer),” said Deborah Spano, United’s spokeswoman.
City Councilman Steve Merolla stated that he warned the rest of the Council that they were making themselves vulnerable for a lawsuit by conducting business in this manner. City Council President Bruce Place was apparently unaware of the lawsuit, but Mayor Scott Avedisian said he wasn’t surprised that the losing party in a bid procedure had followed this course of action.
“We expected it. There was a bid process. We went through it. United wasn’t awarded the bid,” said Avedisian.