BISD INSURANCE COSTS SOAR TO $51 MILLION UNDER CAVAZOS' MAA: WHERE'S THE $9 MILLION IN SAVINGS MR. AGUILAR (ZAYAS-CORTEZ-COLUNGA)?

By Juan Montoya
Remember in the waning days of the last Brownsville Independent School Board elections in 2010 when incumbent candidates Rick Zayas an Ruben Cortez were joined by cohorts Joe Colunga and Rolando Aguilar to announce they were suing insurance provider HealthSmart to recover some $14.5 million in alleged "overcharges?"
And then, after the lawsuit was filed and the majority awarded the contract to Mutual Assurance Administrators Inc. (MAA) of Oklahoma City, brokered by local insurance mogul Johnny Cavazos, Aguilar claimed loudly and for all the world to hear that the district stood to save $9 million in insurance payments under his compadre Cavazos' company?
Guess what?
Not only does it appear that the BISD has a snowball's chance in hell of winning the lawsuit against HealthSmart, it also appears that by the end of the next school year the HealthSmart contract is projected to end up costing the self-insured district some $51.1 million, a hefty $10 million more than HealthSmart costs that triggered the lawsuit against the company.
"Where's the $9 millions in savings now, trustee Aguilar?," asked a BISD main office staffer. "All we know for sure is that as a result of the increase in costs, the nice fat commission (in millions of dollars) will end up in Cavazos' pockets. That should come in handy in case Aguilar decides to run for office again."
During the presentation of a consultant's report plan review presented to the board last week (not attended by the Brownsville Herald's Gary Long), trustees were told that for the present budget year the contract to MAA will cost the district $46.5 million. For the next year (2011-2012), that figure is projected to rise to $51.1.
BISD is self-insured and its 7,733 employees are covered by the plans.
When the former board majority sued HealthSmart, it did so because some trustees said the sudden increases in the district's health insurance were so obvious that anyone could see.
“Basically, it just seemed to me that they were taking advantage of us, that the TPA (third-party administrator) was putting profits ahead of district needs,” said Cortez in the heat of the election that he ultimately lost to Enrique Escobedo. “That was why I asked for (an)audit ... and now the audit has confirmed what we believed to be true.”
If Cortez and his three allies on the board felt that the increase from 2007-2008 to 2009-1010 in BISD's health costs from $34 million to $41 million ($7 million) were the result of HealthSmart "taking advantage" of the district, what are they saying now that MMA's costs are projected to increase from 2009-2010's $37 .8 million to 2011-2012's $51 million ($14 million, twice as much)?
And, as the HealthSmart lawsuit moves forward in court, it is becoming increasingly clear that the last-minute election bombshell that Cortez-Zayas though would get them the votes to stay in office has sputtered and may be settled for peanuts, the only ones benefiting being the attorneys for the law firm and Mike Saldaña, their former district counsel and also former BISD board member appointed by the majority to represent them in court.
"It was a political ploy from the start." said an administrator source close to the board. "The reason it was done just a few weeks from the election was because the candidates were desperate and they thought large headlines compliments of their megaphone Gary Long and the Brownsville Herald would tip the scale with the voters. Obviously, it didn't work. Now what do they have to say about these numbers?"
About the only beneficiary was lawyer Saldaña, who continues to bill the district for representing the district in court. As long as the case remains open, he continues to milk the district for his legal fees.
However, that may not be the case for Cavazos and his MMA. Trustees recently voted to terminate the contract and to issue a Request For Proposals (RFPs) and to open the process to all companies willing to make a bid.
"It used to be that most of the companies who might have bid for our insurance knew that the process was basically closed to them because of Cavazos' association with the majority on the board," said a source. "Now we are letting everyone know that there is no monopoly in this district's insurance business and we expect that more companies will participate once the word gets out."
HealthSmart protested when it lost the contract to MMA after Chief Financial Officer Tony Juarez recommended it get the award. Juarez was then unceremoniously transferred and terminated in a flurry of grievances field against him by allies of the board's majority.
In a federal lawsuit Juarez filed against the four board members, he produced recordings indicating that he was being pressured to file a grievance against then-superintendent Hector Gonzales.
One of those recorded was former trustee Otis Powers who told Juarez the majority of the board would "love you" if he filed a grievance against Gonzales that they could then use as justification to fire the former superintendent.
Instead, Juarez went to the FBI and filed Whistleblower's lawsuit alleging that a majority of the board was trying to "rig" the insurance contract towards Cavazos and that his First Amendment rights had been violated.
The case remains in federal court under appeal from the majority after U.S. Judge Andrew Hanen refused to grant the defendants a summary judgment dismissing the lawsuit in their favor.
Many observers question the voting (4-3) in the motion to go out for RFPs. Those voting for it were Catalina Presas-Garcia, Luci Longoria, Enrique Escobedo and Christina Saavedra. Those voting against it were Colunga, Aguilar and Minerva Peña.
Colunga and Aguilar were part of the former board majority that favored suing HealthSmart and awarding the insurance contract to MAA brokered by Cavazos.
With the approval by the board to hire an outside firm to conduct a forensic audit to detect wrongdoing in the management of the district's finances for the past three years, it is clear that the awarding of the district's insurance during that time will be one of the issues that will come under close scrutiny. Some say it's about time the air was cleared on that matter.
"For years there have been many red flags concerning the relationship between the elected board members and local insurance brokers," said our source. "The current board is doing the right thing. We need to enact strict reforms in the way we do the business of the residents in the BISD. The public must be sure that the board members have the best interests of the taxpayers and students in mind when they conducts the public's business."