WAS HEALTHSMART LAWSUIT A FAILED CAMPAIGN GIMMICK AFTER ALL?

By Juan  Montoya
They wanted a big splash in the media before the election and they got it.
Former Brownsville Independent School District trustees Rick Zayas and Ruben Cortez – along with their fellows in the majority Rolando Aguilar and Joe Collunga – in the waning days of the 2010 trustee elections got front-page coverage with their lawsuit against HealthSmart Benefit Solutions Inc. to recover what they said was some $14.5 million in "overcharges."

BISD filed a lawsuit alleging improper charges during the two years it administered the district’s self-funded employee health plan and charged the company with fraud, breach of contract, civil conspiracy and gross negligence.

Now, hundreds of thousands of dollars in legal fees later, the new majority on the board voted Wednesday  to authorize the district's attorneys to amend the lawsuit if necessary and to move forward to resolve the litigation.

In other words, there was more smoke than fire to the claims and the filing of the lawsuit was more of a campaign gimmick at taxpayers' expense than a legitimate action to recover money.

Board President Catalina Presas-Garcia and trustees Enrique Escobedo, Christina Saavedra and Luci Longoria voted  in favor and trustees Joe Colunga, Rolando Aguilar and Minerva Peña voted against.

Arturo Michel, the local representative of  the Houston law firm Thompson & Horton LLP that has represented the BISD board on the case, said that he needed the flexibility to amend the district's lawsuit before HerathSmart moved to dismiss the claims on which it may not prevail.

In other words, Michel told the trustees many of the charges continued in the original Zayas-Cortez, Aguilar and Colunga-instigated lawsuit cannot be proved.

Instead, he said he needed the freedom to focus on those where the district may have half a chance of winning. He said needed the board's approval before the other side moves for dismissal of all claims.

Gary Long of the Brownsville Herald (who by the way gave the filing of the lawsuit front-page treatment and quoted Zayas and Cortez exclusively in the article) wrote that Michel warned the current majority that "because the matter is a plaintiff’s lawsuit, BISD must pay the cost of prosecuting the case."

Since many of the fraud and conspiracy claims probably can't be proven, he asked the current board majority for "flexibility to pursue only the claims where BISD is most likely to prevail."
“We need to focus on the claims we should be focusing on and not waste time and money on claims where it doesn’t look like we will recover (damages),” Long reported Michel saying.
Presas-Garcia said the HealthSmart lawsuit is just one of a number of matters left by the previous board of trustees for the current board to clean up.
"Ask Mr. Zayas, Cortez , Colunga and Aguilar where the $14.5 million are at," Presas-Garcia said after the meeting. "And while you're at it, ask Mr. Aguilar about the $7 million we're supposed to be saving with the company he recommended."
Under BISD's self-funded plan for its 7,733 employees, the Third-Party Administrator (TPA) arranges contracts with doctors, hospitals and other health care providers through a Preferred Provider Organization, or PPO, which in turn provides discounts for using those services.
Claim totals for the  BISD's plan for the past six years under Mutual of Omaha as the TPA were:
*$26.025 million for 2003-2004;
*$23.605 million for 2004-2005;
*$26.862 million for 2005-2006 and
*$28.655 million for 2006-2007.
Under HealthSmart, claims totaled:
* $34.769 million for 2007-2008 and
* were projected to total about $40 million for 2008-2009.
That's when the former board majority stepped in and filed their lawsuit against HealthSmart claiming the company was overcharging. Yet, during a presentation of a consultant's plan review presented to the board just two months ago, trustees were told that for the present budget year the contract to MAA for 1010-2011 will cost the district $46.5 million.
And for the next year (2011-2012), that figure is projected to rise to $51.1 million.
When the former board majority sued HealthSmart, it did so because Zayas and Cortez 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)?
Now that the board's counsel is looking for authority to be more "flexible" in their lawsuit claims, does it mean that those who doubted the campaign hype touting the frugality of Johnny Cavazos' MMA have been vindicated and that the district should stop throwing good money after bad on this obviously "political" lawsuit?