Legal dispute pending over health plan

by Robert Koch

University graduate assistants are busy completing enrollment forms for their new BlueCross BlueShield health insurance — effective Sept. 1 — unaware of the impending legal battle.
Student Risk Managers, Inc., the incumbent student health-care administrator, filed a lawsuit July 26 against the University and BlueCross BlueShield of Minnesota, alleging unfair bidding practices.
Risk Managers contends graduate assistants received an inferior plan costing more.
The University, according to the lawsuit, disclosed Risk Managers’ confidential proposal to BlueCross, then allowed the latter company to resubmit its proposal.
“(The University) showed everybody’s hand,” said Risk Managers’ attorney Jim Matthews. “Then BlueCross came in and lowered their bid in the appropriate areas and continued in negotiations with the University.”
The University sent out its request for proposals in February. Selection criteria included monthly premium, alternative benefit costs, scope and quality of the provider network, and willingness to resolve problems.
Regents approved the selection of BlueCross at their June 9 board meeting. Scope and quality of the provider network, not cost, appeared to be the decisive criteria. The monthly premium for the existing plan is $127.11; the new BlueCross plan will cost $150.73.
Costs aside, the dispute involves whether the University followed its own guidelines as established in its request for proposals. Risk Managers contends BlueCross submitted a plan substantially different from that requested — and the University accepted it.
But Lorie Gildea, University associate general counsel, cited two clauses within the request. One allowed the University to reject any and all proposals, waive minor irregularities and make awards “as deemed in the best interest of the University.” Another required proposers to list deviations under a section titled “Deviations.”
“This wasn’t a request for bids –this was a request for proposals,” Gildea said. “In a request for proposals, you reserve the right to negotiate, and that’s what we did here.”
Foreign-student coverage is one area where Risk Managers alleges excessive deviation occurred. The University stipulated the provider “must cover all expenses for medical evacuation or repatriation.” The BlueCross plan, Matthews said, reportedly does not offer the benefit.
“What are the people who are abroad supposed to do?” he asked. “How do they get their bodies home?”
Gildea, however, said she is sure the University has resolved the matter in a satisfactory way, either through negotiation with BlueCross or by purchasing coverage in another form.
Although a judge rejected a restraining order to halt the BlueCross plan, the lawsuit will proceed. Matthews is awaiting additional University documents that might shed light on the selection process. Damages sought have not been determined, he added.
“The criteria put forward in the request for proposals was not followed,” said Risk Managers’ president Dan Newman. “We were the lowest net cost to the student.”

Robert Koch covers police and courts and welcomes comments at [email protected].