Board rejects ethics charge, awards contracts

Thursday, March 9, 2000 | 10:34 a.m.

CARSON CITY -- Despite protests by a Las Vegas health care company that has filed an ethics complaint against the administrator of the state workers health insurance system, the state Board of Examiners Wednesday approved two contracts for the program.

PacifiCare Behavioral Health, which had held the contract for four years, challenged the awarding of the new contracts on grounds they were never put out to bid.

PacifiCare also has filed a complaint with the state Ethics Commission against Jan Marie Reed, administrator of the state Public Employees Benefits Program, which oversees the $150 million health insurance plan for state workers.

Before taking her state job, Reed had worked with the two companies awarded the new contracts.

After deciding in December to put the contracts out to bid, the Board of Examiners in February, on Reed's recommendation, reversed itself on a 5-4 vote and agreed to award the contracts without a bidding procedure.

Reed said the change will save $800,000 for the system, which one year ago faced insolvency.

She recommended one contract for administrative services be awarded to UICI Administrator for an estimated $151,000 for next fiscal year. The other contract for overseeing mental health treatment for about $70,000 next year is going to IntraCorp. of Anaheim, Calif.

Reed is the former Nevada administrator for UICI and worked for IntraCorp before being hired by the state to run its health insurance program.

UICI supervised payment of the state benefit system's bills from 1998 until the new system was put into place last year.

At the Examiners Board meeting in Carson City, Rose Phillips, account manager for PacifiCare, argued it was wrong for the benefits board to first vote to go to bid for the contracts and then change its mind. She called it a violation of due process.

Phillips said PacifiCare and other companies were ready to offer their bids on the business. She suggested that while the bidding process continues, PacifiCare would stay on the job until a new contract is awarded.

Deputy Attorney General Randy Munn said Reed and the board followed the proper procedures in deciding not to put the contracts out to bid.

Reed said the benefits board needs to take advantage of every opportunity to save money to repay part of the extra $26 million the Legislature put in the program to keep it afloat.

Noting that the $800,000 savings is fairly significant, Gov. Kenny Guinn, the Examiners board chairman, told PacifiCare representatives, "You will have to give me some pretty strong information to change my mind."

Phillips argued that PacifiCare initially submitted a bid that was close to the contract awarded UICI, but Reed countered that the price quoted by PacifiCare was nearly double what the other two companies agreed upon.

The ethics complaint was filed against Reed with the Ethics Commission on Feb. 4 by S. Alan Savitz, president and chief executive officer of PacifiCare.