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ObamaCare Clusterfuck: Covered California gives no-bid contracts to cronies

Corrente readers could see this coming in May 2013: "California exchange spending and contractors exempted from open records law". I'm sure there are plenty of rationalizations for exemptions like that, but it's hard to think of any good reasons. And so we come to today's story from AP:

AP Exclusive: California gives no-bid health pacts

LOS ANGELES (AP) -- California's health insurance exchange has awarded $184 million in contracts without the competitive bidding and oversight that is standard practice across state government, including deals that sent millions of dollars to a firm whose employees have long-standing ties to the agency's executive director. ...

Several of those contracts worth a total of $4.2 million went to a consulting firm, The Tori Group, whose founder has strong professional ties to agency Executive Director Peter Lee, while others were awarded to a subsidiary of a health care company he once headed.

Awarding no-bid contracts is unusual in state government, where rules promote "open and fair competition" to give taxpayers the best deal and avoid ethical conflicts. The practice is generally reserved for emergencies or when no known competition exists. ...

The agency confirmed some no-bid contracts were awarded to people with previous professional ties to Lee, but emphasized Covered California was under pressure to move fast and needed specialized skills.

What a steaming load of crap. They had four years to build the system,[1] and "specialized skills" are always a rationalization for cronyism. I mean, come on. The bidding process is meant to find out if the needed skills really are all that specialized!

The fledgling exchange "needed experienced individuals who could go toe-to-toe with health plans and bring to our consumers the best possible insurance value. Contractors like The Tori Group possess unique and deep health care experience to help make that happen and get the job done on a tight deadline," Lee said in a statement.

Oh, please. "Toe-to-toe with health plans." I guess that's why Cigna and Aetna are being sued for deceptively selling "consumers" narrow network plans.

"As this organization matures," [Lee] added, "we will rely less on private contractors."

Because corruption is only for the immature?

Kathay Feng, executive director of California Common Cause, said she recognized the need to free Covered California from cumbersome contracting rules that could have hampered its ability to meet Affordable Care Act deadlines.

But with tens of millions of taxpayer dollars at issue, "some accountability and transparency is needed, whether through audits or an alternative oversight body," she said, adding, "To spend $4.2 million on anything, let alone a contract to a friend and former colleague, raises serious questions."

Ka-ching! And veal pen outfits like Common Cause think Lee's actions stink.

The no-bid contracts represent nearly $2 of every $10 awarded to outside companies by the agency and were among roughly $1 billion in agreements disclosed to AP that the exchange executed from late 2010 through July, according to the records.


The founder of The Tori Group, Leesa Tori, worked under Lee when she was a senior executive at Pacific Health Advantage, a small business insurance exchange that failed in 2006. Lee was a longtime chief executive of Pacific Business Group on Health, which managed Pacific Health Advantage, and Tori also worked with him at the parent company.

So, wait. The expertise that demanded a no-bid contract came from somebody whose company failed? I mean, I'm all for learning from failure, but doesn't it make more sense to learn from success? (Assuming success to be possible in the context of health insurnance, of course.)

Long before it opened its doors to the public last fall, Covered California awarded a small contract to Tori for her advice on designing a program to sell insurance to small companies. The $4,900 agreement in late 2011 was executed without rival bids.

Walking around money. Ka-ching!

The deal would mark the beginning of a lucrative and far-reaching partnership between the agency and the company Tori formed about two years ago, just as national health care reform took root across the U.S. An initial $150,000 contract with The Tori Group in March 2013 was executed by Lee, but later amendments that increased its value to $4.2 million were approved by Covered California's board, an agency statement indicated.

Ka-ching! And the board is implicated. I wonder if they'll throw Lee under the bus or tough it out? My guess would be the latter, since California is at this point a one-party state.

Nearly three years after her first, small contract went into effect, she and employees at her firm hold senior-level positions and work on issues ranging from enrollment to health plan design at Covered California.

At least five other people who are contracted to work at Covered California have ties to the now-defunct Pacific Health Advantage, four of them at The Tori Group, whose employees are paid through the consulting contracts. In all, nine people listed on the group's website, in addition to Tori, work at the exchange.

Yolanda Richardson, Covered California's chief deputy executive director who reports directly to Lee, was a vice president at Pacific Health Advantage. Before she was hired on staff, she received a 10-month, $176,500 no-bid consulting contract from the agency in 2011, about a month before Lee came on board, according to the records.


Tori is Covered California's director of plan management. The Tori Group's chief financial officer, Kathleen Solorio, is Covered California's operations adviser. Another principal at the firm, Corky Goodwin, is serving as interim director of the small business insurance program; she was a senior manager at Pacific Health Advantage.


The Pacific Business Group on Health Negotiating Alliance, a subsidiary of the company Lee previously led, received two no-bid contracts worth a total of $525,000. Spokeswoman Emma Hoo said the work covers "unique and in-depth assessment of plan operations."


John Vigna, spokesman for former Assembly Speaker John Perez, who spearheaded legislation that established the exchange, said Perez was confident that enough checks and balances remained in effect, including oversight by the federal government and a state law that outlines rules for avoiding conflicts of interest.

Remember, of course, that all this so-called expertise is useless, completely without social function; a single payer system would have done away with all of it. So you can also see why Democrats and career "progressives" would hate single payer: No chance for them to hire their cronies.

NOTE It would be fair to say that ObamaCare is a "make work" program for career "progresssives" and the "creative class" (among its many other functions). That's the moral of this story, besides the outright corruption.

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