The state Supreme Court has upheld the state’s award of its health insurance contract to UnitedHealthcare of New England, reversing a Superior Court judge’s December ruling that would have required the contract to be rebid.
The decision, released Thursday and posted, in full, on the Supreme Court’s Web site, says that while there is “little doubt” that the officials who handled the bid process “were, to a large extent, uninformed, overworked and ill-prepared” for the “mountainous” task, they acted in good faith and did not commit any “palpable abuse of discretion,” as would have been required to void the contract.
Governor Donald L. Carcieri hailed the ruling as “a victory for Rhode Island taxpayers.”
“The Supreme Court confirmed what we’ve said all along: The state conducted an extraordinarily fair, transparent and open bidding process,” Carcieri said in a news release. “At no time did the state abuse its discretion in awarding the state employee health care contract to United HealthCare.”
United regional CEO Budd Fisher said his company had expected the state “would be vindicated,” because, “having been involved in it, we knew that it was a fair and equitable process…. I would just tell you that it’s a shame that there’s been such mudslinging.”
Blue Cross & Blue Shield of Rhode Island, the losing bidder whose lawsuit brought the courts into the dispute, was gracious in its final defeat. “We’re disappointed, but we’ll certainly abide by the Supreme Court decision,” spokesman Scott A. Fraser said.
Fraser added that Blue Cross is committed to providing a “smooth and seamless transition” for everyone, and said CEO James E. Purcell called his United counterpart to offer his help in that regard.
The three-year, exclusive contract was originally slated to begin Jan. 1, but while the appeal was pending, the state was instead directed to extend its contract with its current health insurer, the losing bidder this time, Blue Cross & Blue Shield of Rhode Island.
About 52,000 state workers, retirees and their dependents are covered by the deal. United had already mailed them membership cards when Superior Court Judge Netti C. Vogel halted the transition process. United spokeswoman Debora M. Spano said the state has to provide 60 days’ notice before switching its coverage, so the switch may take time.
“We don’t know a lot yet,” Spano said. “We have to wait for some direction from the state.” Also unclear, she said, is whether the contract will still run for 36 months, or whether it will end Dec. 31, 2007, as originally scheduled.
Once the state is ready, however, “we’re ready to go,” Fisher said. “We’ve had a long time to think about how to implement this account and do the things necessary. This is what we do across the country: We install very large accounts seamlessly. It’s a part of our culture and who we are.”
The state awarded the contract to United in October, but Blue Cross promptly appealed, citing flaws in the way the state and its consultant, Hewitt Associates, had handled the bidding process and arguing that, if properly compared with United’s, its bid was superior.
After the state rejected the Blue Cross appeal, the insurer went to court. Judge Vogel issued her ruling in December.
“Finally, it is now beyond question that UnitedHealthcare submitted the best bid, and deserved to win the state employee health care contract,” Carcieri said. “The United contract will save Rhode Island taxpayers more than $25 million over the next three years. This contract will also enable Rhode Island’s cities and towns to save millions of additional dollars by contracting with United for the same administrative rate as the state.”
