Waste-Case Scenario

While negotiating a $21 million contract with Broward County, Unisys swept a $100 million health-insurance mess right under the rug.

Talking with colleagues around the state, Herring heard horror stories about Unisys sending payments to the wrong health care providers and demanding claims information that already had been sent several times. "It would just drive you crazy," Herring said. "It was just like going into the black hole."

The judge's conclusion: Unisys is guilty of more than just bad management.
"To me there is a real question whether or not there was any hanky-panky in terms of them getting the contract awarded to them," he said. "Someone didn't make the proper background check to see if they were a responsible bidder on the contract. Apparently, from what I heard, they made a low-ball bid. And we got what we paid for."

During his battles with Unisys, Herring sought help from Sen. "Skip" Campbell, a first-term Democrat who knows something about legal liability. He's worth almost $9 million, largely because he's a very good lawyer who knows how to win very big lawsuits. Intrigued by Herring's difficulties, Campbell last December began asking what went wrong with the state health-insurance contract. The senator recently said: "It's bigger than I thought."

The state's trust fund for its employee health-insurance program has a projected deficit of almost $200 million. Part of the deficit has nothing to do with Unisys. Premiums haven't risen in five years, despite a 20 percent rise in health care costs. Increases in prescription drug use and costs, federal mandates requiring additional health care coverage, and trust-fund financial requirements have also contributed to the deficit.

Reports and hearings on the deficit problem abound, but the state has shown little interest in determining just how much of the blame should go to Unisys. Last year Campbell decided to find out. He consulted with legislative staff experts, who pulled together costs related to claims-processing errors, Unisys' inability to negotiate better health care discounts, and higher administrative fees required to correct the problems.

Combining direct and indirect costs, the staff gave Campbell a startling total, an amount that had not been made public. "They figured approximately $100 million goes to fraud, deceit, or mismanagement by Unisys," Campbell said.

At the December 3, 1997, meeting of the Senate Committee on Governmental Reform and Oversight, Campbell publicly called for a state investigation to determine Unisys' legal liability. "We have an obligation to the citizens of the state of Florida," he told the committee. "The figures I have seen are that somewhere between $90 and $100 million is due to breach of contract, fraud and misrepresentation.... If I am correct [the state should] proceed to try to collect that $90 or $100 million from Unisys.... We owe it to our constituents to try to get it back if we are legally entitled to it."

Campbell may have struck a nerve, because after the meeting he started to get Tallahassee power calls. A state law-enforcement official, whom Campbell declined to name, invited the senator to lunch and told him "this was opening a can of worms," Campbell recalled. "Then all of a sudden, the lobbyist for Unisys is at my door with their vice president for governmental affairs. They said, 'You might not want to do this.' They said, 'There might be some people in state government that are not going to look too good.' I took that for what it was worth."

The Unisys vice president was Pingree, a political heavyweight who acknowledges talking with Campbell but denies the senator's account. "I never said any such thing," Pingree claimed. "Someone else may have said something like that, but not me. I know he's talked to a lot of people. I am not saying that is not his recollection, but it sure isn't my recollection."

Pingree remembered the meeting this way: "Sen. Campbell didn't think the legislature had been fully informed and that he felt that maybe this was some deal that had been made under the table -- those are my words, not his. I was there to simply say that was certainly not the case."

As Campbell continued to investigate, he was visited by someone else: Douglas Cook, Chiles' friend and health care czar. "He indicated there is not as much occurring as what I think there is," the senator said. "But I think there is a major problem with the whole contract."

Cook, who is director of the state Agency for Health Care Administration, was asked to comment on his meeting with Campbell but declined.

Meanwhile, Campbell continues to ask pointed questions of state officials. Not all welcome them. "Some people are saying I'm too much of an independent thinker," he said. "I get a tremendous sense that people don't want to talk about Unisys, because someone made at least a $100 million error.... It seems clear to me that Unisys could not have fulfilled the contract, and therefore the contract should never have been awarded."

Why does Campbell think Unisys got the contract?
"Some people were pissed at Blue Cross/ Blue Shield," he said.
Including Doug Cook?
"Yup."

Cook and the governor go way back. They started working with each other in Washington in the '80s, when Chiles, then a U.S. senator, was chairman of the Senate Budget Committee, and Cook was a Pentagon budget analyst working with the committee. After retiring from the Senate in 1988, Chiles brought Cook back to Florida with him. Two years later Chiles was elected governor and appointed Cook his first budget director. In 1992 Cook was given the unofficial title "health care czar" when he was appointed director of a new superbureaucracy called the Agency for Health Care Administration (AHCA).

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