Waste-Case Scenario

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

In the following months, claims complaints soared. Salerno's customer-service bureau had handled about 200 phone calls a day when Blue Cross managed the program. That number jumped to 900 a day under Unisys. Letters went from 25 a week to almost 300.

Customers complained that doctors wouldn't treat them because Unisys hadn't paid earlier claims. Some customers were being hounded by collection agencies threatening to ruin their credit because of unpaid bills. Others, like Ellen Zulka of Pompano Beach, had spent months trying to straighten out billing errors. In her case, Unisys paid five surgery-related bills totaling $8500 -- only they were sent to the wrong hospital. When she called Unisys to complain, she was told the claim was lost in the system.

"It got to the point where they had over 300,000 claims that were backlogged in the system at one time," Salerno said. "Some of those sat in there an inordinate amount of time, not a matter of 20 or 30 days; some of them were there 120 or 180 days, and nothing was done with them. Whether it was incompetence or a willful decision made on their part to just not deal with them, I can't say."

As the problems got worse, state officials began receiving what Salerno calls "some very unusual reporting by Unisys with respect to the number of outstanding claims.... The numbers never added up. It sometimes became very difficult to know whether they were being devious or just ignorant. Some of the numbers they gave us they couldn't even explain. We weren't sure whether their statistics were wrong because they just didn't know any better or because they were trying to do a cover-up."

Salerno worked side by side with Unisys employees for more than a year, trying to improve the company's performance. In 1997, when Unisys was finally forced out, so was Salerno -- in retaliation, he says, for his criticism of the Unisys contract award. "It cost me a job," he said. He resigned in July after his duties were reduced from supervising complaints to simply answering telephones.

"The ones who created the problem are still riding high and free," a bitter Salerno said. "The ones who tried to resist what turned into a really expensive donnybrook for state taxpayers, we got the ax. I would just love to see the truth come out."

As complaints mounted against Unisys, so did the investigations. An outside audit by Coopers & Lybrand documented a string of problems, including a claims-error rate that exceeded industry standards and computer software that wasn't performing as promised. The state began withholding a portion of its payments to Unisys as punishment for poor performance. Those penalties eventually totaled about $2 million.

Legislative anger exploded, with one senator complaining to reporters, "they sold us a pig in a poke." Sen. John Grant (R-Tampa) thundered: "Either this is the most monumental bureaucratic blunder in quite a while, or it's some kind of massive scandal."

In May 1996 the Florida Department of Law Enforcement (FDLE) opened a criminal investigation. Based on critical audits and statements from at least two fired Unisys employees, the FDLE looked into what it later called "improper billing practices and criminal conspiracy by Unisys." One of those practices allegedly involved the shifting of claims among computer mailboxes to obscure how long they'd been in the system. "They knew they were falling short of the contract requirements," Arnett Ross, a former quality-assurance worker for Unisys, told the Tallahassee Democrat at the time. "When they knew they couldn't do it, they turned around, and they manipulated the data." Unisys strongly denied the allegations and, responding to media reports on the FDLE investigation, said, "We have found absolutely no evidence of any criminal wrongdoing."

As the investigation progressed, FDLE Director James T. "Tim" Moore complained that Unisys was providing "substantially less than full cooperation." Deputy Attorney General Peter Antonacci was blunter. "This is not the clean-hands crowd," he said. "You have to wonder what else they are up to when they are treating their customers this way."

By the end of 1996, the Chiles administration was in retreat. Cook admitted to reporters that the Unisys contract was "a tragedy of errors... a nightmare for all of us." The following spring, as the administration negotiated surrender terms with Unisys, the state legislature also acted. It took control of the health-insurance contract away from the AHCA and added a provision actually requiring future bidders to know something about running a health-insurance system.

On May 29, 1997, Chiles announced the pullout agreement with Unisys and admitted the AHCA bid process was a mistake. "Unisys underbid that contract an awful lot," the governor said. "The Blues knew a lot more about what they were doing when they put the numbers to it, in hindsight."

Two months later, with the revised bid-rules in place, Chiles announced his new health-insurance management company: Blue Cross/Blue Shield of Florida. "I hope I never have to deal with this again," the governor said.

But the Unisys fallout continued.
In July the FDLE charged two Unisys health-insurance employees with stealing more than $840,000 by diverting claims money to a phony address. In November two more employees were arrested in a copycat scheme planned after the first arrests. One, LaTonia Brennan of Fort Lauderdale, was charged with swindling $23,000 by accessing the Unisys computer network, then changing the addresses of legitimate health care providers to reflect a bogus address. When Unisys hired Brennan for her computer job, she already had a lengthy record of arrests for grand theft, credit card fraud, forgery, and writing bad checks.

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