Waste-Case Scenario

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

As a result of the investigation into Unisys' corporate actions, meanwhile, a statewide grand jury issued a report last June. It remains sealed, however, pending appeals involving those named in the report. One of the appellate issues concerns whether an organization named in the report has the same right to attempt to block disclosure as an individual does.

"Our office is litigating the question of disclosure," said Jim Schneider, special counsel to the statewide prosecutor. "Under Florida law only an individual, a flesh-and-blood human being, can move to repress a report. An individual is not the same as an agency."

No one involved in the investigation would comment on whether Unisys or the AHCA had moved to block the report. Those familiar with evidence presented to the grand jury say the report, if eventually released, could inspire calls for civil action against Unisys.

In adding up the costs of Unisys mismanagement, knowledgeable state officials include about $12 million more a year the state must pay Blue Cross/Blue Shield to take over management of the contract; about $9 million in lost premium payments and costs incurred when some 15,000 employees abandoned the problem-plagued Unisys system for HMOs; anywhere from $10 to $27 million in overpayments and underpayments the state is still trying to sort through; and the costs of the investigations. Also, under Unisys the state ended up paying more money per insurance claim than it would have under the Blue Cross contract, which included deep discounts from health care providers. The estimated extra cost: $30 million.

To deal with the overall insurance deficit, the legislature is expected to approve an emergency allocation of almost $55 million to complete this fis-cal year. Chiles has included another $84 million in his 199899 budget. He has also proposed a 30 percent increase in health-insurance premiums, which adds another $42 million.

Reviewing the insurance crisis, Mark Neimeiser, who handled the issue for the state employees' union, said of Unisys, "They may have hired some very good, high-priced lobbyists. Maybe they should have paid some attention to customer service instead."

The nineteen lobbyists Unisys employed during the insurance crisis included ultimate insider James B. Krog, Chiles' chief of staff from 1990 to 1992 and key strategist in both his political campaigns. In the 1994 campaign, Krog took the blame for "phonegate," a series of deceptive anti-Republican phone calls made to senior citizens and undecided voters just before the election.

Unisys lobbyists report to Pingree, the company's vice president for government relations. Pingree was secretary of the Department of Health and Rehabilitative Services and deputy chief of staff under Gov. Bob Graham, and he worked with some of the top people now in the Chiles administration. He is the Unisys executive who visited Campbell after the senator started asking questions.

Despite the deep-rooted political connections, Pingree doesn't see Unisys as especially powerful. "If we're talking politics, all you have to do is look at campaign contributions: One of the most powerful companies in the state of Florida is Blue Cross/Blue Shield," he said. On the health-insurance issue, he added: "The fact is if politics were played, they were played as part of the normal process. I do not know of any influence on either side that was involved in the awarding of the contract."

Lack of experience is the primary cause behind the health-insurance mess, according to Pingree. "That contract was the first contract of its type that Unisys had ever had, and because of lack of transition time and other factors, we weren't ready," he admitted. "We did a lousy job in 1996. There were a lot of people who didn't get their bills paid on time and whose credit worthiness was threatened.... We did it to ourselves. We said that at the time we got out of the business."

Pingree was asked about Campbell's call for the state to sue Unisys to try to recover the full $100 million. "While I have heard such things, there are forums for those things to be discussed," Pingree said. He pointed out that Unisys had already paid the state $2 million in penalties for billing errors and late payments. "Where we did not live up to the terms of our contract, there were penalties and liquidated damages assessed, which Unisys paid. The state had recourse under the contract for nonperformance."

While dealing with the Unisys crisis in Tallahassee, Pingree had to persuade Broward County commissioners to award the company a $21 million contract to set up the justice computer system, IJIS. As part of the project, Unisys is also supposed to fix the year-2000 problem, when old computers, programmed to read only the last two digits in a date, will interpret 2000 as 1900, wreaking havoc on vital data. Commissioners worried about both the cost of IJIS and its technological complexity, because the system is supposed to link now-incompatible computers in five different branches of county government.

Pingree told commissioners that Unisys was the company for the job. "The justice-public safety arena is one where we have over twenty years of nationwide, even international experience," he told New Times. "We do work for Scotland Yard. This is a primary focus for the Unisys business.... There is prior experience and a significant track record. It is something where we know what we're doing."

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