COUNCIL OF THE CITY OF PHILADELPHIA CONTINUED PUBLIC HEARING COMMITTEE ON LAW AND GOVERNMENT - - - Thursday, 9/20/01 1:16 p.m. Room 400, City Hall Philadelphia, PA - - - RESOLUTION NO. 000476 - Authorizing the Committee on Law and Government to investigate whether the City-administered health plan, current and in the past, has provided the most comprehensive and cost-efficient coverage to City employees for the premiums paid, and whether the City could provide more comprehensive and less costly coverage to the approximately 8,000 employees and retirees currently covered by this plan if the other option were pursued. PRESENT: COUNCILMAN DAVID COHEN, Chair COUNCILMAN ANGEL L. ORTIZ, Vice Chair COUNCILWOMAN JANNIE BLACKWELL COUNCILMAN MICHAEL A. NUTTER COUNCILMAN FRANK RIZZO - - - VINCENT VARALLO ASSOCIATES, INC. Registered Professional Reporters Eleven Penn Center, Suite 600 Philadelphia, PA 19103 (215) 561-2220 9/20/01 LAW & GOV'T RES. 00476 I N D E X Thomas Cronin, President.................. District Council 47 Richard Costello, Philadelphia FOP........ 7 Serina Tenant, FOP, City Pension Board.... 21 8 Thomas Lamb, Administrator................ 25 Law Enforcement Health Benefits 9 10 CONTROLLER'S OFFICE WITNESSES: Albert Scaperatto, Post-Audit Deputy...... 30 Anthony Ratkowski, Deputy Controller...... 40 Michael Egan, Audit Administrator......... 40 Linda Berkowitz, Deputy Director, Finance 54 Joseph Goldberger, Retired City Employee 133 Louise Simpson, Retired City Employee..... 138 3 9/20/01 LAW & GOV'T RES. 00476
This is the continuing hearing on Resolution 476 relating to the health plans offered by the City of Philadelphia. There is a continuing quorum existing from before, but I'm urging all members of the committee who are in the building to please come. To my left is Councilman Ortiz. To my right is Shoshana Bricklin, one of the attorneys on Council's technology/legal staff. The first witness I'm going to ask is Tom Cronin, President of District Council 47, and I'm calling on him because I understand that there are loose allegations being made that the chairman of this committee, meaning myself, is a person of union bias. In fact, I don't know what "union bias" means, but if it means someone who supports the labor movement and who believes the treatment of workers has to be fair and proper and that people have to deal with labor organizations honestly, then I fit that category because -- (Applause.)
And I'm sure that the beliefs of the overwhelming members of City Council who are dedicated to the fact that Philadelphians, 4 9/20/01 LAW & GOV'T RES. 00476 most of whom are workers, are entitled to decent treatment in their employment and to respect and dignity, and they're going to get that from City Council. And when people purporting to represent the City of Philadelphia make statements to workers' organizations or to other people, people have a right to expect the truth to be told, and that's what we're seeking here, and I'm not certain we've been getting it because we've been trying to establish one simple basic truth: Was there any truth made to the charge made during the last labor negotiations that the City had made a study that supported the concept that combining all of the health plans would be in the interest of the workers of the City of Philadelphia, both as to efficiency and to economy. And that would seem to be the simplest thing in the world to prove; all the City has to do is come forth and say, This is our document. Whether you agree or disagree with it, this is what it was based on. But after months of trying to determine something, we were met only with statements that there was maybe some kind of a work 5 9/20/01 LAW & GOV'T RES. 00476 commissioned by some attorney or some group somewhere and that there was very general material in it, but you're not entitled to see it because it's some kind of an attorney-client privilege or workers' deliberated process or something else. It seems clear to me that at the state of the record, I would be prepared to say that I believe that the statement made by the negotiating team for the City was not a statement supported by facts. I believe there was no such document because it would seem to me if there were, certainly in the course of the last three or four months, something would have been produced. We'll have another effort made today to find whether there was such a document. But if there is to be any good faith between those who work for a living and those who gain the profits from the workers, there's got to be a basic sense of honesty in all of their dealings, and I think the labor unions that represent the City of Philadelphia are entitled to expect the truth when City officials give them facts, or allege them to be facts. And this committee is going to continue to work to try to establish that principle, 6 9/20/01 LAW & GOV'T RES. 00476 and also at the same time, perhaps, to learn some information about health. Despite the Council Committee's interest in the whole health planning process, there was a recent advertisement in the newspaper that called for certain information from health-care providers. No one this in the Council, I found, was informed at all about that. Nobody knows anything about the people who were involved or who made a decision or why the decision was made 0or are there similar other decisions being made. And I take that to be an indication of not dealing in good faith with this Council Committee, and this committee will not tolerate that, and I think it ought to be understood by everybody Now, with that indication, I would like Mr. Cronin for his observations with respect to the hearing.
You guys remember "Guys and Dolls," the movie and the Broadway play? The chubby guy, Stubby Kaye, and Nathan Detroit ran the longest continuing crap game in the history of New 7 9/20/01 LAW & GOV'T RES. 00476 York City, and I know Rich Costello would appreciate this, you know. It seems like we're running the longest continuous hearings in the history of this City Council. In fact, you know, we should -- we should bring in some -- all of the people who continuously come to this Council because we've heard all of the stories from the retirees and the fireworkers and District 47 and the police officers, and we have a very good record along those lines, Mr. President -- Mr. Chairman. what we don't have is another -- another radio personality that -- he had a radio show from Chicago in which he said, "You really haven't heard the real story." And what we haven't heard is the real story because the real story is within the executive office of the City. I don't want to continue the longest-running hearings in the history of City Council. I think the Administration, Mr. President, with all due respect, has to be subpoenaed to bring all of the those materials that we keep on asking for and all of the witnesses that we need to have here. Mr. Katz is not coming in; he should be here. If he refuses, he should be subpoenaed. 8 9/20/01 LAW & GOV'T RES. 00476 (Applause.)
And whatever documents we don't have -- and we know -- I mean we have gone through this. I know what Mr. Cronin's probably going to say to us. But I think at this time, we are just -- we should just sit down and hold a crap game right here, you know, because we're wasting a lot of good people's time, and I don't think we should keep on wasting a lot of good people's time if we're not going to get that information. And we should take all the steps that are necessary because there is no privilege between the executive and the legislative. This is material that we have paid for, that we have authorized, and it should be, and it is, in the public domain. And it should be brought to us. So, Mr. Chairman, with all due respect, I think we should hear Mr. Cronin, but I think we should take the next step that needs to be taken. (Applause.)
I think the observation is salient, but the chair has a weakness for conciliation. I'm hopeful that the --
-- that the Administration will really decide to cooperate, because otherwise, what I see is a long, hard battle that's going to consume the energy of many people on the matter of, is there a work product privilege, is there attorney-client privilege, is there a privilege which Councilman Ortiz says does not exist and in which I believe he is right? But is there such a thing as a privilege which enables the executive of the City to deny to City Council the direct documents, for example, that are produced as a result of an appropriation by City Council of the funds necessary to get the document in the first place. Is there something -- I even learned today there's something called -- that the City sometimes uses generally unsuccessfully to assert, and that's called "a deliberative process privilege." At some point --
But, Mr. Chairman, if I may, you know, we're not asking the Administration for the details on the attack on Osama Bin Laden, okay? That's national security interests. We're asking for things that we have authorized that we 10 9/20/01 LAW & GOV'T RES. 00476 have put forward and that continuously we've been Stonewalled during the last six, seven months.
Well, with that conclusion, I agree. But I'm going to ask Mr. Cronin, because he was the one who testified in the first instance about it being said at the negotiations that took place that such documentation existed Mr. Cronin, the committee is pleased that you're here today. Please proceed.
Thank you, Mr. Chairman. I also appreciate the retirees that are here and the representatives of Locals 810, 2186, 2187 the employees -- mushroom workers from Kennett Square who have a validation here. (Applause.)
And also all of the other interested parties. I'm just -- I was here this morning, and I know that the press usually jams these seats over here; I'm sorry that no one is here from the press again here today 'cause I sure would like this story to reach the mass of Philadelphians. My name is Thomas Paine Cronin, and I'm 11 9/20/01 LAW & GOV'T RES. 00476 the President of AFSCME District Council 47. I'm also the chair of AFSCME District Council 47 health and welfare fund. On behalf of the City workers represented by District Council 47, I have followed with great interest the Committee of Law and Government's investigation into how the City administers health benefits provided to non-represented employees. To say the least, the hearings have been illuminating, shining, a hard light on the fact that the City really has no idea how its benefits are administered. This information comes to us straight from the City itself. First, the City informs us that, notwithstanding the fact that this committee made its request for documentation more than a year ago -- I want to repeat, more than a year ago -- the City had not seriously looked into the administration of its health and welfare plan and the documentation available until June of 2001. Miss Wilkerson informed us that she and Linda Berkowitz, the City's Deputy Director of Financial Oversight, would spend the summer taking a, quote, thorough look, end quote; that's from the 12 9/20/01 LAW & GOV'T RES. 00476 transcript of the June 4th hearings, Pages 10 through 17. We were further informed that Miss Berkowitz had been charged with ferreting out documents requested by the committee. However, it apparently was going to be a long summer for Ms. Berkowitz, who testified that the City's records regarding its health and welfare plan are in disarray. Miss Berkowitz testified that the documentation regarding the City-administered plan is poor, P-O-O-R, it is poor. That's a quote; it's from the transcript of the June 14th hearing, 34. Both Mrs. Wilkerson and Miss Berkowitz testified that they would be working throughout the summer to complete the City's assessment of its health plan. Miss Berkowitz testified that she would, quote, certainly hope that we would have something for you when Council comes back into session this fall; it's from the transcript of the June 4, 2001 hearing, on . If they do come up with a report, we will be most interested in reviewing this document. Given the City's effort at delay and obfuscation, it 13 9/20/01 LAW & GOV'T RES. 00476 would be interesting to learn how the City's plan is actually administered. We will also be interested to see if the documentation needed to complete such an analysis was actually compiled and reviewed. If so, the City's comptroller would be most interested in receiving both the report and the documentation. It is my understanding that the City has been no 9 more forthcoming with the controller's office than it has been with this committee. If they do not come up with a report -- so here it is September -- after a long summer and the City has not come up with any coherent analysis of its own plan, whether it is administered well and whether the City is wisely spending the health care dollars. I can't say that it is a real shock to me that the City simply doesn't care whether it's getting the best bang for the buck. Unfortunately, neither the citizens of Philadelphia nor the press are shocked to learn that the Administration is wasting money year in and year out on sloppy administration of its health plans and on big broker fees for the politically powerful. I would think the Administration would be embarrassed that no one 14 9/20/01 LAW & GOV'T RES. 00476 is surprised by its waste and its patronage. The City's smoke and mirrors, stalling and dodging might just be another power game for the City. But as you know, to the employees of the City of Philadelphia, what is at stake is the quality and security of their health benefits.
The City has consistently asked in negotiations -- and we have ever reason to believe that it will ask again in upcoming negotiations -- for consolidation of the health plans currently administered separately and accountably by the four unions. But the City has come to the table with nothing on this account. The City does not and, as far as any reasonable observer can tell, cannot make the case that it can competently administer the benefits of non-represented employees, let alone its represented employees. As Joyce Wilkerson has testified, quote, We recognize that pursuing consolidation discussions with the union is contingent on our ability to administer the City's plan in a professional and thorough manner, end of quote. This came from the transcript June 4, 2001, . What does that say about the City's 15 9/20/01 LAW & GOV'T RES. 00476 bargaining demands in every previous negotiation when, as we are told by Miss Berkowitz, the City's administration of its own plan was P-O-O-R. Finally, I have to comment on the City's plan -- and I use that term very loosely -- to consolidate the health plans. I do not need to revisit our frustration and the frustration of everyone present in this room, with the exception of the City representatives, at being told by the City that substantial savings could be realized if only the health plans could be consolidated. I called it a fraud in the last hearing, and the City's actions have only served to reinforce this conclusion. The bottom line is that the City has done nothing to allay the committee's concerns and the concerns of the union that the City has no 18 foundation for claiming that it would be better for any party, not even for the City, to consolidate the health plans. Let me be frank. The city now asserts finally that there is in fact a memo supporting its position, but that it is protected by legal privilege. Even assuming, which I assuredly do not, that there is such a privilege, the City does not 16 9/20/01 LAW & GOV'T RES. 00476 have to assert the privilege. It is just using this position to avoid releasing the document. Let me tell you some truths about the alleged memo: 1. If the memo really supported the City's position, they would release it and let it stand up to scrutiny. If the memo supported the City's position, copies of it would be plastered on the desk of every reporter that covers City Hall. The City would be brandishing copies in the face of every negotiating team. Given that the document is being kept under wraps, the only alternatives appear to be that it is either a puff piece that cannot stand up to the rigorous review or that it is analytically competent and does not support the City's position. Let's stop playing games 2. If the City's record-keeping and documentation are a as bad as the City's own witnesses emphasize that it is, what is the possible basis of the analysis? Or perhaps, as we all suspect, the conclusions are based on political desire and figures pulled from thin air. If the City has the records to support the conclusions in the memo, why can't Linda Berkowitz find them and 17 9/20/01 LAW & GOV'T RES. 00476 why can't the City turn them over to Jonathon Saidel? We can only conclude that the report was not based on any documentation relating to actual City-administered plans. 3. Finally, if all the City can come up with that supports the position is, quote, one memo, then there is clearly no claim or study that forms the basis of the City's opinion. Moreover, I infer from Miss Berkowitz's comments at the June 4th hearing that the City's benefits consultant for the 2000 negotiations, Doyle & Associates, authored the memo. Anyone who attended the health care portions of the police and fire Act 111 arbitration hearings can attest that the representatives of Doyle & Associates certainly revealed only the most shallow knowledge of collectively-bargained health plans and even less knowledge of collectively-bargained plans in the public sector.
If a memo by this firm is the only documentation supporting the City's position about consolidation, the City needs to go back and get some hard analysis from real experts in this field. AFSCME District Council 47 will continue to monitor the work of this committee closely. We 18 9/20/01 LAW & GOV'T RES. 00476 look forward to learning more about just how the City administers its own health benefits. Thank you.
We're going to be asking the representative of the City, Miss Berkowitz, shortly about the completion of the work during the summertime and the status of the hearing. We're hoping we'll get some information that will satisfy everybody here; at least we live in hopes. So thank you very much, Mr. Cronin, for your position.
I understand that Mr. Costello, with the Fraternal Order of Police, is here. If he is, would he approach the -- if he desires to have anything to say with respect to the statements the union representatives will indicate to the City's witnesses what we hope they're going to be replying to. (Witnesses come forward.) 19 9/20/01 LAW & GOV'T RES. 00476
Mr. Costello, we're very pleased that you and your associates are here.
Good afternoon, Mr. Chairman. Without belaboring any of the comments made by my colleague Thomas Cronin, we just wanted to point out some further information that has not been emphasized. Up until now, we have been concentrating on the off-duty or the private medical care afforded the City employees. We are faced with equally serious problems obtaining City assistance regarding on-duty medical care for those officers who have been injured in the line of duty. You would think that that would be a top priority of an administration to cover that type of a situation without question and without hesitation, but such is not the case. Before I introduce our officers to talk about that, I just want to add that -- not to disagree with Tom's point of view, but we had heard that that supposed report that I think he said was written by Doyle & Associates does not in fact exist at all, that there is no report alleging any type of 20 9/20/01 LAW & GOV'T RES. 00476 consolidation, and that's why you're being told it's privileged. It's privileged because it's also imaginary. (Laughter.) (Applause.)
I believe what was prepared by Doyle & Associates is, however, valuable because it cost the taxpayers of this city about $280,000. So if you ever see it, maintain a copy because it's probably one of the most costly documents this city has ever produced Having said that, I would now like to introduce Officer Serena Tenant who is a member of the City Pension Board and also an FOP representative whose responsibility it is to deal with those officers who are injured in the line of duty. And with her is the administrator of our law enforcement health benefits that you've met previously, Tom lamb, and Tom's role is when the City completely refuses to pay for the medical care of those killed in the line of duty or injured in the line of duty, then he picks it up, and that's even in view of the fact that we've received a cap, 21 9/20/01 LAW & GOV'T RES. 00476 but I'd like the two of them to explain the details of this very serious situation. It also plays into the facts of this case, and there's nothing about what you're about to hear that's privileged.
My name is Serina Tenant, T-E-N-A-N-T. Mr. Chairman, ladies and gentlemen, I am employed by the Fraternal Order of Police.
Let me interrupt you for a minute to announce the presence of Councilman Rizzo and Stanley Shapiro, also with the Council technical/legal staff. Go ahead. Sorry for the interruption.
I'm also one of the elected labor trustees who sits on the Board of Pensions and Retirement. Some of my responsibilities for the Fraternal Order of Police are making sure that my officers understand what their rights are when they get injured in the line of duty. One of the tedious tasks that I've been burdened with for the last seven years is handling the bills that the officers are actually receiving 22 9/20/01 LAW & GOV'T RES. 00476 in their homes in regard to injuries that occur on duty. They are dunned by mailings and they are dunned by phone-call messages from people who provide this service. I have requested the officers to bring me the bill, to the FOP, and I personally send the bill by mail to Comp Services, which is the third-party administrator for the IOD system, or the injury-on-duty system. I have received communication back from the Comp Services people indicating that the bills have been paid when, in fact they aren't, and when my officers go for credit checks or to go to purchase homes, they're embarrassed by these bills that are constantly lingering around Recently, I received a bill that is over three years old that Comp Services refuses to pay, even though the bill has been accepted as an injury-on-duty bill. My officers are very frustrated, I am very frustrated. I'm told constantly that the bills are being paid; and, in fact, we know that they aren't being paid. I've brought with me a stack of bills that just detail the last six months that I have sent to Comp Services, only to get additional 23 9/20/01 LAW & GOV'T RES. 00476 comments or out-and-out lies that they're telling me the bills are being paid My other problem that is recently occurring is the fact that the officers are now being dunned for the remainder of the bill that Comp Service has not paid. So we understand that the officer is not responsible for the remaining of the bill, that he or she is not supposed be dunned at home, he or she is not supposed to be telephoned at home. And constantly, people are breaking the law and infringing on the privacy of my police officers. It's a disgrace. It's bad enough that they're injured on duty. Some of the biggest offenders are two of the treating networks that are very much aware of the rules and regulations; one being Hahnemann Hospital; the other one being MCP, and I don't think that that's fair to my officers, and I'd like for someone to do something so they don't have to suffer the further indignity of not having their bills paid. Thank you. (Applause.)
Councilman Rizzo has a 24 9/20/01 LAW & GOV'T RES. 00476 question.
I'd like to ask you a question about the scenario that you just described
Obviously, these bills add to the expenses to the provider -- postage and processing. Obviously you're not aware if the provider was ever told that sending these bills to the individual, you members, is inappropriate. Are you aware that anyone from the Administration has ever said to them, This isn't the way that you're supposed to be doing your business?
Well, I've told them, being familiar with the Worker's Compensation Act, I have told the administrators of Comp Services that I'm very much aware that it's against the law. They agree with me, but they want me to take on the burden of contacting the dunner to let them know that it's against the law. And, quite frankly, I don't need anything else on my plate to do at this time.
Well, I think -- well, obviously, the donor should not be doing that; maybe they think that it is a good expense and that 25 9/20/01 LAW & GOV'T RES. 00476 hopefully, they'll some response from that type of mailing. But I think the Administration has a burden to let those folks know that this is an inappropriate practice. And I'm hoping as a result of this hearing that they're listening and they do something about it. If they don't, I'm sure that the Chair will write a letter to these folks and request them to make sure that that practice stops.
I think its very clear that Councilman Rizzo's right and that it's the responsibility of the City to make sure that the people the City contracts with obey the law.
And we'll be asking that question of Miss Berkowitz when she comes up.
Okay. Would the next speaker please proceed. Please identify yourself for the record.
Thanks, Mr. Chairman. Tom 9/20/01 LAW & GOV'T RES. 00476 Lamb. I administer law enforcement health benefits. I previously testified regarding the City's injured-on-duty responsibility for officers that were injured in the line of duty where we had over 8,000 occurrences that were -- that we were forced to pay for. And what officer Serena Tenant just testified to, you can see why the providers would much rather bill police Blue Cross plan than turn it over to a collection agency and receive a quarter on the dollar. And I receive calls similar to Serena from officers saying they have collection agencies calling the officer's home belittling and berating their 10-year-old daughter for an outstanding balance. That is absolutely unacceptable. And the City's attitude is, We're going to keep tap dancing, like they're tap dancing with this committee, like they tap danced in the last four City contract talks. As long as they can get away with it, they're going to continue it and they have no regard for the workers of the City of Philadelphia. (Applause.)
Thank you. 27 9/20/01 LAW & GOV'T RES. 00476 Can you give the committee a list of the companies that are engaged in that practice?
In the engagement of dunning, is that what you're talking about, Mr. Chairman?
Yes, the companies that are calling the individual officers.
The largest one is a company called NRO. I have their address if you want it. I'm sorry, I beg your pardon. It's NCO Financial Systems. They're listed at East 12 Clementon Road, Suite 102 North, in Gibbsboro, New 13 Jersey, 08026. Their 800 number is 1-800-220-2800. 14 You never get to speak to the same person. 15 I've called them a million times. It's a voice mail 16 that you have to follow. I have told these people 17 that it's against the law to dun my officers or any 18 City of Philadelphia employee. They are nonchalant, 19 they're very nasty, and they just don't want to 20 accept the fact that Comp Services is the provider. I'm more than happy to give them the name of the individual adjustor because they are chosen by the first initial of the last name of the employees. They don't want to hear anything except, When is this person going to pay the bill? 28 9/20/01 LAW & GOV'T RES. 00476
Yes. I handle the on-duty injuries when it comes to the Workers Comp situation, yes.
Well, we'll have to see. It just seems incomprehensible that this is going on. And we'll raise that question with Miss Berkowitz.
All right, and we'll all hear the answer. All right, thank you very much. Are there Any other questions from any other member of the committee? (No further questions.)
We thank you for giving us this additional information. It seems the more we get into this, the more problems there are. (Applause.)
Is there any other representative of a labor organization here representing City employees? If not, then I'm going to ask Miss Berkowitz to come forward. 29 9/20/01 LAW & GOV'T RES. 00476 Miss Berkowitz, hold it for one moment. Is the representative of the City Controller's Office present? Is Mr. Scaperatto here?
Would you please approach the witness table. (Witnesses come forward.)
Forgive me if I don't. We understand -- well, I understand directly from the City Controller, having had a conversation with him about a week ago, he said that there was no cooperation between the City Administration and his office, and except for duties imposed upon him because of his office and the dire needs of the PGW gas workers that face a major layoff, he would be here, but he promised us you would be here today to report on the efforts of the City Controller to conduct the audit that you were 30 9/20/01 LAW & GOV'T RES. 00476 assigned to do by the controller. Mr. Scaperatto, would you give your name for the record and then proceed with your statement.
Sure. My name is Albert Scaperatto. I'm the Post-Audit Deputy, and I'm here today to speak on behalf of the City Controller, Jonathon Saidel, who, you mentioned, could not be here today because he's currently attending the labor negotiations with Philadelphia Gas Works and its employees bargaining unit. I'm joined here this afternoon by two of my colleagues by Mr. Anthony Ratwonski and Mr. Michael Egan. Mr. Ratwonski, on my left, is the Deputy Controller for Office Administration and Communication; and to his left is Mr. Egan, who is my audit administrator in charge of the day-to-day activities of the health benefits review At the request of Council, the City Controller's office is conducting a review of the City-administered health plans for fiscal 2001. This afternoon, I would like to briefly discuss the objectives we hope to achieve by the audit; and secondly, to inform the committee of any problems we are encountering with City officials in the 31 9/20/01 LAW & GOV'T RES. 00476 performance of our work. We planned our review to provide Council with answers to three questions that we base on Council Resolution 476. The first question is: Are the City-administered health plans providing the most comprehensive and cost-effective coverage to City employees for the premiums paid; second, if the plans are not providing the most comprehensive and cost-effective coverage, are the excess premiums or reduced benefits significant; and if they are significant, why is the situation occurring? To answer these questions, we established a series of work programs. Each program consists of a number of steps designed to collect and analyze data. Prior to June 2001, our repeated attempts to obtain information and data went unanswered. In June, Miss Linda Berkowitz informed our office that she would be the contact person for this review. I can now report that Miss Berkowitz has been cooperative by providing our office with requests for proposals, contracts, and other information and documents requested. We are conducting interviews with plan 32 9/20/01 LAW & GOV'T RES. 00476 administrative staff to enable us to understand and evaluate the process the City uses in providing health benefits to employees. We also plan to meet with the City's consultant to determine the fees earned and process used for negotiating dental, optical, and prescription benefits. We have identified comparable cities and we developed survey questions so we can compare City procedures with best practices used by comparable cities throughout the United States Except for the prescription contract, which, we were informed, has not yet been reduced to writing, we are in the process of analyzing health benefit contracts and testing for compliance. Finally, we hope to compare the City's benefit and costs to those of comparable plans such as the DC 47 plan. My staff informed me that we are not currently experiencing any problems with City officials in obtaining information and answers to our questions. Please be advised that our office will promptly notify the chairman and members of this committee if cooperation becomes a problem and adversely affects the scope and objectives of our 33 9/20/01 LAW & GOV'T RES. 00476 review. That concludes my presentation. I appreciate your attention. Anthony Ratwonski and Mike Egan will be happy to answer any questions you have.
Mr. Scaperatto, when did the status of non-cooperation change to the status of cooperative?
That was shortly we were informed that Linda Berkowitz would be our contact person. And it's my understanding that when we request information, she has responded favorably.
And is the information that you have available to this committee?
No. Well, I mean, we have it, but it's going to be a part of our work papers and part of our report.
We would like to see copies of everything you've gotten.
I don't anything is 34 9/20/01 LAW & GOV'T RES. 00476 confidential, I don't think that would be a problem. That's all public information. We can provide it.
Well, how soon could we get that? You must have a particular kind of charm that this committee lacks.
No. Mike Egan told me that everything we have has also been provided to you, so we have nothing other than what's been provided to you. The same information that you have is what we have in our work papers.
Well, could you give us the answers to the questions you raised based upon the information you have?
Not yet. But I hope by the time we finish our audit, we would be able to answer those questions.
Because we have found that the material that we've gotten from Miss Berkowitz has raised more questions than it is has answered. We've not even been able to get the 35 9/20/01 LAW & GOV'T RES. 00476 simple -- did you try to get that document that they say exists that supports the Administration's statement --
-- that combining the plans would produce a more efficient and more economical health system?
Because we didn't feel it was pertinent to the objectives of our audit. That document refers to the combination of plans. That's not -- our objective of our audit was not to --
No, but part of your questions was, as I understood them as you read them, the first was: Does the City now have the most efficient and most economical setup? And if not, then why not? And are there -- is there any other method of obtaining a more efficient plan? The City claims that it has to study it; it was part of its labor negotiations that it has a 36 9/20/01 LAW & GOV'T RES. 00476 study showing that a combination of all of the health plans would promote economy and efficiency. How long -- could you give me a period of time? When was the time when you were able to say that Miss Berkowitz furnished you with all of the information you needed and was most cooperative? She's a cooperative-sounding person, I must say that. But I'm talking of actual production, because the controller informed me that there was not the ability on the part of the controller to get the information it needed. You're telling us the other side.
I will double-check with my staff, but I believe that the information that we requested has been provided to us, and maybe it will not be that way in the future, but as of now, what we think we need to do the audit, we're getting. We're not done, but what we've asked for to date --
Well, I'd like you to at least ask for something that seems to have been called "the Doyle report." It is as hidden from view as anything I've known. You heard Mr. Costello testify that he believes that it does not in fact exist. He didn't call the it "the Doyle report," 37 9/20/01 LAW & GOV'T RES. 00476 but all of the evidence seems to support Mr. Costello's version. I was told by the City Solicitor that it didn't contain any facts or data, that it was a very general nature, but that he had a combination of different privileges -- the work product privilege, the attorney-client privilege, the kind of "it's-none-of-your-business" privilege, and that seems to be the most important aspect of the privilege and since we authorize the funds that produce the report, if there is such a report, we think it's clear that we are entitled to it. And if it's not given in a friendly, cooperative way, we intend to take every possible step toward having it produced by judicial order.
Now, I would certainly think that your audit would have to show that.
Well, again, our audit was looking at the plans that the City negotiated, and were they the best plans that they could have gotten at the time.
And could you refer to 38 9/20/01 LAW & GOV'T RES. 00476 any document that helped you on that question? We have no document in our possession given to us by Miss Berkowitz that would shed any light on that subject.
Our goal was to conduct a best-practices survey and to compare the City plan with comparable plans for benefits provided and costs, to see if our plans are out of line, and if so, to what extent.
Now, you heard Mr. Cronin refer to the fact that Miss Berkowitz at a hearing in June said that the City's records were poor?
That there was poor documentation, poor record-keeping? Did you conclude that that was the case, or did you find that Miss Berkowitz was wrong and that the City's records were fine?
Well, that's going to be an audit finding that we're going to put in our report, our review of the City's process and procedures. And if we find that to be the case and deficiencies in the system, we will report that to 39 9/20/01 LAW & GOV'T RES. 00476 you.
Well, we don't like to discuss our audit findings until we go through due process and we put all of the checks and balances in our report, and then when we issue the report, that's when we make our findings public.
So your statement to us today is that you find Miss Berkowitz cooperative?
Now, do you find anything beyond that general statement?
In the way of findings, I'm not -- I don't want to discuss any of the findings that we found without --
We're trying -- and we haven't completed it, but we're trying to match them up to District Council 47's plan in terms of the benefits that the 47 plan provides and the cost per member, and we're matching that up to what the City benefit plans provide and what it is paying for 40 9/20/01 LAW & GOV'T RES. 00476 those services. And we're trying to see what's out of line there.
Shoshana Bricklin for the record, City Council technical staff. You mentioned in your testimony that you were looking at various cities that are comparable. Can you give us a list at this time of any of the cities that you're looking into?
We can provide you with a list. I do not have a list with me; we can provide you with it.
Have you also looked at by 41 9/20/01 LAW & GOV'T RES. 00476 the wat the State -- the Commonwealth of Pennsylvania, the State legislature, the Senate, their administration -- their administrative -- the executive branch in terms of their health benefits? They may be of --
No, we have not looked at the Commonwealth of Pennsylvania, no. 9
I might suggest that you would look into that because they may also offer some -- shed some light on the kinds of benefit that legislators and governments are providing their employees.
The other question I have is: In your testimony, you say that the prescription contract has not been reduced to writing yet. Can you explain why in your opinion it has not been reduced to writing as yet?
In requesting a number of the contracts, we found that they were not available at the time we requested them, but in talking to other cities, we have found that that is not unusual, it's not an unusual practice.
Were you told 42 9/20/01 LAW & GOV'T RES. 00476 that they're not available?
That's a very good question Mr. Chairman, and I can't tell you offhand, but we were very surprised that they were not available, but in speaking to people from other cities, we find that it is not an unusual practice, it's not an unusual practice.
So a conclusion that can be drawn is that the executive in other cities doesn't provide information, just as the one here doesn't provide information. (Unintelligible, parties talking over each other.)
-- but I will say that as surprised as we were that the contracts were not readily available, if that is a common practice 43 9/20/01 LAW & GOV'T RES. 00476 elsewhere, you know, what can we say about it if that is the way the industry does business.
Is that a good way to -- should we -- you know, a lot of things have come into question during the last couple of days in this country. Is the natural way of doing business -- you know, just because that's the way some people do business, is that the way we have to accept -- do we have to be accepting of that matter if -- that we don't get information when we want it and in a manner that will lead us to probably make better public policy as a City Council and as a government?
No, sir, I wouldn't say that, but the point is, the issue from our standpoint is, is the condition that we're finding in the City much different than we would find in any other municipality. If that is the way the health --
I understand, but what I'm saying is, if other municipalities are not getting information, should we then say, Well, other municipalities don't get it so we should be satisfied with that and our public policy and the way we develop public policy, then, you know, we 44 9/20/01 LAW & GOV'T RES. 00476 should be accepting of those traditions.
But did you get a date when they're going to be made available?
We have. The only contract we don't have currently is the prescription contract.
Well, that sounds to me like "shortly" has arrived. You know, we're concerned. As Councilman Ortiz has pointed out, the fact that other cities may or may not have sloppy practices and the reasons for them don't bind the City. Shouldn't we have good practices? We've had the prescription contract for a long, long time; why is it not readily available?
Mr. Cohen, I can't answer that question. I mean, as I said before, we were as 45 9/20/01 LAW & GOV'T RES. 00476 surprised as you are now to find that. But if it is a common industry practice, it is yet to be determined as to why that is. I can't answer that yet, I can't answer that question for you yet.
Could you tell me when is the existing contract going to expire?
Have you looked at the existing deal? Have you evaluated the existing contract?
It has not been reduced to writing so we can't examine it if it hasn't been reduced to writing. 46 9/20/01 LAW & GOV'T RES. 00476
A contract that we have for present prescription plan, there's nothing on paper and we have a contract with someone?
How about basic -- forget reduced to writing, how about just a copy of the contract that was signed to implement that deal; have you asked for that?
I don't believe we have gotten anything if there is anything in writing.
How could there be a deal without a piece of paper? As a said, I think that cooperative description that you alluded to about a half hour ago, obviously, if you're asking for information and the statement is, it hasn't been you reduced to writing, I don't know in this city how they could engage in a prescription program without having a paper document.
Well, Mr. Rizzo, the -- it is not unusual, I mean, even in other City activities for contractual arrangements to be made and services to be provided before contracts are signed; that's not at all unusual. 47 9/20/01 LAW & GOV'T RES. 00476
Well, this prescription has been in place and we don't do business with a handshake around here. Maybe we do.
Well, then that is obviously something that your organization should be outraged about.
If we have no paper trail -- and what's the value of this contract?
I couldn't say off the top of my head, sir. (Unintelligible, parties talking over each other.)
You're doing an audit and you don't have an idea of what the contract is?
Thank you. While that's being checked, may I make this announcement on behalf of the City Council Committee on Education, which an education hearing scheduled for today at 2 p.m. That hearing has been rescheduled until Monday, September the 24th, and 48 9/20/01 LAW & GOV'T RES. 00476 will be called from o'clock to o'clock in City Council chambers, room 400 -- that's this room now. So it's the City Council Committee on Education holding a hearing on Resolution No. 010531. The resolution calls for an investigation to assess whether Edison Schools, Incorporated, or other privatization efforts, can resolve the financial and educational crisis facing the Philadelphia public schools. So the hearing time is Monday, September 24th, at 1 o'clock. And I want to express the appreciation of the Law and Government Committee to the chair of the Education Committee, Councilwoman Donna Miller, for rescheduling the hearing to give us the opportunity to continue this hearing onward. Thank you for the interruption Now we're going back to the hearing. Do you have any information on that last question?
And does anyone -- any of your associates have -- in other words, you have no feel -- you're doing an audit and you have no 25 feel for the magnitude of the -- 49 9/20/01 LAW & GOV'T RES. 00476
Okay, I'm sure we'll be able to get that from the Administration today, so hang around. Thank you.
And, Councilman Rizzo, I just wanted to say that any weaknesses or deficiencies that we find in the system will be reported in our report to you.
How could you tolerate -- I mean, I just can't imagine you asking for a copy of a contract that we have had do -- you know the answer -- how many years?
And someone giving you the lame excuse that it hasn't been reduced to 50 9/20/01 LAW & GOV'T RES. 00476 writing. This has got to be a multi-million dollar deal. We're not buying a -- this isn't pencils that, you know, you could say to the stationery store, you know, Keep a little tab going. The -- I just can't imagine that you would accept that answer, that it is not available. I would do whatever I would have to do to find out why they're lying to you.
Mr. Rizzo, I'm not saying that we accepted that and I'm not saying that they were lying to me. I feel that they're being truthful to me, that it is -- that they don't have an executed copy of the contract yet.
There are nearly 8,000 people covered by this contract. The amount of money involved is millions. The contract sets forth brokers' fees that, as far as I understand, have been paid regularly, and I don't understand how they've been paid without the basis of a contract in writing supporting those payments. 51 9/20/01 LAW & GOV'T RES. 00476
Well, I think, Mr. Cohen, possibly the answer to that is that if the two parties are haggling over details, the only option the City would have would be to stop payment. If it stops payment, the program stops. So if they're haggling over details, it would seem to me -- and I'm guessing here as to why this is going on -- they would have little choice but to continue the program and to continue to try to get the details hammered out.
Well, I don't know about the details; all I know is, for example, the co-pay on prescription drugs has risen from $1 to as much as $16 per prescription. That to me is kind of pretty big details. Now, I would like to know what authorizes that. You tell me there's no contract? You know, there's got to be a reason for there being no 20 contract and that reason -- I can't imagine any reason that would make any kind of sense.
Mr. Cohen, I can't answer you that question, but I wouldn't want to jump to conclusions on it.
Well, you know, you 52 9/20/01 LAW & GOV'T RES. 00476 found a person who told you that was cooperative.
Well, I guess that gives us the definition of what is meant by "cooperative."
You go in and you audit something, you're told nothing's available, but the person says it in a nice way and so the person's cooperative in the audit.
Well, why don't -- well, isn't it your function to find out why they don't have it?
By talking to the various 53 9/20/01 LAW & GOV'T RES. 00476 people that are involved in the process; and that, we are doing,