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,
Have you gone to the vendor and asked them for a copy of their -- it's probably right in their filing cabinet, the contract that they signed. Has anyone thought of asking them for a copy of it since we can't find ours?
Would you do that? Maybe that would be a way to expedite the information.
All right. Let me nouns that Anthony (indiscernible), vice president of the firefighters union, is present here, and we're pleased to have you here with us. All right, thank you very much, gentlemen, from the City Controller's office. We're going to ask that Miss Berkowitz now 54 9/20/01 LAW & GOV'T RES. 00476 come forward. (Witness comes forward.)
Miss Berkowitz, the committee has done a lot of homework but it was kind of preempted by the testimony of Mr. Cronin. He cited the precise paragraph from the testimony that this committee was going to cite to you, your June 14th, I think it was -- June 4th promise that the summer would be dedicated to making the studies and that you would report to us what you had found by way of records and the plans, and we would like you to report to that. That would be our first question to you. What has happened during the summer and what do you have to show us the product of that full-time review?
Good afternoon, Councilman Cohen and members of the committee. Before I answer your question, I would like to make a couple of comments because much has been said here today; some that's factually correct and some that's factually incorrect.
That's in your judgment, of course. 55 9/20/01 LAW & GOV'T RES. 00476
Well, I think that's in all of our judgments when each of us speaks; that is correct, sir. I would like to make a comment about the controller's audit
Well, we're pleased to learn that you were very cooperative.
The controller's office has received everything they have asked for; they have received the same information that you have because that is the information that exists. You had asked the controller's representatives a number of questions about the contract for prescription coverage, and I think I might be able to shed some light on that. You are quite right that it was appalling that the City has been doing business in the absence of an executed agreement. At the time I got involved with this entire issue, I learned for the first time that the City had been negotiating terms and conditions of that agreement for more than a year with no 23 resolution. I began to push for a resolution in June. We have resolved all outstanding issues with the 56 9/20/01 LAW & GOV'T RES. 00476 vendor, and it has been reduced to writing, and the reason that the controller's office and this committee does not yet have a copy is because we concluded negotiations the week before the tragedy in New York. We were expecting the vendor, which is Advanced PCS, to send us their signed copy of the agreement so that we could then execute the agreement, and, unfortunately, as we know, much of normal business was disrupted by the events last week. But as soon as -- I'm expecting that signed agreement any day, the City will then execute it, and this committee and the controller's office will receive a copy I think that Mr. Egan tried to explain that in the absence of an agreement, we were fortune that our risk was mitigated and that Advanced PCS was willing to continue prescription coverage so that our employees would not be without that benefit. But you were absolutely right: That is not a prudent way to do business, it is not a sound business practice, and I don't really care what the practice is in other jurisdictions with regard to 57 9/20/01 LAW & GOV'T RES. 00476 that. Every attempt will be made to have an executed agreement when the benefit period begins. I spent a lot of time in the City reengineering the way the City does contract management, and everyone who knows my philosophy on contracting in the City knows that I abhor the fact that in too many instances, the City does business in the absence of contracts and agreements. It is not a sound business practice.
Do you know how long of a period that practice has been existing?
Probably before I was born probably before I was born, Councilman. I realize that that practice existed soon after I came into the Goode Administration in 1990, and that was one of the reasons why, in 1994, the previous administration embarked on a very ambitious effort to re-engineer the way it did contract management in the City, because we were not doing business in a professional manner, in my opinion.
I will also like to make a comment on the -- 58 9/20/01 LAW & GOV'T RES. 00476
Well, could you tell us before you leave that subject --
Could you tell us what the differences were that caused this problem of no 7 contract to exist? What were the differences?
A lot of it surrounded the normal differences that the City has with its contractors, and those are the issues surrounding liability and indemnification, and we got those resolved. There were payment issues in terms of the way PCS normally does its business and the way the City pays its health benefit vendors, but we got those -- those were resolved. And one of the reasons it took so long is because people simply were not paying attention to it prior to this summer, and that's very unfortunate. We were at risk, our vendor was at risk; it is not a good way to do business.
Based on your 59 9/20/01 LAW & GOV'T RES. 00476 statement, can you tell us what law may have been violated here? What's the ramification of doing what we've been doing here? Is there any particular law? Could this be criminal?
No. No, it is not. The only real ramification would have been that if the vendor -- if the vendor had decided in mid-year to pull out of their relationship with the City because they did not have an agreement.
So you're telling me that there's nothing in the Charter, nothing in the Procurement Department policies that controls this kind of conduct? In other words, if we hadn't had these hearings and this contract would have been allowed to continue in the way it has been managed in the past, that there was no violation of anything?
I can't speak to that, Councilman, I am not an attorney and I'm certainly not an expert on the charter. All I can tell you is that the City, unfortunately, at times, because of exigent circumstances, or because we need to continue to provide a service and we have not reached terms 60 9/20/01 LAW & GOV'T RES. 00476 that -- we have not agreed on terms and conditions with our contractor, it is unfortunately not unusual for --
This doesn't fit that category. You're talking about a program that has never been formalized.
Oh, no, no, no, that is not so, that is not so. Maybe this will help clarify it. It is my understanding that in 1999, when the City went out with an RFP for prescription coverage, the respondent was -- the successful respondent was Rite Aid. Rite Aid had a subsidiary corporation called PCS. During the time -- between the time that the City -- that the City selected the prescription coverage vendor and the time that negotiations in earnest began, PCS was spun off from Rite Aid and became an independent organization called Advanced PCS.
Do you have a copy in your archives, in your file, of any formalized agreement, signed agreement, for a prescription plan?
I -- I believe so. I will 61 9/20/01 LAW & GOV'T RES. 00476 have to check on that, Councilman Rizzo.
Yes. I'm hoping that we had a formalized agreement prior to 2000
Well, I would like to see a formalized agreement so we can compare --
Given what I have expressed -- given how I have characterized -- and Mr. Cronin spelled the word correctly, P-O-O-R. Given how I have characterized the City's documentation in the past of its health care coverage, I couldn't begin to tell you what the probability is.
Well, I'm not saying that 62 9/20/01 LAW & GOV'T RES. 00476 you're not going to get it (Applause.)
Let me go to a very simple question. You heard the testimony of the president of the Fraternal Order of Police with respect to the nonpayment of injured-on-duty claims.
This has been discussed in hearings before this committee previously and, as I explained, because the FOP brought litigation against the City on this issue, I cannot comment on it. If the FOP -- if Mr. Costello would like to tell me today and document that the FOP has withdrawn that litigation, I will attempt to get the Council the most current information. But as long as it is in litigation, I know that all of the attorneys present here can understand that I am not free to comment on that, and I have so stated that before.
Well, I don't understand what one thing has to do with the other. 63 9/20/01 LAW & GOV'T RES. 00476 Are we paying third-party injury claims --
When an officer is hurt on duty, is the medical payment absorbed by the City or do we say to the police officer --
Councilman Cohen, I am not free to comment on that; as I have explained before, it is a matter under litigation
Well, what's under litigation -- what does that have to do with whether the City accepts the responsibility for work injuries of police officers?
I cannot comment on that; it is a matter under litigation.
Well, what could be under litigation? Doesn't the City have an absolute duty to be responsible for injuries to its employees? That can't be under litigation.
Councilman, with all due respect, you have asked me this question before in a previous hearing, I have responded to it. You are 64 9/20/01 LAW & GOV'T RES. 00476 asking me now and I am responding to it: I have been advised by the City's Law Department that I may not comment on this because it is a matter that is currently the subject of litigation.
I just -- you know, maybe if I continue to remain an attorney for another 64 years, 'cause that's how long I've been an attorney -- (Applause.)
-- maybe I'll understand that. But you're saying that -- assume that the City Solicitor's Office has advised you in effect that as soon as somebody sues the City, the City now has a perfect excuse for refusing to give any information about anything.
Well, you're saying you can't answer a simple question -- 65 9/20/01 LAW & GOV'T RES. 00476
-- as to whether the City assumes responsibility for the medical care of a police officer who is injured on duty. And it seems to me that answer is clear, no matter who's suing who, wherever they're suing. The answer's got to be yes, there can be disagreements.
That general question would be much better put to Joe Perillo, who heads the City's Division of Risk Management, because his office handles that responsibility, I do not.
Boy, it's certainly an easy way for the City to hide behind its so-called obligations, and there can't be any such obligation. I mean, I can state factually now, I can make the complaint that the City refuses to admit that it is responsible for work injuries received by police officers during their work? I mean, I've never heard anything like that.
Councilman Cohen, you may characterize my statement any way that you choose; I have no control over that. I can only tell you that I am not free to discuss this issue because it is the subject of litigation brought by the FOP. 66 9/20/01 LAW & GOV'T RES. 00476
I think you must have misunderstood the direction from the Law Department. I'm going to ask the Council Law Department to check with the City Law Department on that issue. What -- with respect to the first question I posed with you, what is the result of your summertime study of what you were studying with respect to the report you were going to give us? All we saw was somebody sent to us -- because no one in the Administration, you included, had the courtesy to tell us, despite our interest in the subject manifested by these hearings, that the City was hiring a personal consultant. I have no idea what that means or what the duties are. Somebody had to send us a clipping of what appeared in an advertisement, I think, a week ago Monday, announcing that a Mr. Arnold Katz was the person to whom providers who wished to provide health plans for the City of Philadelphia should submit something in a week's notice. Now all we know is that, and we can't understand the discourtesy that was extended to the committee here and to the Council by not telling us. We know of no such position, we don't know who 67 9/20/01 LAW & GOV'T RES. 00476 Mr. Katz is, we don't think he's a City employee, but we'd like you to tell us, is he a City employee or not? is he hired by the City? in what capacity is he hired? We'd like to see a copy of his work contract, and if there is no work contract, please tell us what it's supposed to be. What does the man expect to receive by way of payment, or is he a volunteer? We know absolutely nothing. What is he a consultant for? why was he chosen? We'd like to have that, and we don't understand why you would go ahead with plans for next year without informing the Council of that in advance. Maybe we had an idea. Maybe we'll agree, maybe we'll disagree with your ideas. But you don't think -- do you represent the Administration thinking that City Council has no business in being informed about this? Why do you think we're having these hearings for?
Who put the ad in the paper; do you know? Did it happen apart from your office? Were you as surprised as we were to learn about it? 68 9/20/01 LAW & GOV'T RES. 00476
Can I start with that question: Were you surprised to learn that there was an advertisement in the newspaper about the -- I think it's Arnold Katz, I may have the first name wrong
Councilman Cohen, I cannot respond. You have just -- you have just uttered a multitude of questions. I would be very happy to answer them if you would give me the courtesy and the opportunity to do so.
I believe that I had indicated previously to this committee that the City would be going out with requests for proposals for most of the benefits covered under the City-administered plan. We are -- we are doing --
We -- this is not a secret. Again, because of the lack of documentation and because there had not been RFPs, as you can see by all of the records that I have sent to this 69 9/20/01 LAW & GOV'T RES. 00476 committee, for some of the benefits, there had not been RFPs in a number of years. I felt that it was important to get a better sense of the competitive environment. And so the Administration decided to issue RFPs this summer. We had prepared them this summer, they were issued. The ones for dental, prescription, and group life were issued at the beginning of, I think, September 5th, and the RFP for medical benefits was issued September 17th.
If I -- I have copies -- I have a copy. I'm sorry that I only have a copy for you. I would be very happy to get additional copies for the committee but I did not want to come here today without at least one copy for the chair, and I have them with me.
Of each of these -- see, I have no idea what's in them and I don't know how they could have been prepared without the committee having an opportunity to look to see whether there was anything we were going to suggest about them. Was it your thought that we had no 70 9/20/01 LAW & GOV'T RES. 00476 ability to add anything to the process?
Councilman Cohen, as I understand it, the responsibility for the Administration of the City-administered health plan is the Administration.
And you have no 8 interest in what City Council might say?
-- that one of the reasons that I brought you the RFP today is because the RFP is not the end of the process. In fact, it is far from the end of the process, and the real process of determining coverage begins once we get responses. So -- because those will be -- the agreements will be negotiated. I would welcome any recommendations you have. If you see things in the RFP that you think are not relevant, if you have relevant information that you believe should be part of the negotiation process with potential providers, we would welcome any input that you have. 71 9/20/01 LAW & GOV'T RES. 00476
If I can just -- Councilman, if I can just finish my statement, if I may finish my statement.
Well, I would like you to reply directly to points you're making.
Now you understand my frustration so if I may finish my statement. And prior to any -- any executed agreement, it is the Administration's intent, I believe as it did the last time that the medical benefits agreement was crafted, that the Administration will sit down with members of Council for their input but we are under an extremely tight time frame. That is one of the reasons --
-- why the response time is so short, because we must have new benefits in place January 1. We need to have open enrollment mid-November, which means we need to have recommend -- I need to have recommendations to the Administration in October, as early in October as we possibly can on recommended providers. The time 72 9/20/01 LAW & GOV'T RES. 00476 frame is extremely short. Were I to do this again, I would not do it -- I would not begin the RFP process during the summer; I would have begun it a lot earlier. But as I explained, I did not really get involved in the issue of the City-administered health plan until almost half the year was over.
But let me tell you just from quick observer of that ad, you're not interested in getting third-party administrators represented broadly. You've given such a short time notice, hidden it from view so that most third-party administrators don't even know they were supposed to do something by September 17th
Yes? It seems to me that you have chosen who it is you want to have the contract with.
Councilman Cohen, we can 73 9/20/01 LAW & GOV'T RES. 00476 say a lot of things here that will play to a lot of audiences, but I will tell you this --
-- that limits the number of people that can apply when they don't even know about it?
Councilman Cohen, I strongly object to each and every comment that has been made today -- not only today but in the past that casts aspersions on my integrity.
And I have sat -- if you will let me respond without attempting to characterize my actions, I will be happy to give you as much information as I am able. I am already -- 74 9/20/01 LAW & GOV'T RES. 00476
I'll tell you what: Ask all of your questions and I will stay silent until --
No, no, no, you're not conducting the hearing, Miss Berkowitz. (Applause.)
And, Councilman Cohen, I will be happy to listen to all of your questions --
-- but I am not going to attempt to respond when I keep being interrupted.
My question is: Why did you limit the response time to one week from September 10th to September 17th without having notified all of the possible third-party administrator companies in the City that you were doing that? Why was the only ad the ad in the paper giving one week, indicating that if they didn't apply -- and, of course, that week by this past 75 9/20/01 LAW & GOV'T RES. 00476 Monday, it was all over. Did you intend that to be? Can a third-party administrator company now apply? That's the question.
As I have explained -- you may not like my explanation, but it is the only one we can give you -- we are on an extremely tight time frame, and this process, if I had had my druthers, would have begun in the spring rather than in the summer. And 12, which I think is a fairly --
Twelve TPAs have expressed their interest in responding to the RFP. I don't call that a narrow field.
How many TPA companies are there in the area? 76 9/20/01 LAW & GOV'T RES. 00476
I cannot tell you and I cannot be specific other than what I am about to tell you because we are in the midst of an RFP process. That is a competitive process and I hope that this committee will respect that process.
Is the RFP process going to be limited to those TPA companies that responded by September 17th?
We extended the deadline because some potential respondents notified our representatives that because of the events that took place in New York, that they -- that there were -- there were timing problems, and we extended that deadline by, I believe, two days -- by the close of business today.
But did you make any public announcement to that effect?
We ran an ad, and every potential respondent who responded to the ad and asked for an extension, we believe that we have been responsive to that.
Potential -- potential 77 9/20/01 LAW & GOV'T RES. 00476 respondents were also notified by letter.
Do you have a list of those that you notified by letter?
I do not. And if I did, Councilman, I would not make that available to you now.
It is not. I have just asked you to respect the fact that we are now involved in a competitive process.
Well, but competition must include every available person who could be a competitor.
Councilman Cohen, my sense of -- in my limited experience with the health care field, my sense is, because it is so competitive, potential respondents are constantly on the lookout for opportunities; that is their bread and butter. So if there are TPAs that are not aware that the fifth largest city in the country is 78 9/20/01 LAW & GOV'T RES. 00476 involved in an RFP process, I would be concerned about their capacity to provide benefit coverage for the City's employees.
I don't think that conclusion follows at all, Miss Berkowitz.
That is my conclusion, and I know that you will not agree always with my answer, but that is my conclusion.
I don't -- I -- I just don't think it's appropriate. Did the -- what does the City have now as a third-party adviser, in the current year?
We are all Blue. I believe Council knows that and I believe Council has the documents because I submitted them to Council.
It is Independence Blue Cross. 79 9/20/01 LAW & GOV'T RES. 00476
We are all Blue. We have Keystone and we have Blue Cross. Your technical -- Council's technical staff and your office have all of the information, Councilman.
Your staff, I would hope by now, would know that we're all Blue. We've testified to it here, we are all Blue currently
But that's not the name of the company, "All Blue"; is that right?
I -- I don't -- I'm sorry, I don't understand what you're asking, Councilman. 80 9/20/01 LAW & GOV'T RES. 00476
Miss Berkowitz, you've got to answer according to my questions --
Now I'm asking you, do we use that third-party administrator process now?
Right. Now, is the ad a proposal to decide whether or not you should retain the same one or whether the field should be open to a lot of others?
The RFP process -- the RFP, as you will see, once your staff has had a 81 9/20/01 LAW & GOV'T RES. 00476 chance to look through it, the RFP offers two potential scenarios: One is the TPA; one is self-insurance by the City. So that we want to understand the widest range of options available to us in terms of benefits and costs.
And are you covering just the non-representative workforce?
That is -- I believe that is what constitutes the City-administered plan.
No, it is -- Councilman, I mean, we know that there are basically five health plans. The four municipal unions each administer their own and the Administration administers the plan for exempts and non-represented employees.
What was the purpose of the ad. Do that simply; tell me why the ad went in.
We normally do that in an RFP process so that individuals have the ability to let us know of their interest. Because of timing issues --
The interest to do what? 82 9/20/01 LAW & GOV'T RES. 00476
For what? What is it the RFP is about? To provide what kind of service? Or if it's service --
No. There is an RFP for medical, there is an RFP for dental, there is an RFP for life, and there is an RFP for prescription.
And the ad in the Monday paper, Monday, September 10th --
That one was for medical. There was a previous one for -- there were previous ones for dental, for life, and for prescription.
They were advertised in -- all of the notices about the RFP were advertised in the Philadelphia Inquirer, the Philadelphia Daily News, and the Philadelphia Tribune.
I don't have the date of the advertisement for dental, life, and 83 9/20/01 LAW & GOV'T RES. 00476 prescription, but I will get a copy of that for you as well as a copy of the ad.
And means the group that's covered by what you call the "all Blues" --
-- has nothing to do -- and does that provider also provide the third-party administration work?
The all Blue, currently. I thought that the ad on the 10th of September related specifically to third-party administrators. Are you telling me it did not?
No. I am saying that we released an RFP that asked for responses to provide coverage either through a TPA or a self-insured plan for the City.
And was that the content of this September 10th -- that was not my understanding of the content.
I don't know what your 84 9/20/01 LAW & GOV'T RES. 00476 understanding is.
Well, my understanding was that it was specifically for a third-party administrator, like this company that you referred to before.
Third-party administrators have the ability to propose a self-insured plan for the City.
Which means that it is fully reimbursed by the City and it is not based on a per-member capitation rate. It is a fee-for-service plan.
What we are not going to be considering -- perhaps this will clarify it. We -- evidently for some reason this time, some interest was generated on the part of brokers for TPAs, and we are not considering proposals from 85 9/20/01 LAW & GOV'T RES. 00476 brokers.
Why was the response to go to someone who is -- or till recently was, to my knowledge, I may not have had the knowledge, associated with the City? Why was this person named in the article assigned to be the one to whom the replies should be sent? Why weren't they sent to you or to somebody else in the City?
Councilman, my office does not have the capacity to deal with the responses in terms of getting the paper. If I can -- please let me just finish.
Because I'm going to try to explain to you the relationship with Mr. Katz, why we are employing Mr. Katz, and what his role is. In looking at --
He's been very discourteous, you know, to this committee. He was invited to be here so that he could tell us what his assignment is, and he's not here, leaving this committee very little option except to do what Councilman Ortiz said before.
Councilman Cohen, 86 9/20/01 LAW & GOV'T RES. 00476 Mr. Katz -- let me answer that question first.
Mr. Katz, it is my understanding, was called on Rosh Hashanah, which is a religious holiday for him, and asked out of the blue by a member of your staff to attend this hearing.
Mr. Katz knows nothing about the proceedings -- these hearings, he knows nothing about the subject. The message, as I understand it, that was left was that this committee wanted him to come to talk about the City's bidding procedures. Mr. Katz is not an expert on the City's bidding procedures; and, in fact we are not engaged in a bidding process, because under the City Charter, a bidding has a particular and very specific meaning. It is not an RFP process. Bid process and RFP process are not one in the same. Mr. Katz, I -- on my way into work, after I took off Tuesday also for the religious holiday, 87 9/20/01 LAW & GOV'T RES. 00476 listened to my voice mail, I received a voice mail from Mr. Katz, evidently after he had heard his, saying that -- he left a voice mail for me a few minutes after p.m. when he got the voice mail 6 from the member of your staff, asking me what this 7 was all about and explaining to me that that was 8 extremely short notice, he had no idea what any of 9 this was about, and he was not free to appear. 10
That was because -- 11 (Unintelligible, parties talking over each other.)
Councilman Cohen, may I please finish responding to your question?
Please don't respond that way. I'm telling you the reason he got that short notice was because you had failed to notify the committee about that, and we were surprised --
We got word from someone late that afternoon, and for the first time we know about it, we thought that what was courteous to do was to let Mr. Katz know of the hearing at least by voice mail if no other way -- 88 9/20/01 LAW & GOV'T RES. 00476
-- and asked him to appear. We had no way of contacting him prior to today.
Well, your office could have contacted me. And since he is working as a consultant for the City --
Well, we had no idea who he was except his name appeared in the paper.
Well, since I have been coming here every hearing since May, June, and been responding to questions about the City-administered plan, I would think it might have been a logical conclusion for a member of your staff to have made that I might know something about this.
I'll tell you frankly, I did not think you had anything to do with it. I thought it came directly, if it came from anywhere, from either the Mayor or from the Chief of Staff of the Mayor.
Well, then that -- then I'm sorry if we have not made it sufficiently clear previous to this.
It never occurred to me 89 9/20/01 LAW & GOV'T RES. 00476 that you were involved in it.
Since I am the one who has been talking to your staff and Council technical staff and since I have been the one talking to you, that there might have been a good chance that I might know something about it. So unfortunately, the call was not made to me, and if you would like, I --
Because of the Jewish holiday; that's why the call was not made to you. We got the information, I was not in the office, I received a phone message while away from the office because of the Jewish holiday that this had occurred. I couldn't believe it. I said, The holiday exists Tuesday and Wednesday, our hearing is Thursday; at least we owe the gentleman of having a day or two's notice, call him, he probably won't be at work but he'll probably have a voice mail, so you can leave the message, and he very likely will call in and we'll have some information in advance of Thursday. It was the only way of reaching him except on the very day of the hearing, and it was out of courtesy for -- and respect for his 90 9/20/01 LAW & GOV'T RES. 00476 observance of the Jewish holidays that the call was made to him on the voice mail. And the call -- no one would have thought of calling you; I assumed you were not at work, but people observe differently and maybe you were.
But it never occurred to me that you had a thing to do with that ad, but I did think it came from the City somewhere.
May I -- as I expressed to you, I said that I would be very happy to explain who Mr. Katz is and what his relationship to the City is if I could be permitted to do that.
May I suggest a short recess? The chair has to take a telephone call from 91 9/20/01 LAW & GOV'T RES. 00476 my family. And I would ask for about a three-minute recess because I want to hear your statement. I was going to ask the majority leader to take the chair but I did want personally to hear yours, your segment. So we'll be in a very short recess. I'm just going over there to make a call, and hopefully, I'll be right back. (Break taken.) (Proceedings resume.) - - -
Okay, the committee will resume. I'm sorry for the need for the recess. Miss Berkowitz, I -- may we have order in the chambers. During the recess period, Councilman Nutter was here and I'm hoping he'll be back. UNIDENTIFIED SPEAKER: He's still here.
He's still here? Where is he? Good. And Councilman Rizzo was here and Councilwoman Blackwell. Miss Berkowitz, I wanted to hear your answer directly and that's the reason I ... Would you proceed. 92 9/20/01 LAW & GOV'T RES. 00476
Sure. And, Councilman Cohen, if I can just clarify one thing.
There was some discussion before we took the break about the fact that potential respondents only had one week to respond; that was regarding their intent to propose.
Not in terms of how long they actually had for the proposal process. So I just wanted to clarify that.
(Inaudible) -- announce within that week? Say somebody now had not been in touch at all; would that person still have the ability to --
I understand, but an RFP process, by its very nature, can't be open-ended. It has parameters around it. And this is -- what we did here is not unusual from what we do with many 93 9/20/01 LAW & GOV'T RES. 00476 other RFPs in the City.
It just seems unreasonable to preclude someone -- if there are people who might be of use to the City, it seems unfair to preclude them by that short announcement, but let's see how many people oppose that.
In the past, it is my understanding that the negotiations -- all of the negotiations regarding the medical portion of the City-administered health plan was handled soley by the City's personnel department. The health care environment is extremely volatile. Costs are increasing nationally and in order to assure ourselves that we are getting the best possible benefits at the lowest possible cost, we felt it very important to go out and get technical expertise this round, this RFP round. And that is why we engaged Brokerage Concepts, Inc, which has a great deal of expertise in health benefits, to assist us.
How did you pick that company? 94 9/20/01 LAW & GOV'T RES. 00476
Because I am not an expert in health benefits, I asked around to other people in the government, including the Mayor's Office, if someone could be recommended to me, and Brokerage Concepts was recommended to me.
Yes, I have, and he already has already begun his duties. Mr. Katz is -- 95 9/20/01 LAW & GOV'T RES. 00476
He has an office on Walnut Street and an office in King of Prussia. He does not work for the City; he runs his own firm.
Mr. Katz's firm has drafted -- is handling the RFP process for the City. He drafted the RFP, which the City reviewed, is handling all of the logistics for getting the responses, will evaluate the responses, discuss its evaluation with a committee made up of people within the Administration, and will make recommendations to us, and he will assist in helping us negotiate the contract, the agreement.
Now, when you say -- just one question, then I'll yield to Councilman Nutter.
When you say the 96 9/20/01 LAW & GOV'T RES. 00476 Mayor's Office recommended, was there anybody in particular in the Mayor's Office? You say, "the Mayor's Office"; it could be almost anybody. And I raise the question 'cause I'd like to know on what basis he was chosen.
I cannot tell you on what basis he was chosen except that he does have expertise in this area.
Thank you, Mr. Chairman. Good afternoon, Miss Berkowitz.
In that same vein, I have a couple of questions myself. You said on a couple occasions so I'm going to take it that there is a certain significance that you attach to it. You've used the phrase -- what's the -- the company's called what, "Brokerage Concepts"?
And I think you've used the phrase, "They have expertise in this particular area"? Is that what you said earlier, or 97 9/20/01 LAW & GOV'T RES. 00476 what's the phrase that you have been using?
I believe I said -- I said that we were looking for technical expertise.
I'm sorry? It is my understanding that this is based on negotiating health plans.
I have -- I have -- I have their information. We have spoken with the individual. In my judgment --
So you determined based on their information that they have expertise in this particular area?
Okay. Would you expect their material to say that they did not have expertise in this particular area? 98 9/20/01 LAW & GOV'T RES. 00476
I mean, if you have a company and you have materials, you're trying to promote your cause, right?
And you would say that you have expertise in a particular area, right?
I understand the difference between promotional material and --
Okay, so what was the judgment based on that you are now convinced that they have expertise in this particular area?
I am as convinced that they have expertise in this area as I am convinced that many other people who work as providers and consultants for the City have expertise in their area. They have experience, this organization does health benefit work for other municipalities and townships in Pennsylvania.
Okay, tell me a little bit about that. Who are some of their other clients?
I'll be happy to get you a list. 99 9/20/01 LAW & GOV'T RES. 00476
Can you give me two or three off the top of your head?
Councilman, I don't remember. I know -- I believe that Radnor is one, I think that Chester is another, but I would be happy to get you a complete list
I believe so. I believe that those are two of their clients.
Would they be their larger clients or their smaller clients?
That I -- I'm sorry that I don't recall their entire list of clients. We may be their biggest client in Pennsylvania, but I will get you a list.
Hmm. How big is the firm? 100 9/20/01 LAW & GOV'T RES. 00476
How long will it take to get the list, the client list?
I believe I could get a list by the beginning of next week. I think they know who their clients are.
Oh, I guess I assumed that you had a client list based on your review.
I mean, that's a part of your evaluation, to determine that they had expertise, right?
Councilman, if you are asking, did I do an in-depth analysis of their expertise? I did not.
Well, now, I mean Miss Berkowitz, your earlier statement was that you are convinced -- you didn't say this, but I'm left with the impression that you are convinced beyond a shadow of a doubt that they have expertise in this area --
-- which leads me to then think that based on your position and your 101 9/20/01 LAW & GOV'T RES. 00476 level of expertise, that you know a great deal about the company, that there's been a thorough examination of who these people are and what they do.
I talked to these people, I looked at their materials, and I have seen the RFP that they crafted, and based on the RFP, I would say that they reinforced my opinion.
Now, were they the only company that was asked to do this work?
I would be happy to send you -- I will be happy to send you their profile.
The gentleman that you are working with, what is his name?
He is the head of the firm; his name is Arnold Katz, K-A-T-Z.
And you've been dealing with him directly? 102 9/20/01 LAW & GOV'T RES. 00476
Yes, I have, as well as other individuals who work for him.
Okay, all right. But you're saying you don't have a sense of the size of the firm. I mean, is it 5 people, 50 people, 500 people?
I really don't recall how many people, but I will be happy to get you all of that information.
I -- I -- I really don't remember, Councilman. But I believe it's been for many years.
Now, in this world -- and you have a certain level of expertise in this particular area, so I'm going to ask that you not try to overwhelm me in this question and answer back and forth because you have more information than I do.
Councilman, if I can just say that I've made it very clear that I am -- that I do not have an extensive amount of experience or knowledge on health care and health plans. 103 9/20/01 LAW & GOV'T RES. 00476
Okay, all right. I'm at least a recipient of whatever your decision-making is. In these arrangements, you said the person, obviously, they have their own company, they don't work -- they're not public employees, but they have a contract with the City?
They -- they -- again, they -- we have agreed on a scope of work. They will not receive payment from the City. There will be an agreement between the City and Brokerage Concepts, Inc.
You just -- you said that they will not be paid by the City, you said that there's an agreement between Brokerage Concepts and the City. That is a little counterintuitive to me. 104 9/20/01 LAW & GOV'T RES. 00476
No, it's not, Councilman. In fact, in the RFP -- and I believe that it's on the table -- I believe it's somewhere there now, I believe that Miss Bricklin has it. On , we discuss on the RFP the nature of the compensation for Brokerage Concepts, Inc. The City will not -- the agreement that the City -- that the City -- the terms that the City has agreed to with Brokerage Concepts, Inc. is they will perform a certain set of services for the City, but their compensation will not come from the City.
And let's take that a couple steps further. I don't understand that. You mean whoever ends up providing the health-care services --
Similar to the way -- similar to the compensation for Capital Management, which does dental, optical, prescription, and life. We've --
Again, Miss Berkowitz, this is not what I do on a regular basis, so the 105 9/20/01 LAW & GOV'T RES. 00476 intricacies of these various contracts is fairly foreign to me. Everything I know about the dental plan is: I go to my dentist, she does what she does, I leave, and that's the end of my involvement, so I don't what I know her contract is. What I know is that she doesn't ask me for any money So this is a situation where the City asks someone, by way of an RFP, We want you to do certain work for us and craft -- and what's their job?
No, I'm sorry, I'm sorry. I think it sounds like there may be a little confusion.
Mr. Katz did not respond to an RFP; Mr. Katz and his company developed the RFP for medical coverage for people enrolled in the City-administered plan.
Okay, I understand. You talked to the Mr. Katz and said, We need an RFP developed for us to be able to figure out who's going to provide health care for us. He says okay. At some point in time, unless he's running a charity, the conversation turns to, How am I going 106 9/20/01 LAW & GOV'T RES. 00476 to get paid? You say, Well, we're not going to pay you; whoever is the successful respondent bidder to the RFP, they're going to pay you.
We have not determined a price. And one of the reasons we have not determined the price is because we do not want that to predetermine the rates that are going to be proposed.
Why would a person do work for someone and they don't know how much they're going to get paid?
When you talk about the successful respondent, just so I understand the term, in the currents context, who is the last successful respondent? I mean, who might we be talking about, or what type of entity are we talking 107 9/20/01 LAW & GOV'T RES. 00476 about?
Well, you probably are aware that currently, the City -- the people enrolled in the City-administered health plan are covered for medical benefits by Independence Blue Cross.
Okay. So if we use that and we're not predetermining who's going to get it the next time -- again, just so I understand, when you use the phrase "successful respondent," you're talking about someone like an Independence Blue Cross, right?
An entity like Blue Cross or multiple entities like Blue Cross.
And so I want to make sure that there's a real name thing that goes with the box.
So you're saying that Brokerage Concepts will be paid based upon a negotiation between Brokerage Concepts, the City of 108 9/20/01 LAW & GOV'T RES. 00476 Philadelphia, and the successful respondent, which is an entity like an Independence Blue Cross.
Okay. And then how do you determine what their compensation should be for having developed an RFP? I mean, what's their job?
I don't -- I don't -- I don't want to mislead you, Councilman. There have been preliminary discussions with Brokerage Concepts on price, but we are not discussing price because we do not want that to impact on the rates that may be proposed.
Well, I understand that and that wasn't my question. My question was: How do you determine the price and what exactly are we paying for? Are we paying for the development of documents up here or for some additional services?
No. There will be -- there are additional services. They act as liaison, they perform -- they help us resolve problems. They will help us not just in the RFP but -- and perhaps I said this before you came in. They will be evaluating the responses, they will take the first cut at evaluating the responses. They will be -- 109 9/20/01 LAW & GOV'T RES. 00476 they will be assisting the City in evaluating the responses. They will be making recommendations to the City, they will be assisting the City in actually negotiating the agreement, or agreements.
And that's because the City feels that we're not capable of doing it ourselves?
I -- as I expressed, I felt very strongly that the City needed to bring in some assistance with technical expertise, because in the past, only the -- the negotiations had really been between potential providers and the personnel director for the City.
For medical coverage, we did not. We did for dental, optical, prescription, and life. And because medical benefits are the most costly of the benefits, I thought it was imperative and fiduciarily responsible on the Administration's part to seek outside assistance.
Hmm. And no one in the City has this level of expertise out of 25,000 110 9/20/01 LAW & GOV'T RES. 00476 employees?
I -- I'm sorry if I'm not making myself clear. The negotiations for medical coverage --
-- have been handled for the past few years pretty much soley by the City's personnel director.
I am not commenting on whether that individual did a good job or a bad job, because I personally -- except to say that I personally believe that the coverage in the City-administered plan is good coverage But because the health care market is so volatile and costs are escalating, I believed strongly that we needed to bring an outside assistant to help us ensure that we were getting the best coverage for the lowest possible cost.
Okay. One last question. This -- the advertisement that was in the 111 9/20/01 LAW & GOV'T RES. 00476 newspaper --
-- was for -- that obviously was not for consultants 'cause you didn't advertise for that.
Potential respondents to the RFP. It was a notice basically saying that the City intents to issue an RFP for medical coverage, and it was requesting that people notify of their intent to respond; meaning that they were requesting an RFP.
I understand. 112 9/20/01 LAW & GOV'T RES. 00476 How many people have responded?
It is -- so far, twelve have expressed an interest in submitting a proposal.
No, I am not. And I don't know who they are. And as I explained before to Councilman Cohen, it is a competitive process.
No, I understand that. That's -- I mean, you may have no appreciation for the question; it is why I did not ask you who they were.
I didn't ask you if you were in a position to say who they were because I thought there might be some sensitivity.
Okay, that's fine Councilman, for the moment, I think I'm done. Thank you.
Miss Berkowitz, I'm looking 113 9/20/01 LAW & GOV'T RES. 00476 at the RFP, I'm looking at , which says, "The plans must be consistent, if not identical, with the current offerings that we have now." My question is: You understand that this -- this investigation started because the City -- we were concerned that the City-administered health plan did not offer the same level of benefits yet alone at the same price -- at a higher price than DC 47. So what I'm interested in is if these benefits -- is this RFP -- are the RFP responses going to be limited to the benefits that have been offered this year or less? Or how -- who -- how -- what kind of benefits -- we certainly are not going to -- it doesn't seem that we wouldn't -- if I were a respondent to put out an RFP, I certainly wouldn't add more than what the current benefits are now. So my question is: Who decided and how was it decided what specific benefits would be included in the medical RFP?
That language is meant to imply a threshold, not a ceiling.
But wouldn't it be common sense that the respondents would offer exactly or less -- I mean, they would not offer more -- 114 9/20/01 LAW & GOV'T RES. 00476
Not necessarily, and I anticipate that that might be one of the questions. We're going to be having a pre-respondent session, which I would invite representatives of Council to observe, on September 28th, at 2 o'clock.
Conference Room C, on the 16th floor of the Municipal Service Building
Yes. That session is limited to potential proposers and Council staff.
Thank you. The other question I had, you at previous hearings saw the diagram, the chart that was prepared by DC 47 that compared our level of benefits with the -- "our" meaning the City-administered plan -- with their plan. Our -- you have seen that chart. Did you see that in the previous hearings we've had?
I was not at the hearings where that chart was presented. I understand it was presented and I believe that the committee had asked for the City's comparison, and I believe that that 115 9/20/01 LAW & GOV'T RES. 00476 was given to the committee.
Well, I'm only asking, and we would be happy to provide it again for you, that those -- the elements that were part of the DC 47 plan are elements that this committee has indicated would be good components for a future medical plan, some components, which have not at this point been ever included or have been eroded from previous medical plans. I mean, I think Councilman Cohen has alluded to the fact that he probably would like to see the medical coverage of several years ago when the copayments were lower and the employee contributions were less. So I'm wondering if those considerations will be a part of this RFP, or are we just expected that the cost to the employee will be going higher and higher each year, with no cap in sight?
We -- it is our intent to negotiate coverage that is the best possible coverage at the best price both for the City, for the City's General Fund, and for the employee.
Miss Berkowitz, what arrangements are you making to have Council input in 116 9/20/01 LAW & GOV'T RES. 00476 determining what the benefits ought to be?
As I expressed to you, Councilman, I mean, I have not -- I have not heard from Council, and I would certainly be open to hearing from Council, any specific recommendations for coverage that is not currently provided in the City-administered plan. The issue of copays is a cost-determinant factor. And I -- I -- I appreciate the fact, I have heard it here, I think everyone is sensitive to rising health care costs. I am covered under the City-administered plan, so I pay those copays just like you do, and I remember the day when I paid a co-pay of $1 for a prescription. But I also understand that times are different. We believe that the City-administered plan is an excellent plan and is superior to DC 47's. People may disagree. That is one of the things that the controller's office is looking at. I understood the mission of their audit and -- because I -- because I also want to know --
If I could just finish this, please. Because I also want to know, not 117 9/20/01 LAW & GOV'T RES. 00476 being an expert in this field, how we compare with not just DC 47's plan but the plans of other jurisdictions as well. My office, in terms of the review that you had alluded to earlier, the review that I was undertaking this summer, my office had contacted a number of jurisdictions around the country to get an understanding of how they structured their plans, what kind of benefits were paid, whether -- whether all of the jurisdiction's employees were covered under a plan administered by the jurisdiction, or whether they had union-administered plans, and what the costs looked like, what the menu of options looked like. And we were -- we were -- we had already gotten a fair amount of information. When I -- when the controller's office first asked me for information -- and we have turned all of that information over to the controller's office and I have expressed to them my desire that they get those -- that they continue on with that cost comparison, plan comparison, and that they be able to share with the Administration best practices that they come across in terms of health coverage for governmental employees. 118 9/20/01 LAW & GOV'T RES. 00476
Have you furnished that information to the Council Committee?
I have not. I have given that information to the controller's office.
'Cause I understood that we received the same thing that the controller has.
As I said, the controller has -- everything they requested of us was the same information that you had requested, and they have that. In addition as part of the review that my office was doing, we got some comparative information, which we have turned over to the controller's office.
Now, we have very -- in 119 9/20/01 LAW & GOV'T RES. 00476 talking about time, I can telling you, you are facing a terrible situation if you hold this meeting on September 28th without first having had a meeting with the Council Committee and the Council President at one meeting to discuss what the request should be, and you may need the opportunity to meet with the Mayor on the subject too, or maybe it has to be a member. I don't know who is going to make the final decision as to the Administration proposals. But I believe that before there is any decision made as to the benefits requested -- now, if you're going to have a competitive plan, people have to be competing for the same thing. I think the proper procedure is for us to decide what we want and then to have all of the companies, all of the competitors to bid on that program. I don't know how else you have competitive bidding if people are going to bid on different proposals and one person's going to say, Well, we'll give you this extra benefit but it will cost you this much, or whatever it is.
Councilman, I would encourage Council staff to go through the RFP, look 120 9/20/01 LAW & GOV'T RES. 00476 at the coverage that is discussed in the RFP, and share with me any information -- any requests that you do not see included there. I am open to that.
If you will look at the RFP, there is a reservation of rights expressed in the RFP that allows the City to amend, modify the RFP at any time, in any way it chooses.
But if it's going to be competitive in the bidding, then it seems to me that they'll all have to bid on the same thing.
When we amend the RFP, which is one of the reasons that we want intent to respond. When we amend the RFP, we send the amended language to everyone who expressed an intent to respond so that they are all responding to the same RFP.
And the RFP -- I think there's a provision that sets the broker's fee as a percentage of the expenditures.
That is not -- that is not 121 9/20/01 LAW & GOV'T RES. 00476 in the medical RFP. And that is not in the dental optical -- that is not in the dental, prescription, or life RFP. We did not wish to put a percentage or a specific dollar amount because we did not want to influence the proposed rates.
Well, you know, it's one thing to say the City is not paying. If you mean that it's not the City but it's the City employees who are paying, I can understand that. But I can't understand either the City or its employees paying for Mr. Katz's services because all it means is if he gets the actual money, however it is determined to be, if he gets it from the company, obviously, the company's going to get paid back in the terms of the cost of the services it offers.
That is why we are not discussing compensation in specific terms until the rates have been proposed.
I don't see where that has anything to do with it. It seems to me that it's quite clear that the compensation of the broker is going to be influenced by the amount of business his company gets; his company being the finally-selected provider. And, therefore, the 122 9/20/01 LAW & GOV'T RES. 00476 bigger the contract, the bigger the payment's going to be, whether it's figured on a percentage basis or in a dollar amount.
Please listen to me I would much prefer to change the provision entirely to eliminate -- I would want Mr. Katz, if he is going to be the City's consultant, to be in fact the consultant for the City, paid for by the City, controlled by the City, influenced only by the City, with the City as his client, not for him to be the -- to act as a client to the company providing the services. (Applause.)
Because if he's the City's client, then he will be more inclined to work on behalf of the City. If his client is the company that is the provider, he is going to be working in their interest. Now, the -- so I think that is a very bad 123 9/20/01 LAW & GOV'T RES. 00476 arrangement to have the salary or compensation, whatever it's going to be, determined by any company. The company ought to be not in it. We need a consultant, if there is to be one, we need people whose sole interest is the City really aiming to get what you said -- the most efficient plan for the least cost And I can tell you, you don't get it by getting the compensation. It isn't the City's getting anything free. Either the City is going to be paying for, or more likely what the City will do is say, That's easy, whatever Mr. Katz's compensation is. If it's a half a million dollars a year or $2 million a year, whatever it may be, we'll just divide that among the City-represented employees, we'll just increase the copays I'd like the City to, frankly, put the person on a basic simple compensation package. He's get to be our man; otherwise he is not the City's representative and he cannot and should not be able to City's consultant. I think that's very, very clear. He does not act in the interest of the City under the present proposal. So I offer to you directly today one very 124 9/20/01 LAW & GOV'T RES. 00476 basic change that I believe, in fairness to all of the employees, has to be made, and that is if Mr. Katz's status has to change in that he's got to get paid whatever that amount is, it's got to come from the City treasury and from no other place. It's just like where your salary comes from. I wouldn't want your salary to come from some selected provider because then you'd have to work for them. Follow the money -- just as we're doing in the crisis involving the terrorists, follow the money and you find where things happen. And so that's the number-one suggestion to you Number 2, let's go back to the Doyle report. And, incidentally, I think Mr. Katz would find himself in a terrible conflict-of-interest situation where he's ostensibly the City's consultant, when he works for the company, and the company he's going to be working for is the company -- you know, it's terrible to say to him -- to put him in a position where he's going to get paid by the selected provider. Who knows what discussions these various providers are going to make to him? Say, You know, if you pick us, Mr. Katz, we'll see that you're really taken care 125 9/20/01 LAW & GOV'T RES. 00476 of. He ought not to be in that situation; nobody ought to be in that kinds of a situation So I suggest that that proposal be re-thought, because the City -- one way or the other, the City or its employees are paying for it. Please think about that carefully over the weekend.
Now, secondly, with respect to the Doyle report, what is the status? I had a separate conversation with the City Solicitor, he then sent me a formalized legal opinion. I don't know whether -- I've circulated that legal opinion among other people and they agree with the opinion of the legal staff of the City Council that there's absolutely no merit to the letter that Mr. Trujillo sent to me with respect to its legal standing up. We're going to get that report or we're going to get a statement that no such report exists, and I think you're causing us and the Administration to engage in unnecessary battling, and I wish you would get that report back to your supervisors, whether it's Joyce Wilkerson or the Mayor, because I think our limit of patience in playing around for 126 9/20/01 LAW & GOV'T RES. 00476 more than a year in trying to find out, was there a basis for the statement made by the City to the negotiating team last time. We're trying to fight for the credibility of the City, Miss Berkowitz. You don't understand what it is to hold an office as a councilmember and be told by a group that deals with the City that the City lied to us. When they came and told me that, I said that that cannot be true. I said I'm absolutely certain that the City must have had some basis for it, and we'll get you the basis, and we've been trying to do it, and so far, I've come up blank and am being forced to the conclusion that maybe after all, maybe the City was guilty of fabricating when it made that charge to the union. Now, I think we've got to clear it. If there's a Doyle report, if it exists, whatever it is, whether it has facts, whether it has data or doesn't have any, it ought to be made available, and I wish you would take that up very seriously because I think it's not going to be waiting at any point beyond our next session, which is going to be scheduled after today -- this committee will be recessed until Thursday, October the 4th, at 127 1 9/20/01 LAW & GOV'T RES. 00476 o'clock. Now, I would hope by that time, we can work out all of these problems.
-- because there ought to be no reason for the Administration and the Council not to be cooperating. We have a feeling -- Miss Bricklin stated a part of it, but there's a very serious part in which Councilmembers feel that the benefits are not adequate. And we're going to want to have those considered, and we will see that they're presented to you. I don't know how soon it can be, whether it can be in time for September 28th or not, and we may be asking you to hold that date, push that date back a little bit.
We cannot push that date, Councilman. As I explained, we are on a very, very tight time frame. I am sorry but we are And I just want to let you know that I appreciate the fact that you want to have another hearing on the 4th; I just want to let you know that I will not be in town that week. I am scheduled to be in Atlanta that week. It's a vacation.
Well, I'm a little 128 9/20/01 LAW & GOV'T RES. 00476 stunned about the idea of a vacation.
I appreciate you're entitled to a vacation but it would seem to me that on this tight schedule, I don't know how you'll work that in.
Well, it was scheduled and my fare was bought long before much of this. And I will be out that entire week.
Tim, could you check Thursday, the 11th? You know, I think we're going to get some things done and they can get done the easy way or the hard way, and if it's going to be done the hard way, I guess that's the way it's going to have to be. I just hate to see the energy and time consumed in these battles when frankness -- there can't be anything conflict in the Doyle report; it either exists or not. Whether there are facts or data in 129 9/20/01 LAW & GOV'T RES. 00476 it or not, there's nothing confidential, there's no 3 secretive work process or attorney-client privilege. You're not in the middle of a case where a document is prepared for the purpose of a lawsuit. We don't even begin to understand the different legal theories that are being expressed.
Councilman, I cannot second-guess the City Solicitor. The City Solicitor has given you his opinion concerning the Doyle report, and I certainly am not in a position to second-guess him.
Well, I guess the only one that's in a position to second-guess him is the Mayor or the courts. And you give the -- you know, you limit the possibilities very much because you're telling us that --
Why should we believe that there is any evidence whatever that supports the statements. Do you have anything that would support -- let me put it this frankly --
Is there a -- no, no, no, don't -- please don't -- please wait for my 130 9/20/01 LAW & GOV'T RES. 00476 question and then please answer the question.
And make whatever comments you want at that time. Let me ask you this question: Is there anything known to you which you can submit to this committee which would tend to indicate the existence of some kind of a study or report that would authenticate the City's contention that uniting these plans, the four union plans and the City representative plans, would be more efficient and economical? Is there any such thing that you can show to us?
Councilman, I don't know what else to tell you other than what I have already said.
And you have said the only thing that exists is something performed by an agency called Doyle, a mysterious agency about which we know nothing.
It's not a mysterious agency. They are a consulting form and they do do health care consulting and the --
The City Solicitor has expressed his opinion to you on the ability of the Administration to share that information with you. I don't know -- I mean I'm -- Councilman, I understand that you're frustrated --
Miss Berkowitz, I have to tell you that if that that is your position, I'm going to be recommending to this committee that it issue a preliminary report in which it finds that there was no basis whatever for the statement that was made by the City Administration, and we find there was no support whatever and the statement was obviously a fabrication. We're going to -- we don't like to do that with respect to the City, but I think we have to do that 'cause you're telling us that the only thing that exists is this one item, and we can't even see it. I think a fair conclusion of that is that it's something that if seen, would produce no 21 information. I think for the credibility of this committee, for the credibility of City Council and for the credibility of the City, I think on some occasions, you're compelled to call a spade a spade. 132 9/20/01 LAW & GOV'T RES. 00476 You can't say is a spade is a blonde. If it's a black spade, it's a black spade; if it's a blonde ace, it's a blonde ace, whatever it may be. You're telling us that there's nothing that the City can put forth that can support the City's contention -- and I think that the workforce and the City of Philadelphia is entitled to the conclusion of this legislative committee. I'm going to be raising that at a committee session to get such a finding made because -- and then we will make a determination as to whether or not we're going to pursue the matter further with respect to a subpoena, 'cause I don't know whether there's anything worth subpoenaing from what you're saying. 'Cause if it were something, if it were proof, I think it's absolutely clear that you would not only be showing it to us but probably flaunting it. And I'm very, very disappointed. Is February the 11th okay?
October. Gosh, I'm hoping we're not going to go into February. Does anybody here have any questions that they feel ought to be answered? 133 9/20/01 LAW & GOV'T RES. 00476
1 p.m. on October the 11th. This committee stand in recess until that time. (Retirees indicate desire to speak.)
Yes, would you come forward. And I would like you to stay, Miss Berkowitz. The question -- maybe there will be a question that you could be helpful in responding.
My name is Joseph Goldberger, retired City employee. Many months ago, we started the process for retired people in terms of our pharmaceutical plan, which we received in -- supposedly in January. That plan has since been changed in May. The process by which that plan was devised was heavily criticized by us before this committee 134 9/20/01 LAW & GOV'T RES. 00476 on several hearings. One of the reasons we felt the process was flawed was because the individual who proposed that plan, who developed that plan for us, who was responsible for that plan was a, quote, consultant who was not paid by the City. The consultant received his funding from the prescriptions that were written for retired City employees. My question is: Are we heading down the same path? are we going to have the same type of consultant? what was in the RFP for pharmaceutical services that affected retired nonunion personnel? It is not clear to me that that has been covered in this hearing, and I think it is an absolutely mandatory thing that we know before November. That's my question.
Were you addressing it -- would you like Miss Berkowitz to reply to it?
Yes. I would like an answer that I can communicate to other retired employees who have been faced with the same situation that I have. My benefits under Plan H Medigap for pharmacy have run out, $1250. I am now paying the 135 9/20/01 LAW & GOV'T RES. 00476 full amount of my prescriptions. My last bill was, for example, $307 for 2 prescriptions. This is something that is of vital concern to us and is somewhat different from the pharmaceutical plans that are developed for active employees.
What is the City's plan with respect to retirees? Is there a plan formulated yet?
Well, let me just clarify something. Are you talking about post-City credit retirees?
You're talking about post City credit. It's my understanding that the reason that the coverage was changed was because under the former plan, the cost -- the copays would have been equaled the benefits. There was absolutely no 20 longer a benefit to an individual. And so the City's personnel director negotiated a different coverage with Independence Blue Cross. As you -- and if I can just comment that that is independent of any agreement that the City -- that's independent of the work performed by 136 9/20/01 LAW & GOV'T RES. 00476 the City's consultant on prescription coverage. There is no compensation to a consultant for that. That was negotiated -- because the City does not pay for prescription coverage for post City retirees, post City credit. The City only contributes for active employees and employees within the five years after retirement. So ...
Wasn't there some arrangement before that had special coverage for retirees, say, after they finished four years? Wasn't there a plan that had existed?
Post City credit retirees can participate in a plan that the City makes available, but the City does not pay for the cost of that. The City is only obligated to pay for -- to contribute to the cost of health care for active employees and for those individuals within five years after retirement.
Just -- we're coming back to that, but let me ask a side question, which I've been plagued by. What happens in my case if I pass away tonight? Does my wife get any prescription coverage? She now gets it, but I'm not here, so there's no five-year plan. Does she get 137 9/20/01 LAW & GOV'T RES. 00476 any coverage from the City, the spouse?
Councilman, I don't recall -- I believe in one of the responses that we sent you, you had asked that question, and I believe that spouses and other eligible dependents are covered for the five years. I am not sure that they're covered for the post.
Yes, but I believe that's already on the record. I wish I could remember the answer, but I believe that's already on the record because we've responded to that.
You might want to check the record. 138 9/20/01 LAW & GOV'T RES. 00476 (Witness comes forward.)
Sit down and pull the microphone close to you and identify yourself for the record.
You're going to have a chance. Let Louise Simpson say something for a minute Speak into the microphone. Give your name first, please, for the record.
Louise Simpson. As a retired employee in a non-represented class, I pay for my own medical. I have been getting Personal Choice, and although the controller's office was not able to provide it, here it is, it says "old." Here, it is, the new one, okay? All of the information is there.
These are the plans, the medical plan that included prescription in January -- or rather, December, all non-represented employees who would --
Miss Berkowitz, before 139 9/20/01 LAW & GOV'T RES. 00476 you leave --
In January, all of the plans that the City offered, which were all Blue, had a statement under them that said "All prescription plans are cancelled." The Mayor's assistant got a copy of that when she was here. And, unfortunately Mrs. Berkowitz forgets that in 1999, we weren't all Blue. We also had Aetna, US Health Care, and then that was dropped. Those people that had it had to pick up something else. I wasn't. Four times this year, the prescription plan has changed. The first time, when we were notified in December that the prescriptions were cancelled, Council President Verna called a caucus hearing. Linda Seyda was there and said something would be done. We were supposed to get a special card; we didn't. 140 9/20/01 LAW & GOV'T RES. 00476 On March the 14th, we got something that said "revised health care options." And it noted what the Personal Choice High option plan with prescription drug would be. Then in August the 17th, we got another one that said "discontinuance of PC," which is for prescriptions. I was very confused because it was -- it did not make sense, and when I called the Board of Pensions and Retirement and I talked to Olivia James, who penned this thing, she said to me, "Well, I really can't give you any information, I don't have anything." District Council 47 has advocates. If they need somebody, they call them, they get some information, they get some help. We have nobody, we have to call the Board of Pensions She said to me, "I think you call the Blue Cross help number," so I did and I spoke to a gentleman by the name of Paul Clark. I asked him some very pertinent questions pertaining to this piece of paper and I sent a fax to him and I asked him very specific questions. You know, I need to know from you how a subscriber is supposed to be 141 9/20/01 LAW & GOV'T RES. 00476 reimbursed in a timely manner, okay? We're talking about senior citizens. I sit before you today as somebody who has my faculties, thank God, but there are people out there who don't.
Anyway, I sent this to him and I sent to him a printout of all of my prescriptions. They owed me over $500. I'm still waiting for it. Then I called again and I spoke to another person, and I said to her, "I would like to have what you have said to me put in writing and I want you to send it to me," and she did. And she says something that Mr. Clark did not say. Mr. Clark said I needed a card because when I went to get a prescription filled, the pharmacy said I had to pay full price because I didn't have a card. This lady says I don't need a card.
This lady is from Blue Cross, Independence Blue Cross. 142 9/20/01 LAW & GOV'T RES. 00476 And Mr. Clark said to me that to be reimbursed, I would have to send in a form and he would send me a supply of forms, and here they are, Personal Choice out of network forms. These are used when you go to a doctor that is out of network. There is a tiny little place here that is marked "drug." Nothing else on the form relates to prescriptions. How, I ask you, Councilman, is a senior citizen supposed to figure this out? And here is the amount of money that I paid from January on through because they said in the last thing they sent they were going to make a one-time exception and they were going to count in all of the money that you pay to your pharmacy.
And have you been back to the Board of Pensions to tell them that what they said wasn't so?
Yes. It gives the Personal Choice high option, which I have, and it tells me all the wonderful things it's going to do for me. 143 9/20/01 LAW & GOV'T RES. 00476
The City of Philadelphia that's administering it through the Board of Pensions.
Yeah, and they told me to get in touch with Blue Cross. Now, I've been in touch with Blue Cross and I sent them a copy of this, which is a printout of all the prescriptions. The last page, which has the final number. They owe me over there $500. I have not gotten it yet and I'm still waiting. I think what they're trying to do -- "they" being the City -- is to discourage as many people as they possibly can.
Now, at this time, are you under any City-administered health plan?
Yes, I am. I have my health benefits, and the health cost is deducted from my retirement.
I am under Blue Cross 144 9/20/01 LAW & GOV'T RES. 00476 Personal Choice. And there are several other plans that are available. The other thing too that happened was Miss Berkowitz said --
Yeah, but the City said they're not covering anybody past five years now.
But you have to pay for it. You have to pay for it. You have to pay for it. Now, Miss Berkowitz said that the open enrollment period was going to be November. It has never been November; it has always been December, and this piece of paper proves it So why people have not been able to get information, I don't know, because all you have to do is take the amount of money that people are having deducted from their pension for any one of these plans and add them up and you can see how much money they're getting and then find out how much money they're paying these people. I don't think it's all that difficult.
Yes. The point that I was trying to make was, looking into the future, I 145 9/20/01 LAW & GOV'T RES. 00476 think the past has been thoroughly contaminated by the people who have been doing the negotiating in the past.
You know, that's a question, Miss Berkowitz, I was going to ask you. I know you referred to negotiating, but who does -- what kind of negotiating is there? I don't understand the negotiating. You put out an RFP, people give you the proposals, but there's no negotiating, is there?
Yes, there is, Councilman. Let me just also make sure that you understand that the last medical benefit RFP was issued in 1995. That was a very long time ago. And in the -- between that time and now, the negotiations for health benefits -- for medical benefits was handled by the City's personnel director.
Well I have to tell you, she had testified many times, and we never could find out whether there ever was anything we could call a negotiation.
I understand that, Councilman, I do understand that. An RFP process is not a bid process. In a 146 9/20/01 LAW & GOV'T RES. 00476 bid process, you do not negotiate. You put -- you advertise your specifications and it is the price that determines it if the bidder is responsive.
We're using a request for proposal which has much more flexibility in it because price is not the sole determinant in an RFP process. What you strive for in an RFP process is to negotiate the best deal, which is the best service for the best price.
Well, let ask you that. You said that when it came to getting a personnel consultant, you went to the Mayor's Office for their advice. I am concerned that what you're going to be doing at the very end is you're going to submit a few plans to the Mayor's Office and say, Pick whichever one you want, and the choice may or may not -- because you won't be there when the choice is made and you won't know how it's made, but it may or may not be made on merit. We are very concerned, for example, frankly, that Mr. Katz is best known in the political community for his financial contributions. 147 9/20/01 LAW & GOV'T RES. 00476 In the recent mayoral election, the records show that he was a supporter in the Democratic primary of Martin Weinberg, who was running in opposition to Mayor Street, and he contributed $50,000 to Martin Weinberg's campaign. Shortly after Mayor Street was determined to be the winner of the Democratic primary, Arnold Katz made up for his contribution to the loser; he contributed $55,000 to Mayor Street. That's been published in the Philadelphia newspapers. You're going to probably find stories at various times in the media suggesting that the choice of Mr. Katz among all other third-party administrators was largely influenced by those contributions. Was it true or not?
Well, among people who are providers in one or another, you indicated he has a number -- isn't Concept Brokerage a third-party administrator? That's what I'm told. 148 9/20/01 LAW & GOV'T RES. 00476
It is a brokerage firm, but he is not our third-party administrator.
Isn't he very heavily a representative of many different kind of companies? There's some stories that he represents some 50 insurance companies, and I don't know whether that's true or not. I'm just suggesting that the direction we want to go is the direction which leads to fewer, rather than more, of these kinds of stories. The choice ought to be clear for everybody, that it's a good arrangement that the City gets and that it's influenced on -- the choice is influenced only by the content of the proposal, not by whether or not somebody contributed or by how much that person contributed.
I do not believe that political contributions have any impact on this process.
Well, you know, that's 149 9/20/01 LAW & GOV'T RES. 00476 the basis for lots of discussion throughout the country.
Mr. -- Mr. Katz -- Mr. Katz' role is to give us guidance, but the decision will not be his. All of the proposals will be reviewed by experienced professionals within the Administration.
Councilman, I would be very happy to continue to have a dialogue with you, but I'm going to ask that when I am speaking, you at least ask the other people at the witness table to refrain.
Yes, I would certainly hope that. That's a fair request, that's a fair request and I hope it's complied with.
Thank you. I believe that there is a committee -- there is a committee made up of people in the City who have experience with insurance -- Joe Perillo, 150 9/20/01 LAW & GOV'T RES. 00476 who is the City's risk manager and has insurance, who runs the City's compensation programs for disability, Workman's Comp is experienced. He is not a health care expert, but I believe that there is sufficient professional expertise in the City to help us sort through the counsel and advice that we will be getting from Mr. Katz.
Miss Berkowitz, when the previous mayor, Mayor Rendell, was the mayor, the reason it wasn't an all-Blue City at that time because everybody knew who knew anybody about it knew that it would have been cheaper to the City. The reason it was not all Blue was that Mayor Rendell said to people in the Administration, I want a sizeable amount reserved for another company. The company happened to be a company headed by somebody, a well-known contributor to Mayor Rendell's campaigns. Whether that was the reason Mayor Rendell said it or not, they happen to be the facts. Now, everybody in the City administration, because Mayor Rendell was the mayor, accepted that as a fact; that is why we did not have an all-Blue policy prior.
Councilman Cohen, if that 151 9/20/01 LAW & GOV'T RES. 00476 was going to have -- if that same kind of scenario was going to have taken place in this administration, it could have taken place last year, and it did not.
Why didn't you go to Mr. Perillo, for example -- I'm Using names you supplied -- for the advice as to a personnel consultant. You obviously -- I don't know the gentleman, except by reputation, which is good.
Well, why didn't you go to him for the personnel consultant. You don't know the basis that the Mayor's Office used --
He has been involved in the discussions with Mr. Katz, he has reviewed the RFP. He is comfortable with what he has seen, as are other people within the administration, who, I believe, have experience and integrity.
Yeah, well, you see, you have to accept the integrity of a man chosen by the Mayor because the Mayor is your employer. 152 9/20/01 LAW & GOV'T RES. 00476
No, I was asked to speak with Mr. Katz. I went looking for some recommendations and it was made very clear to me that if this individual could not provide the services that we needed, I was under no obligation to enter into an arrangement with him.
But maybe there were a number of other people who might do it better, I don't know, maybe they wouldn't. But if you had been given the name by the Mayor of a half a dozen people who had contributed various sums of money more or less or maybe not contributed at all, we would feel much more comfortable than your getting the name of a single person, unless that single person came from somebody who clearly could not have been influenced --
Councilman Cohen, I received his name, I talked with him. I was comfortable. I have -- until you told me now because there are certain things I pay attention to and certain things I don't, and one of the things -- this is my third administration, and one of the things I do not pay attention to is who contributed what to whom. 153 9/20/01 LAW & GOV'T RES. 00476 I am not political in that sense. I am a professional public administrator; that has been my -- that has been my career. And I was asked to talk to this individual. If I believed that he could meet the needs that I was expressing, it was I who made the recommendation to go outside and get some assistance. I was given his name, I was advised that if I talked with him, if I looked at information concerning him, and I did not believe that he could meet the need that I was expressing, then I was under no obligation to enter into any kind of agreement with him. And I was satisfied. It was my decision, no one else's.
But you knew all along that it was the person recommended by the Mayor's Office.
But I had to be comfortable with it, and I was, and it was my decision.
It's the kind of formal disclaimer that occurs often -- when police say give 154 9/20/01 LAW & GOV'T RES. 00476 a Miranda warning to a defendant, it's done for the record, everybody understands it's being done for the record. I'm just suggesting to you that it would be far better if the recommendations came from sources that could not be influenced by political --
It's my impression, Councilman, that that is a very difficult task in Philadelphia.
Philadelphia is one of the more political cities that I have worked in.
One question, Councilman, that you may be able to asks Mrs. Berkowitz. Since she says she has worked under three administrations, I would like to know what the name of the plan administrator for the medical plan for the City of Philadelphia.
The plan administrator. Who was the plan administrator during any one of those administrations?
Is there an answer to that, Miss Berkowitz? 155 9/20/01 LAW & GOV'T RES. 00476
Working for the City? In previous administrations, it was Lee White. It is currently Dennis Norwood.
I have finally gotten an answer that has taken me three years to get. Thank you very much.
Thank you, Chairman. It's really a comment. I've been sitting here all day and listening to this. I've been involved personally with every FOP City of Philadelphia contract since 1990 and, basically, I came down to three As today: The audacity of the City of Philadelphia to sit here during these hearings, which we compliment your committees on in uncovering, their audacity to say with what has been uncovered that they can handle the plans better than the four unions can handle it, and they sit here and still make that alleged 156 9/20/01 LAW & GOV'T RES. 00476 remark; the arrogance after every committee member -- Councilman Ortiz, Councilman Rizzo, yourself, Councilman Nutter -- could not figure out the arrangement with Capital Management, and one of them, Councilman Ortiz, made the comment, "This may even sound criminal." Well, the City has the arrogance to come back in here today and say they're making the same arrangement now with another carrier or another TPA; it's absolutely absurd. And most important, this separates the unions from the City-managed people: Accountability. Not once from any City representative sitting here today did I hear, We are going to ask the people that are affected what do they think? Would they like a higher payroll deduction or lower benefits? We're going to hold meetings to find out what their input is because they're the ones that are affected. I think, Mr. Chairman, you said that at the first meeting, accountability. The union members can vote us out if we're not accountable to them. The City-managed people, and we used it in one of our exhibits, they just simply come along, lower benefits, and increase payroll deductions, and 157 9/20/01 LAW & GOV'T RES. 00476 they say, If you don't like it, quit. Thank you, Mr. Chairman. (Applause.)
Thank you, Mr. Lamb. But there was one -- I think you should take Mr. Lamb's statement not as a rhetorical statement, but it's the kind of question our office gets all the time. I understand from our legal and technical staff that they get questions, people call in but I did have one question that Mr. Lamb reminded me of. You did make the statement that you are convinced that the benefits offered by the City plan are better than the benefits offered by DC 47. I would just like to know on what basis do you so conclude?
Based on the information I have, and a representative from District Council 47 advised me that he believes that there are -- that some of the information that was provided to me in the comparison that was prepared for the City is incorrect, and I have agreed to sit down when I come back from vacation and meet with him because if it is incorrect, I want to know that. 158 9/20/01 LAW & GOV'T RES. 00476 But, again, I am going to being looking again also to the City Controller because, as Mr. Scaperatto expressed to you, that is something that is one of the issues that they're going to be looking at.
So I am anxious -- again, I am one of the people -- one of the non-represented people enrolled in the City-administered plan so I am interested in getting better coverage at a lower cost too.
Well, it would seem to me that you have had the availability of the information on the DC 47 plan. The City sits on every board of the four union plans and you would know that it's better. Tell me what was untrue about plan. We would also be interested.
Councilman, I don't know that; that's why I'm going to be sitting down with a representative from DC 47.
I said it was based on the information that I had for me. I'm allowed to 159 9/20/01 LAW & GOV'T RES. 00476 conclude for me that the plan that I am enrolled in is better. If somebody -- if I am open to receiving information that can dissuade me of that.
All right. I have a great difficulty following that. On that note, this hearing will stand in recess until Thursday, October 11th, at 1 p.m. Thank you all for your patience. (Hearing ends at 4:33 p.m.) - - - 160 9/20/01 LAW & GOV'T RES. 00476 CERTIFICATE I HEREBY CERTIFY that the foregoing proceedings of the Council of the City of Philadelphia's meeting of the Council Committee on Law and Government held on Thursday, September 20, 2001, at 1:00 p.m, are contained fully and accurately in the stenographic notes taken by me upon, and that this is a true and correct transcript of same. RE: Resolution No.000476 _______________________________, Josephine Cardillo Registered Professional Reporter and Notary Public (The foregoing certification of this transcript does not apply to any reproduction of the same by any means, unless under the direct control and/or supervision of the certifying reporter.)