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?