Controversial investigation of St. Joseph County health broker OK’d

South Bend Tribune (IN)

April 13--SOUTH BEND -- The St. Joseph County auditor convinced the County Council this week to spend up to $50,000 to investigate the county's health insurance broker because he suspects the firm might have improperly billed the county for its services.

Auditor Mike Hamann said he has come across several things "that don't pass the smell test" with R&R Benefits of South Bend, the county's insurance broker since 2003. He has questioned whether the firm might be overcharging the county and other entities it serves.

Opponents of Hamann's plan have called it a waste of taxpayer money and a way to sidestep the authority of the Board of Commissioners -- the county's executive branch that is responsible for approving contracts for audits.

Hamann found a legal way for the County Council -- the legislative and fiscal authority -- to take the lead: First hire an attorney. Then have the attorney use county money to hire a local company to audit R&R.

After listening to Hamann's concerns about billing practices of R&R, the County Council voted 6-3 on Tuesday to hire South Bend attorney James Masters for $125 an hour to carry out the plan by hiring a local firm to do the audit. The three Republican council members voted against the measure: Mark Root, Jamie O'Brien and Mark Telloyan.

The County Council will use money in its budget for legal fees to cover the cost. While $50,000 will be appropriated, Hamann said he doesn't expect the cost to exceed $30,000.

Bob Frick, chief operating officer for R&R, insisted that the firm has nothing to hide. The firm manages the county's self-funded group health insurance plan and provides services for enrolled employees, such as answering questions about benefits.

"Mike has never reached out to us to explain what we do, unfortunately," Frick said on Thursday. "They're welcome to do an audit, but they aren't going to find anything that's not appropriate."

Andy Kostielney, the Republican president of the Board of Commissioners, was taken aback by the decision because Hamann never told him about the plan before the County Council approved it.

"This is clearly a workaround," Kostielney said, emphasizing that commissioners are in charge of audits.

Even so, council attorney Mike Trippel confirmed that the plan falls within the council's authority.

At Tuesday's meeting, Root called the effort "a huge waste of taxpayer money at a time when the county has budget problems." He pressed Hamann to explain why he thinks R&R needs to be audited.

The county is in the midst of budget cuts and will likely face more as it prepares for the full impact of state-mandated property tax caps in 2020

R&R provides services for a handful of entities in the county. Among others, they include the Clay Township Fire Department, Penn Township Fire Department and the Southwest Fire Territory/Portage Township.

Hamann said those township entities used to send payments for St. Joseph County's self-funded health insurance plan to R&R before they went to the county auditor's office. He said R&R held payments to the county for 30 to 45 days and that doing so wasn't appropriate. However, R&R stopped doing that earlier this year after the auditor's office raised concerns.

"It didn't make any sense to me and it had to stop," Hamann said. "And I'm questioning whether entities could be paying too much and what it is going for."

The effort comes as the county is already shopping for a different health insurance broker that could possibly help cut costs from the county's self-funded insurance plan. Commissioners recently approved a plan to seek proposals from such firms, and R&R will submit a plan to try to keep its job.

That effort has also been contentious. Some county officials believe a new firm could cut costs, but others believe savings will be hard to find.

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