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Katy Citizen Watchdog$ |
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We’re Taxpayers. It’s Our Money. |
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State Officials Probe HISD Benefits Program |
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Back To Watchdog Archives (“In The News”) The Houston Independent School District and its employee benefits firm have profited from illegal consulting agreements with other school districts, the Texas Department of Insurance has found.
Mercer took over HISD's employee benefits operation in 2000 and since has been paid at least $20 million for managing the healthcare plan for the district's 20,000 employees. Dallas, Aldine and Katy bought into HISD's employee benefits consortium with Mercer after HISD promised it would hold down benefit costs by pooling their buying power and avoiding costs associated with competitive bidding, according to a letter the state insurance agency sent to Mercer's Los Angeles office earlier this week. ``However, because each ISD is separately rated by carriers, those ISDs do not receive lower benefit rates by being incorporated into a larger group,'' the Texas Department of Insurance letter states. Each school district pays HISD a fee to be part of the consortium. HISD, in turn, pays Mercer a consulting fee for the company's work on behalf of the other school districts, according to the letter. ``The effect of HISD's interlocal contracts with other ISDs is to circumvent the competitive bid process regarding insurance products,'' the agency letter states. ``The result is that Mercer is ultimately behind the scene controlling the decisions which affect thousands of policyholders in several ISDs. Both Mercer and HISD are profiting from this arrangement.'' In addition, state regulators determined that Mercer is operating in Texas without the required consulting license. Mercer has 15 days to respond to the agency's findings. A company spokesman was not immediately available for comment today. HISD school board Trustee Larry Marshall said the insurance department's findings are surprising. "I'm stunned,'' Marshall said. ``Little did we know that this web was in existence. ... I think we probably need an impartial look at this.'' |
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Houston Chroncile |
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Date: 07/13/2006 |
