Covered California, the state health insurance exchange created under the Affordable Care Act of 2010, awarded $184 million worth of contracts for various services to several firms without obtaining competitive bids for the contracts, according to a new investigative report.
Additionally, according to the Associated Press, employees of a firm called The Tori Group that received $4.2 million in various contracts have long-standing professional connections to Covered California Executive Director Peter Lee.
According to the report, when Covered California was created in 2010, the agency was given permission to award no-bid contracts as a way to make sure the new exchange met key deadlines.
Executive director Peter Lee acknowledged in a statement that while Covered California did award some contracts to firms with connections, the agency “needed experienced individuals who could go toe-to-toe with with health plans and bring to our consumers the best possible insurance value. Contractors like the Tori Group possess unique and deep health care experience to help make that happen and get the job done on a tight deadline.”
Leesa Tori, founder of the Tori Group, previously worked under Lee at Pacific Health Advantage, a now-defunct small business insurance exchange. According to the AP, Covered California first awarded a relatively small contract worth $150,000 to the Tori Group in March 2013, but subsequent changes to the grant increased the value of the contract to $4.2 million. Covered California’s board signed off on the increase.
Tori herself now works as Covered California’s director of plan management, while the Tori Group’s chief financial officer, Kathleen Solorio, is the agency’s operations adviser. According to the report, nine employees of the Tori Group also hold positions at Covered California.
In addition to the contracts awarded to the Tori Group, two contracts worth $525,000 were awarded to the Pacific Business Group on Health Negotiating Alliance, a subsidiary of the company that Lee was previously head of.
Kathay Feng, executive director of government watchdog California Common Cause, told the AP that more oversight is needed to ensure no-bid contracts are administered properly.
“Some accountability and transparency is needed, whether through audits or an alternative oversight body,” Feng said. “To spend $4.2 million on anything, let alone a contract to a former friend and colleague, raises serious questions.”