Aetna sues city and unions over bid ‘rig’

New York’s largest private Medicare administrator is suing the Big Apple and local union leaders for allegedly awarding a $34 billion “tainted” contract to an unqualified rival bidder.

Insurance giant Aetna’s bombshell lawsuit against New York City and the Municipal Labor Committee alleges that the bidding process was fixed to favor Alliance, a consortium that includes Emblem Health and Anthem/Blue Cross Blue Shield.

The contract covers the administration of the Medicare Advantage Plus program for 250,000 retired city workers.

“OLR [the city’s Office of Labor Relations] has selected an inexperienced and unqualified bidder through a procurement process that violated New York Procurement law, lacked transparency, and violated principles of public trust and fairness for a procurement that could last up to a minimum of five or as many as eleven years and generate $34 billion dollars in claims revenue,” Aetna alleges in its suit filed in Manhattan Supreme Court earlier this month.

Aetna and Alliance were the two finalists that city officials and union leaders considered for the contract, which is anticipated to save the Big Apple about $3 billion over five years, or roughly $600 million a year.

Aetna is asking the court to nix the contract, which takes effect Jan. 1.

Retired city workers, are not only eligible for Medicare, the federally run program that provides health insurance for people 65 and over, but their union contract also calls for the Big Apple to pick up the cost of their monthly premiums for Medicare Part B, which covers outpatient care as well as other supplemental services.

Aetna argues it has more experience than Alliance in such matters.

One of the criteria in the proposal was that bidders had to have provided service to a client with at least 50,000 subscribers. Aetna alleges that Alliance failed to meet this “low bar.”

Aetna says its prescription plan and premiums for the retirees are lower than the advertised Alliance rate.

It also said a city evaluator wrongly disclosed some of its cost proposals at a meeting with union members, which “tainted” the selection process by alerting Alliance to its figures.

Sources familiar with the negotiations said it appeared that Alliance had an inside track because of its connections to labor leaders. Teamsters Local 237 President Gregory Floyd, for example, sits on the board of Alliance partner Emblem Health.

Nicholas Paolucci, a rep with the city Law Department, said, “The City is committed to selecting providers that are in the best interest of the City and its retirees. We’ll review the case.”

Floyd said his board role didn’t pose a conflict because he only had one vote, which he used in Emblem/ Anthem-Blue Cross’ favor.

“Aetna put in a bid, and they lost the bid. They’re a sore loser,” he said.

“[Mayor de Blasio’s Office of Labor Relations] selected an inexperienced and unqualified bidder [and] violated principles of public trust.” — Aetna