Comptroller: Brick Violated Pay-to-Play Law; Would Save Money by Switching Health Plans

The state comptroller's office has determined that Brick violated state pay-to-play laws when selecting a broker for its employee health insurance policy in 2009.

The same audit also states Brick could have saved money by switching to a state-run employee health insurance plan, however it acknowledges that existing union contracts would have prevented that from happening.

The report, released Tuesday, examined four government entities' operating budgets from 2009 and 2010.

State Comptroller Matthew Boxer said in the report that an audit of the township's financial records revealed that Brick's health insurance broker – Insurance Management & Consulting – was not correctly appointed because the firm made $1,700 in contributions to the campaigns of Mayor Stephen C. Acropolis and several council members.

The five contributions would have affected the broker's appointment in 2009, the report said. That year, the township used what is known as a "non-fair-and-open process" to appoint the broker.

While it is not against the law to award a contract to a business or individual who contributed to a campaign, pay-to-play statutes require the disclosure of contribution records.

"Brick Township did not obtain the required certification, which should have disclosed the prohibited contributions described above," the report said.

Acropolis said Tuesday that the broker was never paid by the township, but instead by Blue Cross-Blue Shield, so officials did not know they were required to provide the disclosure documentation.

"This broker was not paid a dime of any money from the taxpayer," Acropolis said.

"If we had a contract with him, we'd know he would have to disclose and file, and do all of those things. But we don't pay him anything."

The matter has been referred by Boxer's office to the state Election Law Enforcement Commission for a review. No action has been taken on the matter.

"Since 2011, we have complied with the changes recommended by the State Comptroller’s Office regarding this process by soliciting proposals for insurance broker," a statement from the mayor's office said Tuesday afternoon.

Acropolis said the broker was first appointed in 2002 by the Scarpelli administration and has been re-appointed every year since.

A resolution was passed at the Jan. 10, 2012 meeting which re-appointed the same company this year.

The report, which was aimed at examining whether self-insured government entities would save money by switching to the state's health insurance program, found that Brick would have saved $1,120,410 in 2009 and $1,010,188 in 2010 by participating in the state program.

Of the four government entities that were examined – Essex County, East Brunswick and Haddon Township were the other three – only Brick had performed a comparative analysis that included the cost the township would incur had it participated in the SHBP [State Health Benefits Program], the report stated.

Township officials did not take into account that state insurance rates include prescription benefits for retirees, however.

The report did acknowledge that existing union contracts would have prevented the township from participating in the state plan, despite the fact that it would have saved money. Co-pays and other rates under Brick's current collective bargaining agreement provide coverage to employees that is more generous than the state plan, making switching impossible.

"As noted in this report, we acknowledge that joining SHBP in some instances may not be possible until the expiration of current collective bargaining agreements," the report stated.

Acropolis said that despite the potential savings that could have resulted from switching to the state plan, it may not be a long-term, viable alternative to self-insurance.

"The state benefits plan has been underfunded and is bleeding money," Acropolis said. "Why should we want to go into a plan that will eventually have to raise fees?"

Some municipalities that switched to the state benefits plan in violation of union contracts got sued, the mayor said.

"I don't have a problem with people telling us how to do things better, but I can't do things that I'm not legally allowed to do," said Acropolis.