Union Rep Has Ties to Healthcare and Lucrative Contracts

It’s not what you know, it’s how many close ties you have when you’re a union official.  Dave Low, Executive Director of the California School Employees Association, is also in charge of an organization of other government union employees, Californians for Healthcare and Retirement Security.

Records show that he was also a consultant to Blue Shield of California, which provided profitable insurance packages to the same organizations Low headed.   

Chad Terhune has the story in the Los Angeles Times.

But Low had another job as well until recently. He was a consultant for Blue Shield of California, which has secured lucrative health insurance contracts that cover many of the same public workers that Low represents. His contract shows he was to be paid up to $125,000 a year for his work, which went from 2004 until Aug. 31.

Low isn’t the only person with union ties pulling double duty for Blue Shield.

Experts say those close ties between Blue Shield and key labor unions may give the nonprofit company undue influence over multimillion-dollar insurance contracts for public employees. It’s common in California for a joint panel of labor and management officials to pick the winning insurance bidders and set many of the terms.

“This raises red flags about conflicts of interest and self-dealing,” said Jessica Levinson, a Loyola Law School professor who studies public corruption. “It really starts to feel offensive when the public money at stake is so huge.”

Blue Shield and Low said there was nothing inappropriate about their relationship and that they’ve done nothing illegal or unethical. After The Times began asking questions about their relationship, the company ended Low’s contract Aug. 31.

One of the biggest prizes for any company is a contract with the California Public Employees’ Retirement System, the country’s third-largest healthcare buyer after the federal government and General Motors Co. It spends $7 billion annually on medical care for active and retired state and local government workers.

CalPERS is a crucial customer for Blue Shield, which serves about 400,000 of CalPERS’ 1.3 million members. Overall, the San Francisco company has about 3.3 million customers and nearly $10 billion in annual revenue.

Blue Shield’s contracts with Low, obtained by The Times, show that it was paying him for information and advice about dealing with CalPERS’ board members and agency staff. Low was hired to “advise and assist Blue Shield in gaining CalPERS board and constituent support for key initiatives and proposals” and to “assist Blue Shield in its efforts to expand interactions with key decision makers and influencers of other non-CalPERS contracting public agencies.”

“I will challenge anybody to come up with a single instance in which I acted in an unethical manner,” he said. “I’ve never had inappropriate conversations or contacts with Blue Shield or CalPERS.”

It’s common for health insurers to hire outside lobbying firms to press their case while seeking government contracts. But some experts expressed concern that Blue Shield’s chief lobbyist is allowed to simultaneously represent the SEIU, a big union that participates in health-benefit decisions involving public employees and insurers.

“The question is, does Blue Shield have access to insider information through these unions?” said Gerald Kominski, director of the UCLA Center for Health Policy Research. “It doesn’t look right.”

Weideman referred questions to Blue Shield. Both the insurer and the SEIU said they don’t see a conflict of interest in his two roles.

Blue Shield said Weideman’s lobbying for the SEIU doesn’t pose a conflict with potential contracts because his work pertains to legislative issues in Sacramento. Blue Shield added that it’s an acceptable practice at many companies for employees to earn income from outside businesses with management’s approval.