Public School District Health Insurance Trust In Big Trouble

Millions of dollars in questionable expenses, a generous administrative payroll, high executive turnover and rising health care prices……………Unlike health insurance companies, which are subject to regulation, the trust does not answer to the Department of Insurance. For years, there have been complaints of impropriety, and expenditures have been hidden from public scrutiny……

Teachers’ failing health insurance gets one last taxpayer bailout. Will it survive?

Review Journal Investigation: THT Health

An interview with investigative reporter Jeff German about the state of the tax-funded THT Health, the health insurance for Clark County teachers. More than $1 billion in taxpayer funds have been poured into the nonprofit trust since 2011. (Las Vegas Review-Journal)

Updated January 27, 2022 – 5:56 pm

Clark County teachers have been outraged for years about their failing health insurance, the tax-funded, union-dominated Teachers Health Trust.

On social media, in emails to the School District, at board meetings and during interviews, employees who depend on the mismanaged trust said their lives have been miserable: The trust failed to promptly pay medical providers. Procedures weren’t approved. Families lost doctors and had claims sent to collections.

A new agreement, signed in October, for the first time imposes strict transparency measures in return for yet another taxpayer bailout, but problems continue.

“This is the worst I’ve seen with insurance in the seven years I’ve been here,” said Jamie Tadrzynski, a high school history teacher who needs daily insulin injections but is having a tough time getting specific medication approved. “We’re being told to just suck it up and it will get better. But it’s hard to be patient when you have a condition that will kill you without proper medical care.”

Over the past decade, THT Health, as it is now known, has steered itself into a fiscal ditch time and againapproving millions of dollars in questionable expenses and grappling with a generous administrative payroll, high executive turnover and rising health care prices.

More than $1 billion in taxpayer funds have been poured into the nonprofit trust since 2011, with little financial reporting responsibility in place.

Unlike health insurance companies, which are subject to regulation, the trust does not answer to the Nevada Division of Insurance. For years, there have been complaints of impropriety, and expenditures have been hidden from public scrutiny. Previous School Board members and Clark County School District executives never obtained proper accounting in exchange for additional bailouts.

The new agreement is intended to provide real accountability and transparency. It may be the trust’s final chance before the troubled system, which covers 34,000 people, finally is dismantled.

Some call it the last stand for THT Health.

Last chance

The trust must abide by a series of financial reporting and positive cash flow obligations, or it can be dissolved, allowing teachers and their dependents to transition to a universal health care plan under CCSD guidance, according to a copy of the agreement obtained by the Review-Journal.

Vicki Kreidel, president of the National Education Association of Southern Nevada, which represents a small group of about 400 teachers, said the additional oversight is good, but teachers are still having trouble gaining access to health care.

Kreidel, a second grade teacher, said that she has an autoimmune disease and that one of her key medications is on the trust’s excluded list.

“The problem is providers are still dropping us, and now we can’t get access to some of our prescriptions,” Kreidel said, adding that some educators also now have to pay cash for lab tests until they meet their $500 deductible.

“There are teachers going without medication and lab work they’re supposed to be getting,” she said.

Middle school teacher Joe Lawson said that the teachers trust, without his knowledge, switched his family from a PPO dentist plan to an HMO plan and that his longtime dentist is not part of the HMO.

“If I go to my dentist, I would be a cash-only patient,” he said. “They would treat me like I don’t have insurance.

“I have no faith that anything is going to change for the better. We used to be the platinum of insurances back in the day, and now we’re basically being laughed at because we have Teachers Health Trust.”

The trust, established to give teachers a chance to run their own health care system, is unlike others in the public sector — an employee trust overseen by the politically connected teachers union, the Clark County Education Association. By contrast, most county employees and their families are covered under a health plan funded and run by the county. Employees also contribute to the plan.

THT officials said they don’t believe the medical coverage problems encountered by teachers are widespread and they are working to resolve them. At a recent Clark County School Board meeting, new trust CEO Tom Zumtobel said the current health plan is one of the best in the community, with the $500 deductible and 80 percent coverage.

An admission of mismanagement

But Chris Giunchigliani, a former Clark County commissioner and assemblywoman who helped create the trust in 1983 when she ran the teachers union, said the new agreement is an admission of recent mismanagement.

“It’s really a recognition that the union underfunded the trust and put teachers at risk for years,” Giunchigliani said. “This gives me some hope that people recognize that this is a business they’re running, and you don’t want employees being punished because of a lack of management.”

But she said she worries “that this whole issue is going to blow up,” given the trust’s lack of accountability over the years.

Teachers would still be better off with a universal health care plan, said Edward Goldman, a former longtime chief negotiator for the school district.

“The teachers’ trust is too small to exercise clout with providers to get health care services at a lesser cost, which is what the big insurance carriers can do,” said Goldman, a strong critic of the trust over the years.

Goldman likes the transparency that the new agreement brings to the trust.

“I think it’s very good,” he said. “But they’ll never dissolve it if they don’t comply. The Board of Trustees and superintendent have a history of never holding the trust’s feet to the fire.”

The deal to keep THT Health afloat comes at another high price tag for taxpayers: between $35 million and $38 million.

Since January 2011, the school district has contributed $1.4 billion to the nonprofit trust. That figure has primarily gone toward monthly insurance premiums for teachers, but also additional cash infusions this year to help the trust reduce a massive amount of outstanding medical claims, according to district officials.

As of July, the health trust had $55 million in unpaid medical claims, Zumtobel said. That figure has since been reduced to roughly $34 million with some of the additional district funding, he said.

The school district gave the trust a $35 million advance in May to begin paying off the debts.

Bizarre negotiations

Months of work led to the final agreement to again bail out the trust, but a bizarre development occurred as negotiations drew to a close.

Attorney Fikisha Miller, the school district’s chief negotiator, was left out of the eleventh-hour sessions that led to the deal.

In an Oct. 4 email to teachers union Executive Director John Vellardita and others, Miller said she learned that while she was on a brief sick leave the week before, Vellardita had “multiple meetings” with district Chief Financial Officer Jason Goudie — but without her — and that an agreement was at hand. Goudie also was on the negotiating team.

For months Miller had been at the forefront of the talks. Emails obtained by the Review-Journal show she pressed the Teachers Health Trust to be more transparent about turning over financial records so the district could more accurately assess the nonprofit’s deteriorating financial condition.

When it came time to close the deal, the school district chose to move forward without its most knowledgeable negotiator.

And Miller was not happy.

A source said Miller discussed her concerns about the negotiations during a closed session with School Board members on Oct. 6. A week later, she submitted a letter of resignation.

“Due to the events that occurred while I was on medical leave, I believe that it is my ethical obligation to resign from my position as chief negotiator and assistant general counsel,” Miller wrote.

Miller declined to comment on her departure. Superintendent Jesus Jara and School Board President Linda Cavazos also would not comment because the matter was discussed at the closed session.

Vellardita said he did not know why Miller resigned. But both Vellardita and Zumtobel acknowledged that Goudie played a key role in getting the agreement. Goudie declined comment, citing the closed School Board session.

If there was any tension within the district over Miller’s role in the negotiations, the district has kept it from the public. In his Oct. 22 statement after the deal was announced, Jara made a point of praising Miller’s work.

“These agreements would not have been possible without Fikisha Miller leading the negotiating team,” Jara said.

And even Miller publicly touted the agreement when it was brought up and approved at an Oct. 28 School Board meeting.

Adding expertise on board

She told board members that the school district no longer would remain on the sidelines if the teachers trust continues to lose or mismanage its money.

“We are bringing all of the numbers, all of the facts, all of the debt into the light so that the teachers can educate themselves on how their health care is being managed,” Miller said. “And the teachers can hold the trust responsible, and the CCSD can hold the trust responsible.”

Vellardita acknowledged in an interview that it became obvious this year the trust “couldn’t go on forever” in the way that it was being operated.

“It was running a deficit of, you know, one and a half to two million dollars a month,” he said. “It had gone on for way too long before anybody knew. And then it had all of these collateral effects, whether it was an educator being taken to collections, or whether it was providers saying I don’t want to be part of your network anymore. And so I think that contributed to it. And I think what we have now are safeguards where that can never happen again.”

Vellardita said the trust also has recognized the importance of transparency and the need to broaden the expertise of its own teacher-led board. For the first time, it plans to add board members who actually have knowledge of health care and finances, he said.

Vellardita understands the agreement may be the trust’s last stand. He said 92 percent of his members voted to ratify the agreement.

“We feel pretty confident that we’re going to come out of this and that the trust is going to, you know, chart a new course, in terms of being a different and more efficient delivery system and a very important player in the Southern Nevada health market,” Vellardita said.

“But at the same time, I think the school district made a commitment, unprecedented, to help this situation. And in exchange for that, they put in there a requirement that if it doesn’t work, there is no more lifeline. And so we agreed to it. We think it’s reasonable.”

Rob Benson, who served as vice president of the union from 2008 to 2012, said the new deal with THT Health looks good on the surface. But he worries that the trust will find a way to wiggle out of the accountability provisions if it goes on another downward spiral.

“I’m happy they got this, but we need to make sure that they follow through with it because of the teachers. The teachers are hurting,” Benson said. “The trust has a history of not being transparent and accountable.

Financial responsibility lacking

As the trust’s financial health declined, fiscal responsibility wasn’t a priority.

In 2017, internal strife within the health trust spilled into the court system. Lawyers for then-trust CEO Gary Earl and several members of his executive team served notice that they were seeking whistleblower protection and were ready to make public allegations of “unethical and illegal activities” at the trust, records show.

Less than two months later, the trust filed suit against Earl and his colleagues, alleging they committed “acts of misconduct” that included making unauthorized purchases with trust credit cards, engaging in a “malicious” conspiracy to undermine the trust, wrongfully taking trust property and breaching the confidentiality of a THT trade secret.

The Earl-led executive team responded in a countersuit, accusing the trust of violating standard accounting principles and misusing public funds. Among other claims, they alleged the trust entered into a series of no-bid contracts that led to an “extraordinarily high amount of administrative expenses.”

The allegations on both sides quietly went away in April 2018, when a confidential settlement was struck, according to the court documents.

Recent records show that the trust’s previous CEO, Michael Skolnick, received a $200,000 bonus several months before he abruptly resigned in May during the height of the trust’s financial troubles. In 2020, Skolnick drew a total salary of $500,000, which included a $100,000 bonus, according to the records.

Attorney Peter Alpert, the trust’s CEO from 2000 to 2014, questioned those expenses.

“I think the public perception of someone receiving a large bonus when the organization is in financial trouble is not very positive,” Alpert said. “Why would you give someone a $200,000 bonus and several months later they’re gone? I have no knowledge of the underlying facts, but it seems very odd on the face of it.”

He also said Skolnick’s $500,000 salary in 2020 seemed unusually high given the financial state of the trust.

By comparison, Jara, the district superintendent, receives an annual salary of $320,000.

“I think the trust should be more circumspect in paying large salaries when the organization apparently is delinquent in paying its medical claims,” Alpert said.

Zumtobel, who succeeded Skolnick, declined to comment on the bonuses paid to the former CEO. Zumtobel earns $300,000 a year but is eligible for performance bonuses, according to a copy of his employment agreement.

Vellardita insisted that he did not learn about Skolnick’s $200,000 bonus last year until after it was approved.

“My understanding was the previous president of the Teachers Health Trust’s board of trustees authorized giving that bonus, and that person has been since removed from that position,” Vellardita said.

“And so we did not know about it until months after the fact that this guy (Skolnick) in the middle of running deficits and educators being taken to collections, was getting a bonus payment. Had we known … we would have alerted the Teachers Health Trust board to not provide any kind of bonus payment to him or anybody else.”

Vellardita, who is not involved in the trust’s daily operations, said that when it became clear that the trust’s financial problems were as bad as they were, Skolnick did a “quick exit.”

Skolnick could not be reached for comment.

Mystery consultants

Both Vellardita and CEO Zumtobel had trouble explaining another questionable expense — a $3.1 million item ambiguously listed as “legal and professional expenses” in a 2020 THT Health income statement obtained by the Review-Journal.

“This seems like a very large expense,” Alpert said. “They should have had a more defined explanation on the financial statement.”

Alpert said legal and consulting fees during his tenure at the trust were roughly $100,000 or less a year.

Zumtobel suggested some of the $3.1 million, which was spent before he took over the trust, might have been used by Skolnick to pay consultants to redesign the trust’s health plan.

Skolnick also had hired legal consultants, Zumtobel said, but he didn’t know what they did for trust. He said those kinds of expenses won’t occur during his tenure.

Zumtobel refused to talk further about the expenses and what occurred before he joined the trust.

But he said that since joining the trust in June, he has reduced total administrative costs from $18 million to $12 million by eliminating vendors and restructuring payments.

Jara, meanwhile, is optimistic about the new health care agreement.

“I have a good level of confidence that this is going to work,” Jara said. “As superintendent, I could not allow our teachers to continue to worry about their bills, and we found a way to get their bills paid.”

But the years of unreliable coverage still weigh heavy on the minds of teachers.

“My concern is that if these problems aren’t addressed, the issues will get worse down the road,” Vicki Kreidel said.

Added Jamie Tadrzynski: “We’re just kind of out here dangling, and it’s not fair to one of the largest workforces in the county.”

Tadrzynski said word among teachers is that medical providers who haven’t been paid by THT are still dropping the trust.

“They’re telling us they won’t pick us up again no matter what because they’re sick of being burned,” she said.

Contact Jeff German at or 702-380-4564. Follow @JGermanRJ on Twitter. German is a member of the Review-Journal’s investigative team, focusing on reporting that holds leaders and agencies accountable and exposes wrongdoing.