This scheme preys on the ignorance of trusting county and city officials in places you can’t get to from here where last names are seldom used.
By Molly Mulebriar
In a previous article we exposed a scheme between two vendors who participated and won an RFP contest. Then after the fact, in collusion with each other, both vendors attempted to change terms of their agreements and even went so far as to demand an addendum to their agreements after only one week into the contract year. Had these new terms been known during the RFP evaluation process, it is unlikely either one or both would not have won contract awards.
Shenanigans like this come in many forms. We could write a book on the subject.
One of the most famous of all time is one that preys on rural political government entities in Texas. A Texas based TPA with a criminal mind thought of an ingenious way to turbocharge their fees by manipulating stop loss insurance proposals during and after an RFP process.
According to Bill Rusteberg, an independent fee-based consultant, this is how the scheme works:
“The TPA inflates the aggregate factors by $12.50. Then, upon delivery of the stop loss contract the aggregate factors are reduced by the same amount and the $12.50 difference now appears as a pepm “Aggregate Factor Management Fee.” The $12.50 aggregate claim liability that statistically never happens is now a fixed cost that will be charged and paid from now to eternity.”
This scheme preys on the ignorance of trusting county and city officials in places you can’t get to from here where last names are seldom used. Purveyors of the scheme rely on blind ignorance of “They can’t fix what they don’t see and they don’t know what they don’t know.”
That’s a very costly problem.
