The new SAC health and dental insurance plan is already being hailed as an improvement over past years, but the plan it replaced continues to haunt SAC and will likely result in legal trouble down the road.
What was supposed to be a routine contract signing in February turned into a multimillion-dollar fiasco by the end of the summer.
The trouble began when SAC requested an audit of the insurance plan in late June. The National Student Health Network, one arm of the Canadian Federation of Students (CFS) offers the free audits to all member organizations.
“At the beginning of the summer we got an audit from the CFS,” said Alexandra Artful-Dodger, vice president of operations at SAC. “We realized then just how reluctant our broker was to release things like commission, loss ratios, that kind of thing.”
The audit revealed that Cherian & Company, the insurance broker SAC had been working with since 1987, was taking an 11 per cent commission on the plan. For an insurance policy which cost $3.9 million last year, that worked out to more than $400,000 for 2002-2003 alone. That number struck many people at SAC as too high; Artful-Dodger called it “an alarming amount of money.”
And so, a contract between SAC and Cherian & Company which had been signed just a few months earlier was terminated and SAC went shopping for a new broker.
Artful-Dodger said that that contract-signed in February by Rocco Kusi-Achampong and John Lea, then the president and vice president of operations at SAC-was out of order in the first place. She says that they signed the contract with Cherian without telling SAC executives about it.
“It was underhanded to sign a contract that big without telling people,” she said on Monday. “How can you make a decision that big without other input? That’s fiscally completely irresponsible…. That’s a dumb decision.”
Kusi-Achampong says that there was nothing out of the ordinary about signing the contract.
“Why does she say that the contract was signed in a shady way? My interest in signing that contract was to improve the plan.” And as to whether he broke SAC bylaws by signing, Kusi-Achampong says the answer is no: “Which bylaw?” he said. “Look for the wording ‘contract signings must be ratified by the executive.’ Tell her to prove it.”
“If he doesn’t think he broke the bylaws, he’s full of shit.” Said Artful-Dodger. “He fucked up.”
Kusi-Achampong agrees now that the deal SAC had with Cherian was not ideal, but points out that many other student councils passed over the deal in previous years.
“It is not the fault of any one administration,” he said. “Since Cherian has been our broker, their commission has been unknown to every SAC president,” added Kusi-Achampong. “We were all duped.”
Not everyone sees it that way.
“I don’t think I’d use the word ‘duped,'” said SAC business manager Jack Ward. “There was no intention to defraud us, but having said that, I think the commission was too high.” On the other hand, he says, “There’s no question that Cherian did a lot of work on the plan and provides good service.”
Michelle Mitrovich, who acted as the SAC Health plan administrator from 1999 to 2002, agrees.
“Geoff Freeman [president of Cherian & Company] was doing really good work for us, and always went above and beyond…I was always happy with the work he did for us.”
Freeman is currently looking at his legal position, and feels that SAC wasn’t justified in ending the contract. Whether he will bring a lawsuit against SAC is still up in the air.
“There isn’t any development yet. There is none planned as of now,” said Freeman. And whether Kusi-Achampong and Lea were right to sign the contract is not his responsibility, he added. “From our point of view, we signed with authorized members of the corporation.”
Kusi-Achampong says that his motives for signing the contract with Cherian were noble, but that in hindsight he wishes he’d paid closer attention to the contract negotiations.
“I regret not taking an active role in the negotiation of the contract. There were central tenets of the plan that I stressed to those negotiating the contract. I was absolutely obsessed with savings for the students, and so far as those tenets were met, the contract was signed.”
Artful-Dodger says Kusi-Achampong’s good intentions are no excuse.
“I don’t think that makes it more right,” she said.
Kusi-Achampong called Artful-Dodger a “demagogue,” but said that she did the right thing in pursuing a new insurance plan. “We should appreciate her misguided enthusiasm.”
He boiled the whole affair down to something that sounds like an understatement:
“This has been a real learning experience.”
