Four former employees of the Teachers Health Trust who say they witnessed illegal practices at the union-run health insurance provider have responded to a lawsuit filed against them by the trust, calling it a “scurrilous” attempt to distract from the wrongdoing.
The trust’s former executive team — CEO Gary Earl, Chief Operating Officer Felipe Danglapin, Director of Operations Philip DiGiacomo and executive assistant Michael Ielpi — filed a counterclaim to the lawsuit Thursday in District Court in Las Vegas, challenging the assertion that they left the trust after exposing confidential information. Instead, they say, they were fired or resigned after facing retaliation as whistleblowers.
The counterclaim also argues that the trust’s board of trustees and Clark County Education Association Executive Director John Vellardita breached their fiduciary obligations to the trust through a series of costly no-bid contracts.
“The Board of Trustees, in collaboration with Vellardita, further engaged in retaliation and punitive activities against the executive team for attempting to fulfill their duties by exposing the aforementioned waste, conflicts of interest and unethical dealings,” the filing states.
The trust, which administers health benefits for more than 36,000 Clark County teachers and their dependents, has a history of financial turmoil. It is run by a volunteer board of teachers who are appointed by the teachers union. It received a $9.8 million boost from the district for 2016 after facing a near collapse, but now the Clark County School Board has concerns over whether that money put the trust back on sound financial footing.
Card purchases cited
The trust sued the quartet in June, claiming that they released confidential information — including details on the number of unpaid insurance claims — to the school district in April, damaging the teachers union’s bargaining position in contract talks. It also alleged that the men made unauthorized purchases on trust credit cards.
The former executives denied both allegations in their counterclaim.
“To the contrary, the CCSD and the teachers, who fund the trust, needed to be told why Vellardita and (the trust were) unnecessarily burning through millions of their dollars and paying double the national average for significantly less benefits,” the filing states.
As for the credit card purchases, “These minor expenses were not a problem until the defendants exposed the millions of dollars wasted,” it said.
The counterclaim also alleges that the trust’s board reneged on a previous commitment to protect $37 million in “premium subsidy funds” for retirees — money from the Retiree Health Trust, which was dissolved and merged with the Teachers Health Trust in 2014. The union never signed a memo of understanding with the district to restrict such funds solely for retirees, as it had pledged, the former employees contend.
“This important protection has yet to have been enforced,” the filing states.
The trust stood by its allegations.
“The trust is confident in its lawsuit filed on June 30 and looks forward to the facts coming out in court,” it said in a statement.
Vellardita, whose role as union executive includes bargaining for teachers’ health care, echoed similar comments in a statement.
“CCEA believes the counterclaims alleged by the former disgruntled employees of (the trust) are a frivolous lawsuit designed to seek a payday at the expense of the Teachers Health Trust and teachers,” he said.
The central contention of the former executives’ counterclaim is that the trust either agreed to or was negotiating several no-bid contracts to provide services that were more costly than those provided by competitors but provided no extra benefits for teachers.
Administrative expenses swelled to twice the national average through a series of no-bid contracts — including one with WellHealth, the trust’s network provider manager, it states.
It said Earl was rebuked when he questioned another contract to operate four health clinics — each at a cost $1 million more than the national average — despite providing fewer services than other leading national providers, it said.
“Despite the costs of these clinics being well above the national average, including organizations with much larger market share and service offerings, CCEA Executive Director Vellardita stated that questioning his clinics would not be tolerated since the proposed clinics would be handled by Brent Husson, who was ‘his guy,’” the counterclaim states.
Husson is president of the local education advocacy group, Nevada Succeeds, and a contractor for miCare, the health care provider that was in discussions with the trust to potentially operate the clinics.
Contractor disputes allegation
Husson said Friday the company never submitted a written proposal and that presentations on potential costs were not given as flat figures.
“For Gary (Earl) or anybody to characterize our proposals vs. another company and say ‘There’s an X amount of difference in savings,’ even if we had given them that (number), it would not be true,” he said.
Despite the trust’s “precarious financial position,” the counterclaim also asserts that Michael Steinbrink, chairman of the trust’s board of trustees, tried to get his domestic partner hired to the executive leadership team.
“Steinbrink facilitated a written directive to do so, despite the trust not having any open need for positions, the individual’s lack of any transferable work experience or formal education, and for no apparent reason other than the CEO being told that it would release the chairman from his financial responsibility to pay for insurance,” the filing states.
Steinbrink did not return an emailed request for comment.
The counterclaim seeks more than $30,000 in damages for each of the four men.
The attorney for the ex-employees, Andre Lagomarsino, said they originally planned to file a federal whistleblower lawsuit against the trust but will now contest the matter in state court.
The lawsuit and counterclaim are likely to throw a wrench into bargaining between the district and the teachers union for the fiscal 2018 contract. The district, in negotiations, has suggested moving teachers to UnitedHealthcare insurance over concerns that the trust may not be around much longer.
Contact Amelia Pak-Harvey at firstname.lastname@example.org or 702-383-4630. Follow @AmeliaPakHarvey on Twitter.
Other allegations in trust lawsuit
— Ex-CEO Gary Earl became “extremely intoxicated” and was removed by security after falling asleep at a dinner/gala while representing the trust.
— Outside health-care expert issued report to trust that gave “highly critical” review of Earl’s performance. Earl was furious.
Defendants undermined the board in various text messages, calling Board Chairman Michael Steinbrink a “pussy.”
Other allegations in ex-employees response/counterclaim
— Earl was dehydrated, not intoxicated, at dinner/gala.
— Outside health care expert was “paid by the CCEA union to perform a hit job on Earl.”
— Some text messages between executive team are taken out of context and are not about trust business.
— Calling Steinbrink a pussy was short for “pussycat” and was appropriate, “given Steinbrink’s passive acquiescence and complicity with (teachers union Executive Director John) Vellardita’s strong-arm tactics”