Gov. Paterson’s administration awarded a $297 million federal contract without competitive bidding or public notice to GHI, the health-care provider whose parent company employs his wife, The Post has learned.
Legislative investigators are now looking into the huge, 3½-year contract that subsidizes insurance for uninsured individuals with pre-existing health problems — part of President Obama’s health-care reform act, state officials concede.
It could yield up to $30 million in “administrative costs” for Emblem Health, GHI’s (Group Health Inc.’s) parent company.
“Selecting a company for which the governor’s wife works without bidding or public notice raises serious disturbing questions,” one of the Legislature’s top Democrats told The Post.
“This is something that is troubling and something we plan to look at,” the official continued.
Also disturbing, the official said, is that New York chose to have GHI administer the program when it could have joined at least 21 other states in having the federal government assume the responsibility.
First Lady Michelle Paterson is director of integrative wellness for the outfit.
Paterson announced the selection of GHI to handle the new federal program on July 1, noting that the company “is a subsidiary of Emblem Health and is the only nonprofit company authorized to operate statewide in New York.
“GHI’s statewide network of participating providers will make it easier to facilitate access for care for New Yorkers all around the state,” Paterson continued.
But the announcement came almost three months to the day after US Health and Human Services Secretary Kathleen Sebelius notified governors that funding for the special program had become available.
A health-care industry source said that some other regional health-care providers who learned of the program were interested in participating but that no effort was made by the state Insurance Department to encourage their participation.
“There was plenty of time to bid this or advertise this,” the Democratic official noted.
An Insurance Department spokesman insisted that the selection of GHI had nothing to do with Michelle Paterson’s working for parent company Emblem, where she is paid $152,000 a year.
“She did not speak to anyone at the department, and I’m told by people on the second floor [the governor’s office] that she didn’t speak to them either,” spokesman David Neustadt said of the first lady.
“We looked at a lot of alternatives for designing this program, and part of the problem is we were given a very short time to get this going, less than two months,” said Neustadt.
“In the two-month period, it would have been impossible to do the normal state procurement process. We looked at a number of other companies and alternatives and concluded that the only way to do it on time was to select” GHI, he continued.
Neustadt also said it was important for the state to have a provider familiar with New York’s complex health-service system, like GHI, to administer the program rather than rely on the federal government to do the job.
Emblem Health Vice President for Public Affairs Ilene Margolin declined comment.