Despite months of discussion and debate on whether Contra Costa should operate an Obamacare health insurance call center, taxpayers and the Board of Supervisors were blindsided by the county social services director just before the deciding vote.
The state has responsibility for setting up call centers in California to provide comparative information on policies and help residents sign up for insurance that most people must carry starting Jan. 1, 2014.
The state plans to operate two of the call centers and contract out the third to a county. Only two counties bid; Contra Costa was selected. That sent county officials scrambling to negotiate contract detail with the state, find a site, and reach accord with labor unions on work terms for about 200 new employees.
Supervisors had promised there would be no burden on the county general fund. All attention focused on the labor negotiations and the site selection, with good reason. Kathy Gallagher, director of Employment and Human Services Department, was publicly saying that the contract with the state was resolved.
On Feb. 12, she reported that agreement with the state was "imminent." Her Feb. 26 report says, "County Counsel and the County Administrator's Office have concluded a number of conference call meetings to discuss contract language and have come to agreement on the terms of the contract and contract language." She repeated that in reports for the March 12 meeting and for March 15, the special meeting date.
But, as that critical meeting began, Gallagher came clean. She said the state had refused to agree to mutual indemnification, thereby leaving the county with greater financial exposure to lawsuits stemming from operation of its call center.
She noted the risk if, for example, an insurance company sued, claiming it had been blacklisted because the call center was not being fair about referrals. Even if such a claim was illegitimate, legal defense costs could be significant.
"The bottom line at the end of the day," Gallagher said, "is this is a significant risk to the county general fund."
It was the first public mention of the problem. Supervisors John Gioia and Candace Andersen said they got hints just a day or two before.
Gallagher later dismissed the issue as no-harm-no-foul because the board, even when warned, approved the contract on a 3-2 vote. She misses the point: She had misled everyone -- in writing -- for weeks, leaving no time for public debate or exploration of the magnitude of the risk.
Gallagher also later claimed the legal exposure would only be a problem if the county were actually sued. That's wrong. First, it's like saying that a driver's failure to carry insurance is only a problem if he gets into an accident. Second, it contradicts her statement to the board about "significant risk."
The county could protect against that risk with insurance. Gallagher says the budget for the call center includes $15,000 for liability protection through the county's self-insurance fund. But she can't tell me how the number was calculated. I'm told that it doesn't account for the lack of mutual indemnification.
Gallagher says her staff reports reflected her understanding from Deputy County Counsel Jachyn Davis, who was handling the contract details, that the state had verbally agreed to mutual indemnification but later backed out. Davis did not return my call or email. The state position is reflected in a March 14 letter to the county, saying it had made a number of changes to address county concerns and would make no more.
Thinking you have an agreement is different from having one. If there was uncertainty, Gallagher should have said so in her reports.
To be sure, Gallagher has been on the job only a few months and was thrown into this politically charged battle when she arrived. And on the day of the vote, it was clear that three supervisors -- Karen Mitchoff, Federal Glover and Mary Piepho -- were hell-bent on going forward, no matter the risk.
But the public deserved to know the truth and have an opportunity to lobby its representatives based on reliable information. Instead, residents, like the supervisors, were kept in the dark.