Conroe, February 27 – Bless his little heart. Without Craig Doyal telling him what to do, Precinct 2 Montgomery County Commissioner Charlie Riley experienced complete befuddlement during a discussion in the Commissioners Court about whether to spend an extra $100,000 for the County government to hire a third party administrator for property and casualty claims. Riley didn’t understand the difference between insurance coverage (payment for losses) and insurance administration. In fairness to Riley, someone, like Riley, who couldn’t run a truck stop in Cleveland and had to file Chapter 7 bankruptcy to avoid paying his creditors wouldn’t likely be someone with any level of understanding of how business occurs.
Montgomery County’s Risk Management Department is a bit of a mess as well. Terrible leadership by Department Director Virginia Little has resulted in a high turnover rate, poor job performance, and unhappy employees.
The Montgomery County government is self-insured, which means that it essentially pays itself and accumulates premiums in order to pay claims, such as workers compensation or property and casualty claims. Part of the giant account category known as “Internal Service Funds” are the funds the County government retains and invests in order to provide a pool of funds to pay insurance claims. For property and casualty losses, the County government also carries excess liability insurance which kicks in only if a particular loss reaches a certain dollar amount.
In order to manage those (workers comp, property and casualty) insurance claims, the County government has taken two different approaches. For workers compensation claims, the taxpayers have hired a “third party administrator,” York Insurance Services, to manage those types of losses as they occur. For property and casualty claims, however, the County government has managed them in-house through employees of the Risk Management Department who act as an internal claims department.
Montgomery County has paid York a bit less than $89,000 per year for third party administration of the workers compensation insurance.
At the February 26, 2019, meeting of the Commissioners Court, however, the County Purchasing Department put forward a proposal to enter into a contract with AS&G, a large third party insurance administrator based in Houston, to manage both workers compensation claims and property and casualty claims for $189,000 per year, or more than $100,000 per year more than the current cost to Montgomery County taxpayers of third party administration.
At first, County Purchasing Director Gilbert Jalomo had no information about the proposed AS&G contract, which he didn’t provide to the Commissioners Court and for which he had no pricing information or terms. Jalomo’s initial presentation to the Commissioners Court was less than impressive. Little came to the podium to try to assist, but, amazingly, Little, who had requested the contract, knew almost nothing about it.
In order to try to manipulate the Commissioners Court into accepting the increased cost, Little threatened the Court with the “need” to hire at least “two additional people” in her Risk Management Department to handle the “increased claims in the property and casualty area.” Those threats didn’t sit well with Precinct 3 County Commissioner James Noack who criticized Little and Jalomo for bringing this blind contract proposal before the Commissioners Court with no ability whatsoever for them to consider any alternatives, especially since the York contract is expiring on March 1, 2019, three weeks before the next Court meeting.
After the Commissioners Court met in executive session on other matters for approximately an hour, they came back to discuss the proposed third party administration contract again. During the second round, Jalomo had a lot more information for the Commissioners Court.
Jalomo also put forward a very sensible proposal for the Commissioners Court to consider, since they were obviously balking at spending an additional $100,000 on third party administration of insurance when they’re currently funding a Risk Management Department in the Fiscal Year 2019 Budget.
Specifically, Jalomo suggested switching the workers compensation third party administration to AS&G, which Jalomo recommended as a “better company” than York. Since the Commissioners Court, primarily Noack and County Judge Mark Keough, seemed to balk at spending $100,000 on third party administration of property and casualty insurance in addition to the current employees in the Risk Management Department, Jalomo made up for his lack of information about the contract by making a very sensible suggestion: switch the administration of workers compensation claims to AS&G, while continuing to manage property and casualty claims through the Risk Management Department, while the Commissioners Court evaluation options.
At that point, Riley made his more ignorant comment of the meeting, which obviously embarrassed all of his colleagues. Riley said, “I want every thing to be covered and I don’t want to lose one minute of coverage is what I want.”
Despite Jalomo’s explanation and despite Little’s explanation that the Commissioners Court was considering third party administration, not insurance coverage, poor Riley couldn’t wrap his head around that one.
Assistant County Attorney B.D. Griffin said, “Commissioner, we’re going to have property and casualty coverage.”
Jalomo said again, “You’ve got coverage.”
Riley still couldn’t understand the issue, and his Doyal involuntarily retired.
On Noack’s motion to switch the administration of workers compensation claims to AS&G, while continuing to have the Risk Management in-house employees handle property and casualty claims, Keough seconded the motion. It was a three (3) to one (1) vote. Noack, Keough, and Precinct 4 County Commissioner James Metts voted for Jalomo’s common sense solution.
Riley voted against the motion, because he never understood about what he was debating. (Precinct 1 Commissioner Mike Meador never came back from the executive session, so he was absent.)