New investigation raises suspicions about Roselle BOE’s handling of insurance contract

ROSELLE – It appears the board of education approved a $7.5 million controversial contract with an insurance company that is now being investigated by the New Jersey Department of Education for backdoor discussions with board members in a West New York school district.

Last year when the Roselle Board of Education cut a health insurance deal for $7.5 million with Alamo Insurance Group, a company former mayor Garrett Smith worked for who had an insurance fraud indictment hanging over his head, many people, including Mayor Jamel Holley, took issue with it.

The entire matter initially surfaced in July 2013 locally when the Board of Education signed a contract with Alamo Insurance. Holley insisted after the deal was cast that the board could have saved $300,000 in commission had they went with a company not connected to a political ally such as Smith. His words, though, fell on deaf ears.

Alamo Insurance received the $300,000 in commission, and the school board, instead of signing with a “qualified broker” for school district health benefit insurance, began trading legal barbs with Holley.

This was based on the fact the mayor publicly demanded the school board rescind the resolution approving the contract with Alamo and begin the process of selecting a health insurance carrier from a well qualified list of carriers not politically connected to any board members. This started a firestorm of controversy and as a result both sides jumped into the fray demanding retractions or further legal action would follow.

Holley refused to back down, pointing out because Smith had political connections to the board, there was a line that should not have been crossed when it comes to contractual issues. He said this was especially egregious when the approval of such a resolution comes after 2 a.m. when no members of the public are present.

The mayor also felt the manner in which the board passed the resolution in 2013 was “an underhanded way” of approving an important health insurance contract and four members of the school board agreed with him.

The school board attorney maintained the board had every legal right to approve the resolution and characterizing the board in a negative light through the media violated the board’s legal rights.

And so began the legal wrangling surrounding the board’s 11th hour selection of Alamo, but the brouhaha eventually died down, until last week when it surfaced that the state board of education was investigating the manner in which the West New York Board of Education appointed their health benefit carrier, Alamo Insurance.

According to information obtained by LocalSource, last week the West New York Board of Education fired the insurance broker that was at the center of an investigation by the state Department of Education. The board also fired Alamo Insurance Group amid allegations that backdoor discussions led to the board’s abrupt decision to hire the health benefit insurance carrier.

Last week, according to published reports, a department of education spokesperson confirmed that the Office of Fiscal Accountability and Compliance was investigating the West New York Board of Education, but it was still in the early stages.

A complaint was subsequently filed against two West New York school board trustees for allowing politics to guide their decisions on the board. The complaint, filed by a school board candidate, alleged the West New York mayor and others persuaded two school board members to hire Alamo during a closed executive session meeting. This occurred after the board had already voted in favor of hiring another company. Meanwhile, late last week, Holley, who heard about what transpired in West New York, commented on the situation that involved the same health benefit insurance carrier and similar circumstances.

“I was adamantly opposed to a $7.5 million health insurance employee benefit contract from the board of education to Alamo Insurance. What concerned me most was board members Donna Obe, Eric Cendano and Anthony Esposito led the pack to award this contract, which benefited the pockets of former mayor Garrett Smith and his colleagues with $300,000 in commission from our taxpayers while Garrett Smith was under indictment for insurance fraud,” explained Holley, adding that what concerned him even more was that the quality of health benefits for teachers and administrators had diminished.

“Coverage was changed and our already lowest paying educators were forced to pay significantly higher rates for their coverage,” the mayor added.

Holley also noted that when he heard about what was going on in West New York, he realized the connection.
“As mayor of Roselle I am greatly concerned the board of education is left to address the ramifications of the insurance benefits mess in which Alamo and Garrett Smith have caused all board employees to bear,” he said.
Obe and Cedano were up for reelection Tuesday, after LocalSource went to press.