The State of Vermont is suing the manager of its all-payer health care system, OneCare Vermont, over its refusal to provide payroll information requested by State Auditor Doug Hoffer.
Attorney General T.J. Donovan filed the lawsuit Wednesday in Washington Superior Court on Hoffer's behalf. It contends that OneCare’s denials violate its state contract and make it impossible for the auditor to fully evaluate the organization’s cost-effectiveness.
“I didn’t set out to sue OneCare," Hoffer said in a press release announcing the lawsuit, "but they have left us no choice.”
Among the lawsuit’s demands are that OneCare turn over payroll records for all employees during 2019 and 2020, as well as any documents that disclose “fringe benefits.”
In a press release Wednesday afternoon, OneCare called the lawsuit a “baseless overreach without purpose or merit," arguing that it has already met its contractual obligations by providing the state compensation data for all of its executives.
If Hoffer's reading of the contract were correct, the organization said in its response, then he would be entitled to ask for the salary of "every employee of nearly every business that has signed a contract with the state of Vermont."
“We don’t understand why the Auditor believes he is entitled to the personal financial information of each and every one of our employees, including their W-2 and 1099 forms,” OneCare CEO Vicki Loner said in the release. “We feel compelled to oppose this intrusive and unnecessary request.
Vermont is currently in year four of a five-year experiment with all-payer and OneCare, which was created in 2016 as a way to change how health care providers are paid for services.
The organization collects money from Medicare, Medicaid and private insurers to pay providers for each patient they treat instead of for each test, visit and procedure. Last year, OneCare agreed to be accountable for $328 million in health care services provided to Vermonters through Medicaid, according to the lawsuit.
Supporters of the federal-state partnership say it will control the growth of health care costs and advance the quality of care. But over the last year, Hoffer has been highly critical of OneCare, writing in a 70-page report last summer that the state does not have enough data to understand whether the experiment is working.
Wednesday's lawsuit — which comes just two days after the Scott administration announced that most state employees will participate in OneCare Vermont this year — marks a significant escalation in Hoffer’s attempts to peek behind the curtain.
Hoffer initially requested the records in question almost a year ago in light of a “significant” payroll increase at OneCare: from $8.87 million in fiscal year 2019 to $11.8 million in FY 2020, according to the lawsuit. OneCare blamed the hike in part on the conversion of a legal contract into a new employed position, the annualizing of mid-year hires and regular annual pay increases. But it did not include the requested documents.
Hoffer resent his request to Loner, the CEO, who responded that she could not address it until after the COVID-19 crisis subsided because her staff needed to focus its energy elsewhere, the lawsuit says.
When Hoffer pressed the issue, Loner said the sought-after salary information would eventually be submitted to the Green Mountain Care Board, which approves the organization’s budget each year. Yet the compensation data that OneCare ultimately released only covered 12 of its more than 60 employees.
Meanwhile, the lawsuit contends, other required filings that OneCare shared with the federal government failed to adequately explain the salary increases.
“The absence of consistent information raises questions about the accuracy of data provided by OneCare regarding its payroll and benefits, which underly the administrative charges that are passed onto the State of Vermont as well as the payors of private health insurance,” the lawsuit reads. “OneCare’s dominant role related to the delivery of health care in Vermont and its receipt of significant public dollars requires transparency and accountability.”
OneCare says it has gone “above and beyond” compensation reporting requirements by publicly disclosing senior executive salaries and providing Hoffer pay bands and benefits information for all employees — “even though it was not required.”
“Specific non-executive employee information was not released because it intrudes upon employees’ privacy and because the Auditor has articulated no legitimate use to which that information could be put by his office,” the organization said in its press release.
To bolster its argument, OneCare attached quotes from two of its board members — Michael Costa, CEO of Northern Counties Health Care, and Claudio Fort, president and CEO of Rutland Regional Medical Center — that describe the lawsuit as an irrelevant distraction.
"This lawsuit asks for information that is not relevant to [OneCare's] performance and diverts resources from the important work of healthcare reform in Vermont," Fort said. Costa added: “Vermont’s All-Payer Model assumes an extraordinary degree of collaboration between the State and [OneCare], and, sadly, the Auditor’s decision to file a lawsuit creates a significant obstacle to that partnership."
In Hoffer's eyes, however, it is precisely OneCare's lack of collaboration that has brought the state to this point.
“It is unfortunate that OneCare does not respect the terms of the contract they signed," he said in a press release. "They are not above the law.”