Insurer's ties to Broward School Board member Stephanie Kraft raise concerns

During the 2006 race for Coral Springs City Commission, Vista Healthplan and its affiliates donated the maximum allowed by law to the campaign of a political novice who had recently lost his job as Tamarac city attorney.

Although Mitch Kraft's political qualifications may have been unexceptional, he had one blue-chip credential: He was married to Stephanie Kraft, a member of the Broward County School Board, and Vista wanted to become sole health insurance provider to the district's employees.

He lost the Coral Springs race, but the company last year won the $1.7 billion contract, offering what district officials and union leaders agree was a high-quality proposal. Then it used an adjustment provision to dramatically raise rates for dependents, infuriating teachers and other school district employees with children.

"It's insane," said Russ Aber, a history teacher at Westglades Middle School in Parkland, whose wife just gave birth to twins. "It will cost me about $700 a month more out of pocket. I just don't understand it."

Like construction contractors, educational software publishers and other seeking business from the school district, Vista and its lobbyists worked hard to curry favor with board members. But the company's lobbyist Neil Sterling went further than most, hiring Mitch Kraft to do legal work for his company SRG Technology LLC from late 2007 until this month.

And now, with one School Board member accused of accepting bribes in a continuing FBI investigation, there has been growing scrutiny of the links between board members and companies seeking School Board business. The school district on Wednesday announced the formation of a blue-ribbon commission -- including Fort Lauderdale Mayor Jack Seiler and former state Attorney General Bob Butterworth -- to examine the ethics of the school district's practices. And the union representing teachers has called on the district to remove School Board members from the committee that reviews health insurance proposals.

Stephanie Kraft, who received $2,000 in campaign contributions from Vista and its affiliates in 2006, served as chairwoman of the Superintendent's Insurance Advisory Committee, which screened proposals from companies seeking the district's business. At a meeting in October 2008, Kraft and 11 other members of the 15-person committee gave Vista the top rating of the five applicants, and the School Board voted to give the company the contract.

Then this summer the committee voted to recommend approval of a 46 percent rate increase in a dependent coverage program known as Kids Plan. Premiums for another plan serving 200 of the district's sickest people rose by 35 percent. A school district insurance consultant said the increase resulted in part from higher hospitalization costs, additional government coverage mandates and higher claims.

Ronald Weintraub, who recently retired as the school district's benefits director and who was involved in the Vista contract, said he was disturbed by the revelation that Stephanie Kraft's husband had been hired by Vista's lobbyist, particularly since she did not disclose this connection to the advisory committee.

"I think morally she had an obligation to tell the insurance committee this," he said.

"We have transcripts. If you look at the transcription you will not find any statement" that Kraft's husband was working for Sterling, he said.

Had he known, Weintraub said, "I would have gone to the School Board attorney and said, 'How do we proceed?'

"My concern is that we tried to do everything totally transparent, everything out in the open," he said. "So there's no back-door deals, that everybody knew all the information, all the committee members had the same information."

In an advisory committee meeting on the rate increase, board member Robin Bartleman expressed concern about the increase, saying "one of the things that really sold me on Vista was the Kids Plan, and that was because so many people utilize it, and if we had gone with another provider, we would lose out on having this great plan."

Kraft did not immediately respond to a message left on her cell phone Wednesday. Her lawyer, Ken Padowitz, said: "Was Mrs. Kraft's independence compromised in any way? The answer is no." He declined to address why she did not disclose her husband's business relationship with Sterling.

Kevin J. Kulik, Mitch Kraft's lawyer, said the campaign contributions and the legal work for Sterling's company "did not influence the Krafts' integrity."

In a statement e-mailed to the Sun Sentinel, Vista spokeswoman Michelle Johnson said the company won the contract through a "transparent and competitive bid process" and that the overall rate increase was less than the national average.

In her e-mail, Johnson did not respond to the question of why the company donated to Mitch Kraft's Coral Springs Commission race.

The Broward Teachers Union, saying it was concerned about political interference in health insurance decisions, has proposed in its current contract negotiations that the school district permanently remove School Board members from the Insurance Advisory Committee and restrict membership to district staff and union representatives.

Currently, three board members serve on the committee, and union president Pat Santeramo said their presence brings politics into decisions and intimidates district staffers on the committee.

"When you have a lot of questions being asked by School Board members, these district personnel see the direction the board is going in," he said. "They're not going to go against their bosses."