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August 9, 2022

Shelby County’s $750K No-Bid Insurance Contract Violates State Law –

By John Kraft & Kirk Allen

On December 12, 2021

Shelby Co., IL. (ECWd) –

During the December 9, 2021, Shelby County Board meeting, I mentioned (see the 19:20 mark in the video) during public comment that insurance must be put out for bid (when it exceeds the minimum bidding threshold).

As far back as January 9, 2020, we gave Shelby County a couple opinions from the Illinois Attorney General concerning health insurance and the requirement for counties to put health insurance out for bid, and insurance is not a professional service.

We told them in 2020, we know it is a pain, but with proper preplanning and bidding, public bodies can save money on insurance purchases. But just like public comments, this also fell on deaf ears.:

This county board voted on an illegal no-bid contract for its health insurance services in the approximate amount of $750,000.

Later in the meeting, when asked if it must be put out for bid, the State’s Attorney said her assistant had researched the issue and she doesn’t think it needs to be put out for bid. We suggest a county board member obtain a copy of his research and also request a written legal opinion from their State’s Attorney.

See the county health insurance discussion starting at around the 46:43 mark in this video. Barbara Bennett made the motion (and later mentioned the $750K price) to renew the health insurance, discussion followed, then the board voted to approve with only 4 no votes.

Our research indicates counties are required to bid out insurance when it exceeds the minimum bidding threshold of $30K as stated in the Counties Code.

It is important to note Shelby County is a non-home rule unit of local government.

  • Illinois Counties Code sets bidding requirements in section 5-1002: “Competitive bids. (a) Any purchase by a county with fewer than 2,000,000 inhabitants of services, materials, equipment or supplies in excess of $30,000, other than professional services, shall by contracted for in one of the following ways:” and then it goes on to explain about competitive bidding – and it is important to note that a failure to properly bid for insurance, resulting in no insurance coverage, does not create an emergency.
  • Illinois State Bar Association published the Attorney General’s Internal Opinion No. I-12-006, issued June 14, 2012, which states “Accordingly, the competitive bidding requirements of section 5-1022 of the Counties Code apply to securing and renewing health care or liability insurance coverage and the use of designated agents to secure or renew the insurance coverage. 55 ILCS 5/5-1022 (West 2010).
  • A provider of insurance is not a “professional service” according to an Illinois Appellate Court case in 1992, Compass Health Care Plans v. Board of Education.
  • A different standard applies to home rule counties such as Cook County, as can be found in American Health Care Providers v. Cook County. Cook County, a home rule county, need not competitively bid insurance services.
  • In 2015, the Jackson County State’s Attorney wrote a legal opinion on competitive bidding of insurance in counties. In his written opinion, he failed to acknowledge the Cook County case only applies to home rule counties. He does cite, for the bidding requirement, to the Counties Code, the AG Opinion from 2012, and the Board of Education case (above), which all require competitive bidding. He also cites to the opinion that insurance is not a professional service under the Professional Services Selection Act.

We have previously written about county insurance bidding requirements in 2015 and 2019.

This vote should be reconsidered at the next county board meeting, and the insurance should be properly put out for bid as required under Illinois state law.

Even if it was not required to bid out, who in their right mind would choose not to when your spending over three-quarters of a million dollars of taxpayer money?

Video of full meeting:

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