Despite its dismal record insuring state workers, Intergroup has been welcomed back with open arms. The move has some employees seething.

Boice says the attorney general was notified, and his office gave a thumbs-up.

"This was a case where there was a potential conflict," Boice says, "and it was taken to the attorney general and asked, would this constitute a conflict of interest, and the attorney general advised that it would not."

But the AG's opinion did not include an inquiry into the Intergroup bid. Boice says since Knight didn't serve on the DOA evaluation committee, there was no problem with the bid process. (Knight does supervise two DOA staffers who served on the evaluation committee and another who supplied data to the committee.)

"She was not involved in it [the evaluation process]," Boice says. "Just because she works for the state in the benefits thing [department] does not mean her husband should be prohibited from gaining employment."

What, then, would constitute a conflict of interest?
"That's a hypothetical," Boice replies. "You can't expect me to get into that."

Arizona's statute on conflicts of interest states, "Any public officer or employee who has, or whose relative has, a substantial interest in any decision of a public agency shall make known such interest in the official records of such public agency and shall refrain from participating in any manner as an officer in such decision."

DOA has no written opinion by the AG's Office sanctioning its position--Boice says DOA Human Resources director Bill Bell discussed it in a phone call. Currently, the attorney general is looking into the bid to see if there are any issues of conflict, and because of the complaints from Senator Ann Day that the legislative oversight committee was left out of the process, according to spokeswoman Karie Dozer. DOA says it gave the committee all the necessary information about the bid at a meeting during the regular legislative session.

However, a May 24 memo from Mary Ann Knight regarding the bid awards contradicts that claim. According to the memo, contracts were awarded on March 18. She writes that the legislative committee was notified on March 17. However, there was no meeting of the committee on March 17. The committee did meet on March 24--the day letters notifying contractors of their awards went out--and held an executive session during which Bill Bell briefed the committee on the awards.

Despite Mary Ann Knight's claim that all state contractors knew about her husband's position, Blue Cross officials say they were never notified by DOA. The university employees didn't know, either, and Knight was clearly not pleased when they found out.

A transcript of a June 16 meeting--which was taped--between professors and DOA officials captures the confrontation between Knight and professor Jacqueline Sharkey.

"I filed a statement with the attorney general, and there was nobody in the city that doesn't know that my husband works for Intergroup, and I take extreme offense to what you're saying," Knight says. "Where do these questions come from? That's what I want to know."

"Just people calling us," Sharkey responds.
"Just people. All the phantom people," Knight says. ". . . Yes, I love this, this is the same phantom people who have complaints all the time."

Such exchanges have the professors convinced that DOA is protecting Intergroup, despite its track record. "Let's just say we have not had a lot of cooperation from state officials," Sharkey says.

The professors say they've been rebuffed in their attempts to see public documents, that they've been treated rudely by DOA officials, and misled by DOA staff.

Also, the professors claim, every time they bring up Intergroup, someone from DOA tries to switch the subject to Blue Cross. As an example, they point to a statement at the June 16 meeting by DOA's Bill Bell:

"You know," Bell says at the meeting, "we've spent a lot of time on Intergroup, and that's fine . . . but it bothers me that Blue Cross has provided an indemnity program to the state for the last several years, but no one has ever asked the question, why would Blue Cross . . . choose to raise their rates by such an enormous amount this year."

DOA officials say they're not hiding anything or favoring Intergroup in any way.

But they are treating inquiries like toxic waste. Through a secretary, Knight told New Times she'd been ordered not to discuss the matter. The other DOA employees involved in the bid did not return calls for comment. Mary Ann Knight's husband, Richard, hung up when reached by phone.

There is a case to be made that Intergroup won the bid fair and square. Brad Kirkman-Liff, an ASU professor who served on the evaluation committee, says the previous problems with Intergroup led him to be cautious about Blue Cross/Blue Shield on this go-round.

"As volatile as the health market is today, you can't really rely on past performance," he says. "The company you've dealt with for years might not be there next week . . . you have to rely on guarantees of future performance."

Blue Cross was unwilling to give those assurances at first, Kirkman-Liff says, and the firm doubled its indemnity premiums. Given the cost and that concern, he opted for Intergroup. He was joined by evaluators who work for outside health-care consulting firms, as well as the DOA employees on the committee.

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