Human error blamed for Chicopee health insurance overpayments

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Officials in Chicopee, Massachusetts are working to recover money the city paid for health insurance premiums for municipal employees who had retired and in some cases died.

While acknowledging the data review is not finished, Chicopee Mayor John Vieau said the financial loss is expected to be less than 1 percent of the $15 million budgeted for health and dental insurance premiums and much of it will likely be returned to the city by the insurance carriers.

At a City Hall news conference, he told reporters the erroneous payments were not a result of corruption or illegal activity.

“There is no one investigating this because it is nothing to investigate,” Vieau said.

Vieau blamed the problem on a decades-old system that still uses paper forms and on a high turnover of personnel in both the city’s Human Resources’ and Treasurer’s departments.

“New staff are not being completely informed of some of the work flows and procedures created that perfect storm for human error on inter-departmental communication on terminated employees and death notices of retires,” he said.

The apparently erroneous payments were flagged by the City Auditor about nine months ago. Working with the city’s insurance broker and another specialist, View said “immediate” action was taken to determine the scope of the situation and to seek reimbursement for the overpayments.

He said it is a time-consuming process.

Vieau said based on conversations he’s had with other mayors, the overpayments “are very common.”

“This happens in other communities,” he said. “It happens in the private sector.”

Tasked with putting in place controls to assure the overpayment problem does not happen again is the city of Chicopee’s newly-hired chief human resources officer, Stephen Zajchowski.

“I am really happy to be here, but (I’m) coming into some challenges which are always fun,” he said.

He said he is planning to purchase software that will replace the paper-based system and also plans to hire a benefits coordinator whose duties will include reconciling insurance bills.

During the news conference, Vieau was criticized by unnamed “elected officials” who he accused of making “inflammatory comments” and unfounded accusations.

“Sadly, the commentary only serves to disparage and discourage hard-working city employees who not only discover the situation but are working hard to correct it every day,” Vieau said.

Chicopee City Councilor and candidate for mayor Delmarina Lopez, in a prepared statement, said taxpayers’ money was “mismanaged” and the way the Vieau administration handled the situation lacked “transparency.”