A new life- and disability-insurance contract with Cigna Corp. for all non-uniformed city employees will save $700,000; and new dental coverage for non-union workers with Delta Dental will save $1.1 million, Cohen said. Both pacts took effect June 1.
Cohen said the commissions were "a minuscule amount" compared with the projected savings and the "thousands of hours of work" Stamatakis had put into the effort.
Despite the magnitude of the duties and the commissions, however, Cohen said the city had no written agreement or contract with Stamatakis or his firm.
He said city officials had an unwritten agreement with Stamatakis, giving them the right to review any commission arrangements once the terms were negotiated. He also said that the city paid none of the commissions; the companies that get the contracts do.
Under both the life-insurance and dental contracts, Cohen said, Stamatakis was designated as the city's exclusive agent and acted on the city's behalf in soliciting bids from insurance companies.
Asked why other brokers were not allowed to compete for the "exclusive broker" designation, Cohen said there would have been no advantage to the city in doing so. The city was not legally required to seek formal bids, he added.
"Any broker can run the competition for you," Cohen said, adding that the ''real competition" was at the insurance-company level. Cigna submitted a low bid of slightly more than $5 million in annual premiums for the life and disability coverage, Cohen said.
Stamatakis, a longtime supporter of Rizzo's, endorsed Rendell after Rizzo's death last summer. He contributed $3,000 to Rendell's campaign Nov. 1, 1991, and was an unpaid adviser to the transition team after Rendell's lopsided victory. Campaign finance reports show Stamatakis is still owed $104,785 for loans to the Rizzo Committee.
Asked if his roles as a Rendell campaign supporter and transition adviser might have helped him win the role of broker, Stamatakis said no.
"I think what gave me an inside track was that I've been doing this for over 20 years, and I'm very good at it," Stamatakis said.
Cohen said the city probably would soon award a contract to Rite Aid Corp. to provide prescription-drug services to non-union city workers. Stamatakis and his firm, Capital Management Enterprises, have been the city's broker for that contract.
"It's almost inconceivable to me that they (Rite Aid) won't get the contract," said Cohen.
Cohen and Stamatakis said in interviews that they did not know how much, if any, Rite Aid would pay in brokerage commissions because the contract had not been finalized. Cohen also said the scope of the proposed contract had been reduced substantially as a result of the recent negotiations with the city's union employees. Under the agreement, the unions are not obligated to participate in a city-run program.
Cohen said any payments to Stamatakis would come from Rite Aid's profits and would not affect the amount of the city's premium.
"It is certainly possible" that Rite Aid "will say no" to a commission, Cohen said.
The dental-insurance contract, which covers about 6,000 city employees, is for one year; the life- and disability-insurance pact, covering 21,000 city employees, runs two years.
The actual commissions fluctuate monthly, depending on the number of employees covered, Cohen said. Each contract now generates about $4,000 a month in commissions, or about $100,000 annually, he said. Because the life- insurance contract runs a second year, Stamatakis' commission would reach nearly $150,000. Stamatakis did not dispute those figures.
While the city did not solicit competing proposals from brokers on the dental, life and disability coverage, it did invite other proposals for the prescription-drug coverage, Cohen said.
The city issued a "request for qualifications" May 1 to 11 firms; Stamatakis and his firm got the top rating from a review committee that included City Finance Director Stephen P. Mullin, Cohen said.
Officials of many other companies said they never responded to the request, in part because a response was required within 12 days. One said he had not gotten the letter until May 10, two days before the response was due.
"There was just no time," he said.
