Comptroller: health insurance funds steered by private firm amid conflicts

A September 2025 Office of the State Comptroller review of three local Health Insurance Funds found undisclosed conflicts, steered procurements, and a marketing “Hi Fund” that is not a real public entity — later, the funds refused corrective-action plans.

TRENTON — New Jersey’s Office of the State Comptroller concluded in a September 9, 2025 report that three public Health Insurance Funds — the Schools Health Insurance Fund (SHIF), the Southern New Jersey Regional Employee Benefits Fund (SNJHIF), and the Municipal Reinsurance Health Insurance Fund (MRHIF) — operated with longstanding, undisclosed conflicts of interest and procurement violations that concentrated control of taxpayer-funded health benefits in a private brokerage and its related administrator.

The funds together “serve hundreds of local governments and school boards across the state and insure over 100,000 public employees and their families,” the report and OSC news release state. Under state law, proposed public contracts expected to exceed $12.5 million must be submitted to OSC for review.

What OSC says it found

According to OSC’s news release and the 34-page report, Local Government and School Board Health Insurance Funds: A Report on Conflicts of Interest and Procurement Violations:

• Conner Strong & Buckelew (CSB) and PERMA — described by OSC as functioning as one entity despite purporting to be separate — improperly influenced how multimillion-dollar contracts were written, awarded, and priced while also competing for those contracts.
• State regulations prohibit a vendor from serving as both HIF administrator and program manager; OSC found CSB and PERMA shared leadership and employees in ways that violated that separation.
• From fiscal year 2021 to fiscal year 2025, SHIF paid PERMA and CSB a total of about $36 million, OSC said, without the disclosures to regulators and school officials that OSC says the law required.
• OSC said SNJHIF’s proposed cooperative procurements were tailored to favor existing vendors, in violation of procurement law, and directed SHIF and SNJHIF not to proceed until trustees develop a remediation plan.
• In reviewing MRHIF, OSC said it discovered public funds used to market an entity called the “Hi Fund,” which billed itself online as a public entity “founded over 30 years ago” with a $1 billion annual budget. OSC concluded Hi Fund “is not a legal entity” but a marketing fiction created by CSB. Some officials whose names or photos appeared told OSC they had “never heard” of the Hi Fund, according to the release.

“There is no clearer conflict of interest than when a company writes the RFP, reviews the bids, and then steers the contract to itself,” Acting State Comptroller Kevin Walsh said in the Sept. 9, 2025 release. “What makes this worse is that the vendor concealed from the State and its public entity clients that it was operating on all sides of contracting processes that are supposed to protect taxpayer funds.”

OSC referred matters to the Department of Banking and Insurance, the Department of Community Affairs, the Attorney General’s Division of Consumer Affairs, and the School Ethics Commission, and directed the three HIFs to submit corrective action plans within 60 days, with trustees voting in public and without involvement of current or prospective vendors.

After the report: refusal and appeal

In a Nov. 21, 2025 letter to then-Gov. Philip D. Murphy, Senate President Nicholas P. Scutari, and Assembly Speaker Craig J. Coughlin, Walsh reported that on Nov. 10, 2025, the HIFs advised OSC they would not submit corrective action plans. Walsh wrote that state law requires him to notify legislative leaders when a local unit refuses to cooperate in developing or complying with a remediation plan.

The same letter states that on Oct. 24, 2025, the HIFs filed a Notice of Appeal in the Superior Court, Appellate Division, alleging among other things that OSC lacks authority to require a corrective plan, and that the Appellate Division had questioned whether the appeal was premature for failure to exhaust administrative remedies.

Walsh’s letter also said meeting minutes showed CSB continuing as program manager and PERMA/CSB as administrator for SNJHIF and SHIF after the report — which OSC characterized as ongoing violation of the laws identified in the September findings.