Article - June 11, 2008 - Press Of Atlantic City

Former Atlantic City lawyer urges city to probe health system

By Michael Clark

According to several city memos obtained by The Press of Atlantic City, Nestor Smith, City Council's former solicitor based in Cherry Hill, suggested the city hire him to conduct an investigation into Pleasantville-based Reliance Health Systems.

Smith cited six change orders from 2006 in his memos to various City Council members this month, claiming the company deliberately seeks them to increase the value of its contract and is likely to do so again.

Change orders normally are awarded when services go beyond the scope of the original contract. The six orders Smith mentioned amounted to $1,830,769.

"I am concerned regarding the city's exposure to Reliance," Smith wrote a councilman May 2. Smith declined comment for this report.

Reliance's president, Dr. Jon M. Regis, claims the change orders were issued because the company's services contract had expired but the city asked that the services continue. The change orders issued were to reimburse Reliance until a new, formal contract was approved.

"Reliance did not request the change orders, nor did Reliance promote the change orders as a means to increase its contractual reimbursement," Regis wrote in a letter to City Council President William Marsh on May 20. "In fact, Reliance did not receive any new or additional compensation as a result of the change orders."

He added that he is willing to fully cooperate with a complete internal audit.

Mayor Scott Evans said the city is reviewing its dealings with Reliance in an ongoing, wide-reaching internal audit that recently revealed some massive mistakes regarding the city's health benefits.

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