The state’s highest court ruled Friday that Vermont’s elected auditor does not have the authority to review employee payroll information of OneCare Vermont, the private, state-contracted accountable care organization tasked with overseeing $1.3 billion of Vermont’s health care costs.
The Vermont Supreme Court’s unanimous 13-page ruling is the latest chapter in a two-year legal battle that pitted Auditor Doug Hoffer against OneCare in a test that ultimately challenged the reach of the state auditor’s office.
Hoffer first sought OneCare’s payroll and benefits records after OneCare’s budget showed a one-year spike in those expenses, jumping from $8.7 million in fiscal year 2019 to $11.8 million the next year.
When OneCare denied his request for records, Hoffer filed suit. Hoffer contended that OneCare had breached its contract with the Department for Vermont Health Access by denying his requests.
In October 2021, Washington County Superior Court Judge Robert Mello granted OneCare’s motion to dismiss, ruling that Hoffer lacked the “contractual or statutory authority to demand the records.”
On Friday, the Supreme Court affirmed Mello’s decision.
Neither the organization’s contract with the state “nor the statutes governing the Auditor’s authority give the Auditor the right to access OneCare’s accounting records,” wrote Justice Nancy Waples, who authored the ruling.
“The trial court,” Waples added, ”therefore properly granted OneCare’s motion to dismiss the complaint for failure to state a claim upon which relief could be granted.”
In conducting an audit of OneCare, Hoffer asked for 2019 and 2020 payroll data from the organization — including 1099s, W2s and benefits information. OneCare termed the auditor’s request a “baseless overreach” and overly intrusive, which, if allowed, would violate the privacy of employees.
Among Hoffer’s arguments was that OneCare should be treated “as the functional equivalent of a state agency” that is subject to the auditor’s authority under state law, but the justices disagreed.
“Although the contract requires OneCare to provide records for auditing purposes, it does not indicate who is to carry out these audits,” Waples wrote in the ruling.
“The fact that the Auditor’s duties include carrying out audits of state agencies,” she said, “does not automatically mean that he is the ‘authorized representative’ entitled to audit OneCare, a private contractor, merely because it receives state funds.”
Waples’ decision also noted that OneCare is required to obtain budget approval from the Green Mountain Care Board.
Hoffer could not be reached for comment Friday. In a statement provided to VTDigger prior to the ruling, Hoffer said that a decision in OneCare’s favor would deal “a serious blow to government transparency and accountability.”
Such a decision, he said, would cloak “the use of hundreds of millions of Vermont taxpayer dollars in secrecy, allowing Vermont state agencies to protect themselves and their contractors from independent performance and spending oversight.”
In an emailed response, OneCare Vermont’s CEO, Victoria Loner, praised the ruling, saying the organization was glad the court saw Hoffer’s request as an “overreach.” She said OneCare was “happy with today’s outcome,” calling Hoffer’s argument “faulty.”
“In a highly regulated industry, the decision in this case reflects our team’s ongoing efforts to comply with existing federal and state laws,” Loner said.
Oral arguments before the Vermont Supreme Court took place in April.
Andrew Boxer, an attorney representing Hoffer, then told the justices, “This case is about the Vermont State Auditor’s ability to examine the books of the entity responsible for spending $1.2 billion in health care dollars in Vermont in the year 2020, including a $328 million contract for Vermont’s Medicaid’s program.”
“In a world where the practical reality of state government now involves ever-increasing outsourcing to corporations,” Boxer added, “the public policy import for this dispute cannot be overestimated.”
Attorney Anne Rosenblum, representing OneCare, told the justices that the contract between the parties makes no mention of the auditor.
“There’s nothing in the statutory language to suggest that the auditor has authority or jurisdiction over any non-governmental body,” Rosenblum added. “The auditor does not have authority to audit or demand records from a private contractor that provides services to the state, like OneCare.”
Peter D’Auria contributed to this story.