By Erica Rodd
Barely anyone raised an eyebrow this summer when RyeSAC signed with Gallivan and Associates Student Networks as its health plan broker, but scarcely anyone knew of the university’s tumultuous relationship with the company.
Just who had RyeSAC pledged half a decade’s worth of health coverage to? A look into the Ryerson-Gallivan history would reveal this deal to be more than just about switching health plan brokers.
By signing with Gallivan on July 29, RyeSAC penned a new chapter in the Ryerson-Gallivan tale of multimillion dollar deals, questionable gifts and job offers, lawsuits, and broken promises. Before all that though, there was former RyeSAC resident Cory Wright, now employed by Gallivan as a director of student services for Eastern Canada.
A tracing of the company’s lineage shows that four of the six heads at “team” Gallivan were executives of their alma mater’s student unions. All had previously signed five-year deals with the company, and not long after, all would appear on the company’s payroll-including Wright. Doug Herron, who signed with Gallivan in 1999 at Okanagan University College, was hired in 2003; Byan Boechler, previously the president of his students’ association at Mount Royal College, is now Gallivan’s Western-region director of student services; and the company’s present vice president, John Madgett, worked as the assistant general manager of the University of Calgary’s student union from 1992-1997.
In 2000, Wright’s RyeSAC council became the first to go ahead with the multi-year health broker deal, which was supposed to last until 2004. Months later, Gallivan hired him.
But relations between RyeSAC and Gallivan soured two years later, when a new executive headed by Darren Cooney, negotiated a better deal with the National Student Health Network. Ryerson signed a 12-month deal with the NSH, saving students $17 each on insurance. “We secretly had a good discussion about [changing brokers], and we took it to our executive committee,” Cooney told The Eyeopener in 2002.
“We took a look at our current plan and decided it wasn’t the best deal for students.” But that didn’t sit well with Gallivan. By August 2002, the broker’s lawyers had faxed Cooney threats to sue RyeSAC for breach of contract.
That year, students lost $35,000, an amount RyeSAC paid to the company as part of their out-of-court settlement, in addition to reinstating Gallivan as their health and dental insurance provider in September 2003. Gallivan has been a company for eight years, signing only five-year contracts. Historically, student unions have chosen not to sign contracts longer than a year to ensure they’re not tying the hands of future governments.
Still, Derek Isber, vice-president finance and services, defended RyeSAC’s decision and refuted claims the current five-year contract would “handcuff” the next RyeSAC council. “If all our contracts were for one year, we’d spend the entire year making contracts,” Isber said in September. “I just don’t have the time to do that.”
According to Wright, longer-term contracts provide greater stability to insurers. “When we first started [as a company], we signed one-year contracts, but now the standard is five years,” Wright said from his Gallivan office. As a result, Gallivan now has a record for pressuring student unions to sign on for multiple years.
In the experience of Catherine Dickenson, a former executive on Trent University’s Student Union, Gallivan is part of the reason for the university’s amendment to only sign single-year deals. “Our lawyer didn’t advise multi-year contracts and told us that we would get more competitive rates with one-year contracts,” Dickenson said.
In July, RyeSAC requested six health and dental brokers to provide quotes to the board. According to Isber, the best rate-Gallivan’s five-year deal-would require the board to rescind the previous policy that restricted the council to only signing single-year contracts. RyeSAC did just that, once again joining the Gallivan family.
After signing, RyeSAC President Dave MacLean and Isber went on a Gallivan sponsored retreat to Calgary, which included karaoke, a rodeo, and-in the words of Wright-“a lot of free time.” The retreat, according to Wright, was “only for signed schools and was an opportunity for fellow student union execs to talk about how their plan is working on their campus.” “I didn’t know anything about the plan before going into the conference, but now I can talk with people and debate the merits of the plan,” MacLean said.
Past RyeSAC members have also attended similar retreats after the broker invited them. As well, the apparent wining and dining has taken the form of Gallivan offering gifts to student unions, even during periods when a council is reviewing options for its health plan provider. Members of McMaster University’s student union were given three World Cup of Hockey tickets by Gallivan while the university’s current health plan was under review.
“[Company president John Gallivan] had three tickets to the game,” said Wright, when asked about Gallivan’s generous gift. “We’d met the guys from McMaster at conferences, we knew they liked hockey, so we thought we’d do something nice.”
Tickets for the game ranged from $265 to $795 each. Two of the three MSU members who went to the game were a part of the 35-member board that was responsible who would be the health care provider for the school. Ultimately, McMaster ended up re-signing with their previous provider.
While some at McMaster questioned whether it was right for MSU members to accept a gift from a company it was in discussions for a contract with, business ethics experts say the incident does not qualify as bribery – especially since McMaster didn’t end up signing with Gallivan. Hugh Gunz, an ethics professor at the University of Toronto, said the issue of gifts really depends on the ethical code of the student group and added that there are biases when members of a board accept gifts. “I would be less worried if everyone knows on the board.
If someone is taking me out for an expensive lunch, then I’ll tell the board, they’ll know, their judgment knows that I’ve been taken out for lunch by this company.” At Okanagan University College, the student union’s general manager Rob Nagai felt Gallivan’s numbers were inaccurate and wanted the company to clarify the figures for him.
Eventually, Okanagan received information from an insurance carrier that they were due for a substantial decrease in fees. Gallivan, meanwhile, had been telling the college their fees would be increasing during renewal. Still, Mount Royal College in Alberta has no complaints against the broker. “We did a very, very thorough industry evaluation,” said Tyler Smith, vice president of external affairs at Mount Royal’s student union. “We are very happy with Gallivan’s service.”
Tom Rowles, a representative of the Canadian Federation of Students, said that offering jobs to students from insurance companies is an “unusual” practice. According to MacLean, there’s a guarantee clause in RyeSAC’s contract with Gallivan that says the student union can get out of the contract prior to the end of five years if student fees raise over a certain level.
However, he doesn’t foresee future RyeSAC executives prematurely backing out from the Gallivan contract, this time around. “There’s never been this good of a contract at any school.”
-With files from Matt Kwong, Mike Ghenu and David Musayelyan