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Patrick Springer, Published March 09 2014

Fargo-based Noridian has long ties with feuding firm

FARGO – Noridian Healthcare Solutions and EngagePoint for years enjoyed a cozy business relationship.

So the two firms’ ongoing feud over the botched Maryland health exchange, the subject of litigation and bitter allegations, is a business divorce of sorts.

Noridian, recently fired as the prime contractor for Maryland’s online health insurance marketplace, relied heavily on EngagePoint for the expertise to build the complex network to determine premiums and eligibility for subsidies.

The Fargo-based Noridian’s longstanding association with top executives of EngagePoint – several of them former Noridian employees – helps to explain why Noridian allowed itself to become so reliant on outside expertise on the Maryland project.

A trio of EngagePoint executives came from Noridian, a wholly owned subsidiary of Noridian Mutual Insurance Co., which does business as Blue Cross Blue Shield of North Dakota:

• EngagePoint’s top executive, Pradeep Goel, recently held senior positions involving information technology at Noridian.

Noridian announced in April 2011 that it had named Goel “interim enterprise chief information officer” while he also was the top executive of Consumer Health Technologies, which started in November 2006 and later changed its name to EngagePoint.

Later, from November 2011 to May 2012, Goel was chief innovations officer at Noridian, according to his resume on LinkedIn.

Noridian’s association with Consumer Health Technologies, originally based in Fort Lauderdale, Fla., deepened in 2010, when the two companies signed a “multi-year services agreement.”

“This contract is another landmark in the long and successful partnership between Noridian and CHT,” Troy Aswege, then Noridian’s chief technology officer, said when the agreement was announced in October 2010.

• Jay Martinson, EngagePoint’s president, served for years as chief operating officer and executive vice president for Noridian before joining EngagePoint in November 2010.

Martinson was named chief operating officer of Noridian Administrative Services when it was formed in 2002, after being with Blue Cross Blue Shield of North Dakota for 21 years, according to Forum archives.

• Kaylin Frappier, EngagePoint’s vice president of professional services, had a long career with Noridian. He was vice president of government programs when he left last May, and once served as Noridian’s program manager of the Maryland exchange.

Representatives of Noridian and EngagePoint, still involved in litigation over the Maryland exchange, declined to be interviewed, although Tom McGraw, Noridian’s president and chief executive officer, gave a statement to The Forum.

“Much of the history of our relationship between EngagePoint (formerly Consumer Healthcare Technologies) goes back many years, and was under different management,” McGraw said in the statement. “The relationship changed under new management, and was further strained by the regulatory complexity and financial stress of the Maryland state health insurance exchange project.”

Noridian ended its subcontracting relationship with EngagePoint in October, and the two former partners have been embroiled in litigation since.

A lawsuit in U.S. District Court in Maryland was dismissed last week, and the dispute has moved into arbitration.

Noridian’s soured relationship with EngagePoint could prove costly.

Maryland paid $65.4 million to Noridian under its contract, which it recently terminated. Maryland gave notice that it could sue to recover costs when it announced that it was switching to a new contractor to run its exchange.

Also, Maryland officials said last week that flaws in its online health insurance exchange saddled the state with at least $30.5 million in unnecessary Medicaid spending.

Noridian Mutual Insurance Co., the parent company, said in a recent regulatory filing that it estimates losses of $17.8 million for an unidentified wholly owned subsidiary.

That figure was in Noridian’s most recent quarterly financial statement, for the quarter ending Sept. 30, 2013, with the North Dakota Insurance Department. The statement for the quarter ending Dec. 31, 2013, will be filed in April.

Readers can reach Forum reporter Patrick Springer at (701) 241-5522