Key Points

  • Section 112.08(2)(a), Florida Statutes, requires a local government to advertise for competitive bids only before entering a "contract for insurance."
  • A local government's contract with a professional administrator to manage a self-insured healthcare plan is a contract for administrative services, not a contract for insurance, so the statute does not require bidding.
  • The court read the statute as a whole: the self-insurance provision substitutes actuarial review, Office of Insurance Regulation approval, and a qualified administrator for competitive bidding, and the broader bidding language in section 110.123 for the state's plan shows the Legislature knew how to require bidding for any contract.
  • Relying on Florida precedent and era-appropriate dictionaries, the court held that self-insurance involves retaining risk and is not insurance, which requires one party to assume another's risk of loss.
  • The Third DCA affirmed the denial of AvMed's motion for temporary injunction and the dismissal of its suit challenging Miami-Dade County's no-bid award to Aetna.

Florida local governments that pay their employees' medical claims themselves do not have to seek competitive bids for the contracts with the companies that run those health plans, a state appeals court held Nov. 12, rejecting AvMed Inc.'s bid to stop Miami-Dade County from awarding the work to Aetna Life Insurance Co. without a bid.

Judge Gooden, writing for a three-judge panel of the Third District Court of Appeal that also included Judges Lindsey and Lobree, held that the bidding requirement in Section 112.08 of the Florida Statutes applies only to a "contract for insurance." A contract with a professional administrator to manage a self-insured plan is not one, the court held.

The decision governs self-insured plans, in which the government rather than an insurance carrier bears the cost of members' claims. Under the ruling, a local government that self-insures may hire a plan administrator without advertising for competitive bids, the procedure the statute requires before it buys insurance. The panel affirmed the trial court's denial of a temporary injunction and its dismissal of AvMed's suit. The plan covers about 30,000 county employees, retirees and their families.

Miami-Dade has self-insured its group healthcare program since 2008, and AvMed has served as its professional administrator from the start. The county designs and funds the program and pays members' eligible medical expenses. AvMed processes claims, provides customer service and handles reporting in exchange for administrative fees. Its most recent contract was set to expire Dec. 31, 2025.

In early 2025 the county issued a request for proposals that included a local-preference clause: if a local proposer's ranking fell within five percent of a higher-ranked non-local proposer, the local company would get the chance to negotiate. AvMed is a local vendor; Aetna is not. A consultant, Gallagher Benefit Services Inc., found that Aetna's proposal would save the county at least $40 million a year.

The county's Competitive Selection Committee scored Aetna higher than AvMed in every category. But AvMed's combined score landed within five percent of Aetna's, triggering the local preference, and the committee recommended negotiations with AvMed. The committee also "expressed concerns about awarding the contract to AvMed based on the County's experience with the company," the opinion said. Both companies then submitted best and final offers, and Aetna again came in lower.

The county mayor recommended that the Board of County Commissioners waive competitive bidding and award the contract to Aetna. The board first requested a second independent analysis, and the county engaged Aon Consulting Inc., which concluded that Aetna's proposal was $45.5 million less expensive than AvMed's. The board then voted 7-2 to approve the bid waiver and award Aetna the contract.

AvMed sued the county and Aetna, seeking a declaratory judgment that the county could not award the contract outside a competitive process, an injunction, and a writ of mandamus, an order compelling officials to follow the bidding rules in Section 112.08. After an evidentiary hearing, Miami-Dade Circuit Judge Peter R. Lopez denied all three requests and dismissed the case. The trial court concluded that the administrator contract is not a "contract for insurance" and that the county had authority to waive bidding even though it had begun a competitive procurement.

On appeal, AvMed argued that self-insured plans are contracts of insurance. It also pointed to the statute's first sentence, which authorizes contracts with "insurance companies or professional administrators," and linked it to the bidding mandate in the next sentence. Judge Gooden wrote that "that reading considers the opening sentences in isolation and ignores the remainder of the text, its structure, and the context provided by its other provisions."

Read as a whole, the court said, the subsection addresses three distinct subjects: buying insurance, replacing coverage when an insurer fails, and self-insurance. Bidding is required for the first. For a failed insurer, the statute allows either bidding or direct negotiation. For self-insured plans, the Legislature instead required actuarial review and approval by the Office of Insurance Regulation and the use of a qualified, approved administrator. "But when the Legislature authorized self-insured plans, it did not repeat the competitive bidding requirement," the judge wrote.

"Reading the competitive bidding requirement into the self-insured provision would add a requirement that the Legislature did not include," the opinion said. The panel also rejected AvMed's reliance on Section 110.123, which governs the state's own group health program and requires bidding "[b]efore entering into any contract." That broader wording showed the Legislature "knew how to require competitive bidding when it intended to do so," the court wrote.

The court also held that a self-insured plan is not itself a contract for insurance. It cited a 2000 Florida Supreme Court decision stating that "[S]elf-insurance does not constitute insurance in any traditional form," and consulted era-appropriate dictionaries. Those sources define insurance as one party assuming another's risk of loss, while a self-insurer sets aside its own funds to cover losses.

Miami-Dade keeps the risk of paying its employees' medical expenses, and no carrier indemnifies the county, the panel found. "The County's contract does not transfer the risk of loss to another or require another to indemnify the County against that loss," Judge Gooden wrote. "It is a contract for administrative services—not a contract for insurance."

The statute still requires bidding when a local government buys insurance "whether directly from an insurer or indirectly through a plan administrator," the court said. Because AvMed had not met the requirements for a temporary injunction, the panel affirmed. It rejected AvMed's remaining arguments in a footnote without further comment.

AvMed was represented by Etan Mark of Mark Ferrer & Hayden. Miami-Dade County Attorney Geraldine Bonzon-Keenan represented the county. Aetna was represented by Benjamin James Grossman of Foley & Lardner LLP.

The opinion is not final until the court disposes of any timely motion for rehearing.