Media-buying firm Carat charged that Los Angeles advertising agency Ground Zero dropped it after the two firms jointly pitched the account.
Mr. Mayer said the challenge was referred to a joint committee of the California Legislature which in turn must decide whether to call for a media-buying audit by the California Bureau of State Audits.
John Barnes, executive vice president-managing director, Carat USA, Los Angeles, said his shop will continue to pursue its challenge with state entities. He claims Ground Zero did not meet a requirement of the original contract that required the agency to have purchased $20 million in media. Carat also says it can get better value for the state's media buying dollar.
Ground Zero executives declined to comment on the charges.
A state health department spokesman said: "Carat has raised many questions and the department is investigating the allegations."