Today, the United States District Court for the Northern District of Illinois ordered our client’s claims against insurance giant Arthur J. Gallagher will proceed. Employees in Chicago with group health insurance frequently ask me about their employer’s health insurer, not even realizing the employer does not buy typical insurance. Many employers today self insure and buy stop-loss insurance, or reinsurance (reimbursing the employer when expenses exceed a large amount). Our client was an unfortunate victim of what happens when an employer intends to buy stop-loss insurance, but the insurance agents never bind the insurance.
In Access Services of Northern Illinois v. Capitol Administrators, Inc., No. 3:19-cv-50050, 2021 WL 780489 (N.D. Ill. Mar. 1, 2021), Arthur J. Gallagher served as the insurance broker for Access Services, and our client worked at Access Services. The employer’s health plan was supposed to include stop-loss insurance, but the agent who sold the plan (and charged commissions) never bound the insurance, leaving the employees and their families with no assurance their medical claims would be paid. Gallagher came up with a number of theories to try and dismiss every claim against it by both our client (the plan beneficiary) and the employer. Today, Judge Iain Johnston rejected all of Gallagher’s arguments trying to evade liability for not placing insurance. In the opening paragraph of the simultaneous order on the employer’s motion, 2021 WL 780483, Judge Johnston wrote:
“Allegations are not facts; they mean nothing if not proven by evidence. But if the allegations made by the plaintiffs and third-party plaintiff are true, then this case is a prime example of why so many people are so enraged with the health insurance system.”
Our client specifically became diagnosed with cancer and suffered multiple strokes in the year the employer’s health plan had no insurance to pay for the medical bills in 2018. Despite having money for naming rights at a professional sports arena, Gallagher did not feel it should owe anything for leaving innocent employees with unpaid medical bills when it did not make sure insurance was in place. Today it realized how people really feel about the insurance industry in our health system. The litigation appears to be going on as long as it has because Gallagher and its co-defendants, Capitol Administrators and Lucent Health, refuse to come together to solve a problem and try to leave the innocent employees and their families to fend for themselves. Perhaps it is finally time Congress impose stronger remedies under ERISA § 502(a), and (though not applicable here) Illinois adopt better bad faith remedies in the Insurance Code. Judge Johnston could not have said it better. So many people really are so enraged with the health insurance system, and the actors need to be held more accountable. At least today, the insurance industry was finally on the receiving end of a denial (of their motion to dismiss).
If you have a large amount of unpaid medical bills, talk to a knowledgeable ERISA lawyer. You may be able to do more about it than you think.