Osceola Schools blast consultant’s ‘greed’ in health plan choice

man in suit getting dollar bills in his jacket
Among the accusations: $4 million in secret payments.

The Osceola County School District hired a consultant to help the district pick which health insurance company to hire. But instead of helping the school district spend its taxpayer money wisely, the district is accusing the consultant of choosing an insurance company that rang up health care costs for the district while the consultant secretively collected nearly $4 million from insurance carriers, the school district said in a new federal lawsuit filed in U.S. District Court late last month.

In the lawsuit, the school district said it paid a capped annual fee up to $195,650 to Gallagher Benefit Services for the consultant to analyze different insurance companies and help the district hire providers for employee benefits. Gallagher recommended hiring Cigna which the district called “an unmitigated disaster.”

“Unknown to the School Board, Gallagher had received secret insurance commissions over the years totaling millions of dollars. In doing so, Gallagher breached its agreements and, worse, the School Board’s trust, leaving the unmistakable taint on Gallagher’s fealty given that the School Board had engaged a consultant getting paid more from the carriers it was to scrutinize and supervise than from the School Board itself,” the lawsuit said.

Gallagher breached its agreement with Osceola Schools “for the basest of reasons — greed,” the lawsuit accused.

“Gallagher boasts on its website to ‘bringing greater trust to the public trust,’ particularly when serving schools in its ‘primary mission of giving kids the best possible education,’ but its actions regarding the School Board proved anything but that,” the lawsuit said.

Gallagher, which is headquartered outside Chicago but has an office in Orlando, did not respond to a request for comment this week but the company is seeking to dismiss the lawsuit, documents show.

“After stripping away the bluster, the complaint mostly consists of a series of conclusory allegations thrown together in a hodge-podge way that does not provide notice to Gallagher of what specifically the School Board seeks to remedy with its breach of contract claims,” Gallagher said in court documents filed Nov. 30.

The district’s lawsuit said Cigna didn’t negotiate competitive prices for medical procedures and prescriptions. The lawsuit cited examples: Two heart surgeries that should have each cost roughly $220,000 were approved and performed for $2 million while prescriptions selling less than $20 over the counter were approved for $250.

That meant the taxpayer-funded school district was often stuck with the leftover bill.

“Under the self-funded model of employer-sponsored health insurance, the School Board remained responsible for the portion of the health care costs not paid for by the member,” the lawsuit said. “Cigna’s failure to conservatively approve treatment and failure to negotiate competitive prices for prescriptions and medical procedures forced the School Board to grossly overpay health care providers and pharmacies.”

The lawsuit didn’t say how much the district thought it had overpaid. The school district’s attorney said he was not able to immediately comment.

The school district and Cigna are in litigation.

“We previously provided health plan administration to the School District of Osceola County employees for almost 20 years. During this relationship our contract was continuously evaluated and voted on by the District’s procurement and Insurance committee based on our successful track record of making health care affordable, predictable and simple for teachers, administrators and staff,” said Cigna North Florida Market President Dean Mirabella. “We are not a party to the Gallagher lawsuit, and in that lawsuit, there is no allegation that our company paid any improper commissions. Unfounded and misleading public comments have been made about payments for specific procedures that do not take into account or accurately reflect how complex medical procedures are paid. As a valued partner for nearly two decades, we negotiated discounted rates that were fair and competitive for the customers we served.”

Cigna sued the district last year with the insurance company arguing the district didn’t properly competitive bid out for new contracts after the school system decided not to renew Cigna’s contract.

Osceola Schools also blames Gallagher for not protecting the district from Cigna and other carriers while Gallagher “collected secret commissions which exceeded the fixed fee allowed by the Services Agreements and Renewals with the School Board,” the lawsuit said.

Under the agreement with the school district, Gallagher was not supposed to get paid for commissions or supplemental compensation, including finder’s fees, the lawsuit said.

Gallagher and Osceola Schools had been doing business together since 2012.

Gabrielle Russon

Gabrielle Russon is a journalist who covers theme parks and Florida tourism. She previously worked at the Orlando Sentinel, the Sarasota Herald-Tribune, the Toledo Blade and the Kalamazoo Gazette. She graduated from Michigan State University.


3 comments

  • David Hold

    December 6, 2021 at 7:21 am

    I came across this article after reading David Contorn’s post and here is a typical situation that although everybody recognizes there is very little being done to correct it. But as time goes by the ultimate payers will realize that there is time for a change. This rape can not go on even with a healthcare budget such as the US. Not that there are no viable solutions as we have developed one over the past fourteen years to address the critical and escalating healthcare issues. But rather that until it does not affect us personally the attuite was Who Cares. I like to use the analogy to our car insurance premiums. If your agent raised your premium from one year to another you would be calling yelling at him and threatening him of changing brokers. But in healthcare, it was always the attitude that if I do not have to pay for it who cares. As these costs are rapidly getting shifted to the ultimate payers this screaming and yelling will escalate. Although many in the industry recognize that the solution is preventive care. The reality is that none of them are interested as they fear that it will destroy their lucrative bottom lines. We do not have to look any further than the invasion of outsiders trying to capitalize on the opportunity like the retail industry. But the reality is that their so-called solution is going to further aggravate the situation especially in rural areas where we are already facing critical issues. Their clinics are destroying the revenue source of many rural facilities and providers that when a patient is going to require intervention there will not be anybody there to provide it. Not to mention the economic disaster they bring on top of these communities where 30 percent of the local economy is from these vital institutions. Our solution was developed to address these issues where a caregiver with the use of a simple cellphone could interact and monitor a patient disease-specific and as such prevent critical and expensive consequences But one thing our solution lacks is a pedigree and it is why we had to turn our focus on developing and underdeveloped countries where the needs are greater and they do not have the big budgets of the US at their disposal. But as time goes on and situations like this are going to come to light more often so there is hope.

  • Craig Sicinski

    December 9, 2021 at 7:21 am

    Folks lets be clear here.
    This is what small pharmacy owner/operator’s have been saying for YEARS. We are being taken advantage of due to these abusive and predatory business practices by the PBM.
    Pharmacy Benefit Managers (PBM’s) have been gaming the system with NO REGULATION or accountability. It is more than time to AUDIT THE AUDITOR in the pharmacy space and reduce drug costs.
    Craig Sicinski RPh Orlando Pharmacy Orlando, FL

Comments are closed.


#FlaPol

Florida Politics is a statewide, new media platform covering campaigns, elections, government, policy, and lobbying in Florida. This platform and all of its content are owned by Extensive Enterprises Media.

Publisher: Peter Schorsch @PeterSchorschFL

Contributors & reporters: Phil Ammann, Jason Delgado, Renzo Downey, Daniel Figueroa, A.G. Gancarski, Anne Geggis, Kelly Hayes, Joe Henderson, Ryan Nicol, Jacob Ogles, Scott Powers, Gray Rohrer, Jesse Scheckner, Christine Sexton, Andrew Wilson, Mike Wright, and Tristan Wood.

Email: [email protected]
Twitter: @PeterSchorschFL
Phone: (727) 642-3162
Address: 204 37th Avenue North #182
St. Petersburg, Florida 33704




Sign up for Sunburn


Categories