Osceola Schools’ lawsuit against its ex-health insurance consultant won a legal battle in court.
U.S. District Judge Anne Conway denied the consultant’s motion to dismiss the lawsuit last week.
For seven years, Gallagher Benefit Services helped the Osceola School District navigate through the insurance industry by analyzing and making recommendations about which carrier the district should hire.
In exchange, Gallagher was paid annual fees from the insurance companies but the School District set a cap at Gallagher’s commissions at $195,650 “to avoid the self-serving incentives that could accompany this financial arrangement,” the judge wrote in her order.
In a lawsuit filed last year, the district accused Gallagher of breaking that agreement and getting paid more than $2 million in “secret commissions from insurance carriers it recommended to the board,” the order said.
“Gallagher sold itself as a company that was well-positioned to provide consulting and brokerage services to the Board. It also stated that it would (remain) impartial during all business transactions, disclose all compensation received,’ and represent the Board’s best interests in all ongoing interactions,” the judge wrote.
The judge ruled the district’s lawsuit against Gallagher can continue on despite Gallagher’s objections over several matters, including the lawsuit not providing specific details how much and which insurance companies paid Gallagher the alleged secret payments.
For the Gallagher lawsuit, the School District is seeking at least $2 million from Gallagher’s alleged secret payments to set up a fund for district teachers.
“The district is also seeking punitive damages for Gallagher’s breach of fiduciary duty and fraud,” the judge wrote. “In this case, the School Board’s factual allegations provide a reasonable basis to believe that Gallagher committed intentional misconduct. These allegations of fraud are sufficient to state a claim for punitive damages. … Greed, as the School Board points out, is a factor relevant to punitive damages.”
“Punitive damages are the great equalizer, the one thing that can bring corporate America to heel when it acts wrongly,” the district’s attorney Tucker Byrd said when reached for comment Wednesday.
Gallagher could not be reached for comment immediately Wednesday.