The state will be forced to defend itself against a potentially costly class-action lawsuit alleging that thousands of teachers, state employees and retirees were overcharged this year for their health insurance, a judge has ruled.
Fulton County Superior Court Judge Cynthia Wright denied the state’s claim that it was immune from being sued by members of the State Health Benefit Plan. The plan provides health coverage to about 650,000 Georgians and has been a major political headache for Gov. Nathan Deal and the Department of Community Health for more than a year.
Lawyers for plan members have estimated that more than 200,000 teachers, state employees and retirees have been paying more than $10 million a month too much since the agency made changes to coverage in January. The changes were made after plan members complained that the state was trying to save millions of dollars by charging them much higher out-of-pocket costs for health care.
The changes lowered out-of-pocket costs, but they left some plan members paying much higher rates than others who were getting similar benefits. Their lawyers claim the state used "bait and switch tactics" to get members to sign up for higher-priced coverage last fall.
Some teachers and retirees said they should have been allowed to sign up for the lower-cost plan once the state made the coverage fixes in January.
In her order, Wright said the plan amounts to a contract and denied the state’s motion to have the case dismissed.
A. Lee Parks, one of the attorneys representing plan members, said, “State agencies enter into contracts on a daily basis, and its citizens have a right to expect the state to live up to its promises. When the service is your health insurance, it is more than frightening that the state would argue that the policy holders cannot make the state live up to its promises.”
DCH officials declined comment because the legal case is pending.
The $3 billion-a-year insurance plan has been a hot topic since the summer of 2013, when the contract to manage the program for 2014 was awarded to Blue Cross and Blue Shield of Georgia. That prompted one of the companies that had been managing the plan, UnitedHealthcare, to sue the state, arguing that the DCH had resorted to "state-sponsored bid-rigging" to steer the contract to Blue Cross and Blue Shield.
To save money, the state limited the insurance offerings to three plans, with different deductibles and premiums and higher out-of-pocket costs.
Once those higher costs started kicking in, teachers, state employees and retirees revolted, forcing Deal and the DCH to backtrack and lower co-payments for services.
The move cost the state more than $100 million. It also made all three plans more similar. But the premiums didn’t change, so those in the highest level plan paid more than twice as much as those in the lowest-cost plan. The difference for family coverage for an employee runs as high as $279.44 per month, the lawsuit said.
DCH agreed to offer expanded coverage choices for 2015, but teacher groups said prices would skyrocket for some plans.
Issues with the plan have dogged Deal since January, despite his attempts to fix the problems raised by plan members. The governor is running for re-election this year and teachers are traditionally a politically active voting bloc. A group called TRAGIC was started early this year on Facebook to protest the plan. The group now has more than 16,000 members and many of those who post on the site have made it clear they don’t want to see Deal re-elected.
“Georgia employees and retirees entered into a health care contract on Jan.1 with the state and expected to receive the benefits they enrolled in for the duration of the year,” she said.
“Instead, the state greatly altered member benefits mid-year, leaving many paying a much higher premium than others for the same benefit. In short, our health care plans were changed abruptly without the opportunity to elect a new plan. We upheld our end of the contract while the state did not.”
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