Lubbock City Council Approves $4 Million Settlement with HealthSmart
In a special meeting, Lubbock City Council today approved the terms of a $4 million dollar lawsuit settlement with HealthSmart.
HealthSmart bought out the Ted Parker company, AAG, and the settlement settles a long standing dispute between the city and AAG. AAG and the city got into a contract dispute back in 2006 concerning overpayment of city health insurance money for doctors' and hospital claims.
The vote on today’s settlement was 5-1. Councilman Victor Hernandez dissented and Councilman Jim Gilbreath was absent. Councilman Hernandez issued a lengthy statement stating why he voted against the settlement, "I voted against the settlement with AAG et al. Three factors: 1) The public has a right to know the intricacies of this and related cases; 2) The sufficiency of the settlement amount ($4 million); and 3) the release of the audit paid for and conducted by the city of Lubbock should have occurred.
"Rationale: The release of the audit should have been included as part of this settlement agreement. If the release of the audit had been included then, full disclosure could have been had to the public including the range of damages which the city was claiming thus, allowing the public to determine whether the $4 million dollar settlement was sufficient. Also, just as AAG refused to include the release of the audit as part of the settlement agreement, the city could have refused to settle unless the audit was included as part of the settlement. As a further result of not including the release of the audit as part of the settlement agreement, the city continues to incur costs to have the audit released and according to Larry Wharton (outside legal counsel) the release, should it ever occur, could take years to accomplish."
District 4 Lubbock City Councilman Paul R. Beane expressed public gratitude that the longstanding issues between the city and HealthSmart had been put to rest. He also stated on the dais today, "A former elected official made efforts to destroy three people's lives in this matter. Two former Lubbock city councilman and a Lubbock insurance executive. The City of Lubbock owes these three men an apology." The three men Councilman Beane was referencing in his statement were former city councilman John Leonard, former city councilman Gary Boren and Jim White.
Lubbock City Manager, Lee Ann Dumbauld, made the following statement after today's council meeting, “Based on the advice from our legal team we believe that this is a fair resolution that compensates the City for the Parker Group’s handling of our health care relationship. The City Council has been steadfast in its attempt to make sure that the citizens of Lubbock recover any money that the City is owed. Today we have taken another step in that direction with the substantial amount we have recovered.”
Dan Crowley, Executive Chairman of HealthSmart’s Board, also discussed the settlement, “The Company’s leaders and its Board of Directors has substantially changed since the period of time in which this dispute arose. We are a terrific Company today and are pleased we were able to work with the City Council to resolve our differences. We look forward to opportunities in the future to have a positive, constructive relationship with the City.”
In addition to settlement with HealthSmart, the City of Lubbock has also recovered approximately $1.35 million in money from various insurance companies, including Travelers.
The $4 million settlement will used to pay for healthcare benefits for City of Lubbock employees.