City of Lubbock Reaches No Deal

By Elliott Blackburn Avalanche-Journal

Lubbock’s City Council chose Saturday to let a more than two-year legal battle run a little longer.

The council will consider a settlement on countersuits to a 2008 defamation case filed by a former third-party health insurance administrator next week after meeting for 80 minutes behind closed doors and then taking no action on the matter at a special afternoon meeting.

“Being that settlement negotiations are still ongoing, settlement litigation is pending, I would not recommend any action today,” City Attorney Sam Medina advised in open session before Mayor Tom Martin adjourned the meeting.

The long-running fight with ICON Benefits Administrators and American Administrative Group — companies under an umbrella once called the Parker Group — could instead end Thursday. The council will include the issue in its agenda for a Thursday morning meeting.

Medina would not comment on how far the two parties were from agreement or whether he believed there would be a settlement next week.

“That’s an almost impossible question to answer,” he said.

A listed media representative for the benefits group, now called HealthSmart, has not returned phone calls from The Avalanche-Journal.

A jury trial in Dallas had been set for early November.

ICON and later AAG provided health insurance administration from 2004 to 2006 until questions about improper fees and commissions led the city to drop the companies.

City officials alleged the companies kept rebate money from a mail-in pharmacy provider and attached fees to prescriptions the pharmacy filled, charged the full cost for procedures that had a negotiated discount and charged unapproved commissions for certain coverage.

AAG management argued Lubbock improperly moved the business to a new provider, Blue Cross Blue Shield, and that city administrators defamed the companies in the process.

City Manager Lee Ann Dumbauld called the group “crooks, thieves and liars” and warned they could not be trusted, damaging their business, the companies alleged in a lawsuit.

The companies dropped the defamation lawsuits against Dumbauld, former Mayor David Miller and two other employees last spring, but the countersuits remained as the city sought money to cover legal expenses and an audit.

A separate arbitration process over the financial questions raised in the fallout was not a part of the settlement talks, Medina said.

“Two totally separate cases,” he said.