What good is an insurance offer (proposal) upon which you made the decision to purchase, if you cannot compare it to the governing contract to be placed in force?
A. Worthless – contract supercedes proposal
B. Binding – proposal supercedes contract
Editor’s Note: Unfortunately, this phenomenon is becoming more prevalent with political subdivisions who bid out their self-funded employee welfare plans. Proposals are received through contractors (example – third party administrator) who in turn sub-contracts out various components of the plan (example – pharmacy benefit manager). The proposals submitted by the contractor on behalf of the sub-contractor are not binding upon the political subdivision. Once the proposal is approved, the contract is executed between the contractor and the sub-contractor. The political subdivision thus becomes a third party beneficiary only, and not a party to the contract. Therefore, the contract can be deemed “proprietary” to the contractor and the sub-contractor and the political subdivison will not have the ability to compare the actual contract to the proposal upon which they made the decison to purchase. And, it has been our experience that when you cannot review a contract, that means you are usually paying more than you should.