County Sues Insurance Broker Over Secret $250,000 Commission

The county’s complaint alleged broker accepted a $254,000 kickback for referring the county to a major insurer…………………in addition to fees paid directly by the county to the broker…………

County sues insurance broker over “secret” $250,000 commission

Lyle Adriano 26 Oct 2018

Morris County, NJ has filed a lawsuit against its former health insurance broker, claiming that the broker had accepted an under-the-table deal with the health provider it had recommended to county workers.

The county’s complaint alleged broker Frenkel Benefits accepted a $254,000 kickback for referring the public office to a major insurer. The complaint named Frenkel Benefits president Craig Hasday and two other company principals as defendants, while the firm itself was accused of civil conspiracy, common law fraud, consumer fraud, unjust enrichment and breaches of contract and fiduciary duty.

Morristown Daily Record reported that neither Hasday nor a representative of Frenkel has responded to requests for comment.

In March 2015, five of seven freeholders had voted to hire Frenkel to serve as the county’s insurance broker and consultant. Awarded a $125,000 contract, Frenkel was renewed two more times before the freeholders earlier this year rehired its previous broker, Brown & Brown.

Officials claimed that while Frenkel was serving as the county’s broker, Morris County workers suddenly had to switch healthcare providers and negotiate new coverage with Cigna. The lawsuit further alleged that in 2016, Frenkel received a $235,000 commission from Cigna for enrolling the county’s health insurance coverage with it.

Morris County also claimed that Frenkel received another $19,206 in commissions in 2017.

The lawsuit, which seeks monetary and punitive damages, also stated that Hasday had failed to notify the county of any commissions Frenkel received, despite submitting certification that promised transparency. The broker also failed to notify Cigna if the county had approved the coverage plan.

“The defendants created a scheme and artifice to defraud the county by inducing it to change its employee health care coverage to Cigna so that the defendants would receive commissions of $235,000 for the period of Jan. 1, 2016 to Dec. 31, 2016, and $19,206 for the period of Jan. 1, 2017 to Dec. 31, 2017,” the lawsuit said.

On top of the fraud charges, Morris County argued in its lawsuit that Frenkel failed to disclose other financial aspects of the Cigna coverage that expose the county to liability. By not disclosing the exposures, Frenkel could gain “a financial windfall,” officials said.

 

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