Brownsville ISD vs HealthSmart Settlement Terms Revealed


HealthSmart to pay BISD $2 million in three payments………….

Local Brownsville blog reports on terms of Brownsville ISD vs HealthSmart settlement. The controversy concerned the promise of deep PPO discounts and the perceived notion on the behalf of BISD they were screwed. This is a classic example of suing a Ham Sandwich and winning through extortion. (type in Brownsville ISD in the search box on this blog for previous postings) – Molly Muebriar


By Juan Montoya
When the new majority on the Brownsville Independent School District board opted to resurrect the lawsuit the district had dismissed against HealthSmart alleging that the third-party health administrator of the health benefits plan had overcharged, they spoke of recovering $14.5 million.
The claim was made in the waning days of the 2010 election cycle when two board members facing stiff election challenges convinced the majority to file the lawsuit.
Rick Zayas and Ruben Cortez lost nonetheless, and the new board voted to dismiss the lawsuit.,  BISD at first withdrew from the lawsuit on 2010, but a new board majority reinstated it four years later.
The HealthSmart lawsuit was based on the new board majority’s contention that the rising costs of its employee health plan was based on overcharges by that company.

Even before they had directed board counsel Baltazar Salazar to go ahead with the lawsuit, he had already referred the case to the McAllen civil law firm of Garcia and Karam.
A settlement was negotiated by Karam, a firm which was hired by the BISD on a contingency basis March 2014. As such, they staood  to gain a nice chunk of change (more than 45 percent plus expenses) for reaching the settlement.
We heard of a possible settlement last November and made a public inquiry of the district.
When we inquired, we had information from within the legal community that the settlement was for far less than what those proposing the reinstatement of the lawsuit against HealthSmart. The legal community has more holes than a sieve and – if the indications we get are credible – the district ended up with far less than it anticipated, we had a suspicion that contingency lawyers (and referrals) got the lion’s share of the booty.
We got his response:
Date: December 9, 2014
“This is the district’s response to Public Information Request #7735 which was received on November 18, 2014.
As per the BISD School Board Attorney, the district does not have documents responsive to this request at this time because the agreement between Health Smart and BISD has not been fully signed and executed. Therefore, the documents are not yet available. This concludes the district’s response.”
In reality, the settlement had become final Nov. 14, as later documentation the BISD released would show.
Then, after the delay in the “school board attorney (read Baltazar Salazar)” allowing the information to filter out, we made yet another request for the documentation and asked on March 30 of this year for “the final terms and settlement for the BISD vs. HealthSmart lawsuit including attorneys’ fees and the terms of cash payments made to the district.”
Well, we finally got the AG decision for BISD to turn over the info on June 16.
That was seven months after the settlement was signed. These are the terms:

1.HealthSmart will pay BISD $2 million in three payments (Not $14.5 million. Not $7 million.

Not even $3.5 million.)
2.The first payment was made within 30 days
after the November 14 signing for $1,200,000.
*3. The second payment for $400,000 will be made one year from the first payment.
*4. The third and final payment for $400,000 will be made a year from the second payment, that is two years from the initial payment.
Why the asterisk*?
The final two payments are predicted in HealthSmart not going into insolvency. That is, if it filed for Chapter 7 within the first year, BISD will have to take its place in line with other creditors.
5. Each party is responsible for paying its own legal costs and expenses.
6. Since the contingency fees in these cases can go as high as 45 percent and the legal costs and expenses can cover the other 5 percent, BISD will probably share the initial $1,200,000 fifty-fifty with the lawyers and get a total of, not $14.5, not $7 million, not $3.5 million, but (drumroll) how about $600,000?
If the lawyers being lawyers want to get their cut from the ephemeral $800,000 to be paid (unless bankruptcy interferes) in the next two years, they will insist on getting another $400,000 up front and leave BISD with a total of (drumroll) $200,000.
Did BISD counsel Salazar get a referral from Karam? That would probably take another six months of prying so never mind.
No wonder they didn’t want anyone to know. In fact, keeping the details from the public was part of the settlement. Unless someone went through a formal request for information under the Texas Open Records Act, the parties agreed to the stock answer “the matter has been resolved.”
If someone actually persisted and made a formal request, the BISD was to delay and ask for a Texas Attorney General’s opinion on whether the terms of the settlement were exempt from disclosure,
In other words, they knew the information was public, but reached an agreement to conspire, manipulate the release of information to the taxpayers of BISD and the public, to delay releasing it to let thing cool off.
Is everyone cool with that?