Lawsuit Exposes How Health Insurance Brokers Can Earn Enormous Commissions

By Bill Rusteberg

“You Don’t Want Me To Know Your Business Because It Won’t Be Good For You!”

The Weslaco-vs-Aetna lawsuit exposes how brokers can earn enormous commissions in partnership with the BUCAs.

“Weslaco Independent School District (WISD) asserts that this act is one of many that evidence the conspiracy between defendant Robert J. Garza (broker) and Aetna to bill WISD for unauthorized and fraudulent commissions to his benefit.”

Read the pleading HERE and see if you can determine the amount of commissions paid to the broker.

Were they:

_____ $1,086,336

_____$ 227,000

_____Between $1,086,336 and $227,000

_____More than $1,086,336 (inclusive of PPO discount shared savings of 9.8% & Rx rebates)

_____Less than $227,000

Bear in mind that according to the pleading WISD clearly stated in both RFP’s for plan years 2007-2008 and 2008-2009 that no broker commissions were to be paid.

If the WISD had had an independent fee based insurance consultant overseeing the RFP process this would never have happened. Instead WISD administration wasted millions of dollars over the course of two years.

Unfortunately these shenanigans continue. Public entities like the WISD are not subject to ERISA and therefore brokers and other third party intermediaries do not have to comply with federal disclosure requirements recently passed by Congress. Despite this non-ERISA plans should demand full disclosure.

All they have to do is ask.

Several years ago we were hired on a temporary basis to audit a district’s self-funded health plan administered by a BUCA. The district wanted to know where their money was going as their plan was in a deficit spending mode. They believed their broker was earning $127,000 but wanted to confirm that. So we did. We confirmed there was not one broker but two and together they were earning $614,000, not $127,000.

When asked “How did you find this out?” we replied “We asked.” All plan sponsors should do the same but for some reason most don’t.

The Weslaco-vs-Aetna lawsuit is a must read for plan sponsors. File this under “You Don’t Want Me To Know Your Business Because It Won’t Be Good For You!