“United Healthcare of Ohio and Anthem Blue Cross and Blue Shield have signed consent orders with the Ohio Department of Insurance to resolve allegations of improper compensation to agents, Insurance Director Ann Womer Benjamin announced.”
Insurance companies cheating?! Say it ain’t so, Joe.
Apparently, United HealthCare (no stranger to this blog) added a little “vig”to the comp it paid some of its (no doubt favored) brokers. This in addition to the fee said brokers were already being paid by the public agencies doing the shopping.
Having no personal experience in this particular market (well, not really: I recently quoted a small local parks district, but a) they were already with UHC, and b) they weren't paying me anything), I'm somewhat surprised that these brokers were pocketing fees in the first place; generally, we're paid a commission when we actually sell a case. By the carrier.
To make matters worse (not sure how that’s possible), UHC Home Office Critters (HOC’s) also lied to the Department of Insurance investigators. Memo to UHC staff: “Um fellas, that’s a no-no.”
Gee, I wonder what they lied about.
“Anthem Blue Cross Blue Shield, based in Mason, Ohio, signed a similar agreement April 3, paying $30,000. Anthem was not accused of lying to the department.”
On the plus side, they apparently ‘fessed up, thereby mitigating the disaster. Seems that, unlike in the UHC kerfluffle, Anthem HOC’s didn’t know that their brokers were double-dipping.
I also found this tidbit interesting: “Also unclear was why the Department of Insurance was enforcing compliance with Ohio ethics laws, which typically are enforced by the Ohio Ethics Commission.”
On the one hand, I teach a course on Insurance Ethics (and no, that’s not an oxymoron)(or any other kind), which class is approved by the DOI. So, technically, I suppose that they do have a horse in this race.
But on the other hand, the Department is not known for aggressively rooting out alleged carrier corruption. So it’s intriguing to see them actually digging into this matter [ed: metaphor alert].
Kevin Grady, the broker at the center of this storm, appears to be an agent in Columbus. His web page is unremarkable; he doesn’t appear to be a particularly flashy kinda guy.
In any case, Mr Grady apparently made out pretty well in this deal (well, until now, anyway): $137,000 from the school district he was ostensibly representing, plus a cool half mil from UHC.
What, he couldn’t settle for a nice calculator or some golf balls, like the rest of us peons?
I particularly liked this characterization from an email sent by one United HOC: “My guess is that the broker doesn’t want to have to deal with the account directly on a fee basis because of the amount of ‘extortion,’ I mean commission being demanded.”
Mr G now will likely lose his license, face substantial fines, and will probably have to return his (allegedly) ill-gotten gains.
But hey, it sure was fun while it lasted.
But wait, there's more!