AGS Office Considers Appeal in Class Action

December 3, 2014

By Kathleen Baydala Joyner

The state attorney general’s office is deciding whether to appeal a judge’s decision to allow a potential class action to move forward against the Georgia Department of Community Health in which a government employee alleges she was duped into buying a more expensive health insurance plan.

Fulton County Superior Court Judge Cynthia Wright on Oct. 9 rejected the state’s main argument to dismiss, which was that the lawsuit is barred by sovereign immunity. In her order Wright cited statutory and constitutional waivers of sovereign immunity in contract disputes involving state agencies or departments.

Law Department officials declined to comment Wednesday on the ruling but pointed to its July motion to dismiss, which argued that the plaintiff failed to show the existence of a written contract needed to waive sovereign immunity. The state’s motion said that neither health plan materials provided to government employees by the community health department nor the online enrollment process constituted a written contract.

Wright also disagreed with the state on this issue.

“Although DCH contends that no valid contract ever existed between DCH and plaintiff (and other members of the putative class), the court finds no merit in this argument,” the judge wrote in her order.

The plaintiff, Trecia Neal, who works for the DeKalb County school system, filed her potential class action in May seeking reimbursement of premiums and other damages. In it, she alleges the state’s health benefit plan, which is administered by the Department of Community Health, failed to provide the enhanced benefits it promised her and others who enrolled and paid for higher-priced health care packages.

One of Neal’s lawyers, A. Lee Parks of Parks, Chesin & Walbert, said the state used “bait-and-switch tactics to lure over 200,000 members into buying high-priced health care packages.”

Parks said employees were presented with three coverage options — gold, silver and bronze — that each carried different premiums, deductibles and percentages of coinsurance. Neal chose the gold option, which was the most expensive but carried the lowest deductible and highest percentage of coinsurance. The open enrollment period ended in early November 2013 and took effect on Jan. 1.

On Jan. 27, the department eliminated the three-tier system without giving employees prior notice and applied the changes retroactively to Jan. 1, Parks said. The department also did not change what it was charging employees who chose the more expensive plans, he said, adding that the department prohibited employees from switching to the lowest-cost option. That meant top tier policy holders, including his client, continued to pay higher premiums — in some instances up to twice as much — for benefits they were no longer receiving, Parks argued.

A representative with the Department of Community Health did not respond to a request for comment.

Parks said that, during a Sept. 29 hearing on the motion to dismiss, the attorney general’s office essentially argued “that people who buy their health insurance do so at their own peril and there is no recourse for that.”

Parks also said he has been notified by the attorney general’s office that it plans to appeal.

“This just puts off the case and increases the liability of the plan,” Parks said. “You have to remember that somebody has got to pay this back, and every month that goes by they are collecting significant amounts of money they won’t be able to keep.”

But a representative with the Law Department said Wednesday it is still weighing its options.

Neal also is being represented by M. Travis Foust of Parks, Chesin & Walbert, solo practitioner Jeffrey Berhold and Andrew Lampros of Hall & Lampros.

Senior Assistant Attorney General Robin Leigh is the lead counsel for the Department of Community Health. Other lawyers on the case are Senior Assistant AG Julie Adams Jacobs and Assistant AG Stephanie Burnham.

Reprinted with permission from the October 15, 2014 edition of the Daily Report. © 2014 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited. For information, contact 877-257-3382 – reprints@alm.com or visit ALM Media Properties website.