Lawsuit alleges broker cost Dist. 41 more than $600,000

Glen Ellyn District 41 is suing its former insurance broker, saying he and his firm cost it more than $600,000, which forced the district to abandon its self-insurance program.

The lawsuit alleges the firm, Benefit Brokers, miscalculated employee premiums and let the stop-loss policy lapse.

As a result of a $600,359 shortfall, District 41 had to give up its self-insured plan and go with more traditional -- and costly -- insurance coverage, the suit says.

Attorneys for Benefit Brokers have filed a response to the lawsuit denying any errors were made.

District 41 Superintendent Ann Riebock and Benefit Brokers officials had no comment on the lawsuit, which was filed last year in DuPage County court.

Todd Faulkner, the district's attorney, and former district broker Scott Baldwin couldn't be reached for comment.

Attorney Carrie Durkin, who represents the brokers, denies the allegations.

District 41 said Benefit Brokers helped with the district's self-insurance program between 1999 and 2006, preparing cost and membership projections, reviewing quotes for stop-loss insurance and preparing benefit calculations during negotiations. The firm worked on commission.

During the 2004-2005, 2005-2006 and 2006-2007 school years, District 41 claims Benefit Brokers miscalculated the number of employees participating in the plan, essentially counting people twice. They say the district collected less in employee premiums than it should have, according to the suit. Durkin denied the charges.

In early 2006, District 41 said it learned Benefit Brokers failed to submit necessary paperwork for its stop-loss policy as was expected by April 1 -- another charge Durkin denied.

Before the district could negotiate a renewal of its lapsed policy, an employee incurred $400,000 in medical bills over multiple hospital stays, according to the lawsuit. As part of the renewal agreement, the district was required to pick up $250,000 of that cost, the suit says.

After terminating its contract with Benefit Brokers in 2006, District 41 hired Black Mountain Inc. as its new broker.

Black Mountain determined the district's insurance fund was short by $308,690. The district could not collect the unpaid employee contributions retroactively, the suit continues.

It was not "financially prudent for the district to maintain" a self-insured plan, the suit said. District 41 then switched to a more costly standard insurance plan.

District 41 also said in its suit that in late 2005 Benefit Brokers asked to be paid by fees rather than commission. But according to the lawsuit, through June 2006, the firm collected both fees from the district and commission from the insurance provider. Durkin again denied the allegations.

The next court hearing, an update on discovery to provide information, is slated for March 18.