Wednesday, April 25, 2007

FARA sues state over health plan change

A Mandeville-based insurance company has sued the state after being excluded from the Office of Group Benefits health plan for public employees for the coming year according to this article from the Advocate.

FARA Benefit Services Inc. claims in a lawsuit that the state Office of Group Benefits did not follow state law when changing the health insurance plan. FARA also contends in the lawsuit, filed Thursday, that the consultant hired by the state used flawed methodology when calculating which insurance company offered the best coverage for the public employees, most of them state workers, under the Office of Group Benefits plan.

FARA currently offers the managed-care option through the Office of Group Benefits, but FARA’s contract expires at the end of June. In February, the Office of Group Benefits decided to drop the managed-care option starting July 1, according to the lawsuit.

In the lawsuit, FARA claims the Office of Group Benefits relied on a flawed report by consultant Mercer Health and Benefits when deciding to drop the managed-care option and to award the HMO and EPO plans.

After losing out on the contracts, FARA took its bid protest to the state Division of Administration. On April 5, Commissioner of Administration Jerry Luke LeBlanc allowed the contracts to stand.