PRPA sues insurance broker over alleged $3M in added deductible payments

FORT COLLINS — The Platte River Power Authority has alleged in a lawsuit that its health-insurance broker sold the utility a plan that wasn’t suited for an employee with a chronically ill newborn, causing more than $3 million in additional costs.

Since 2013, the Fort Collins-based Platte River has contracted with Illinois-based Gallagher Benefits Services Inc., a subsidiary of Arthur J. Gallager & Co. (NYSE: AJG) to manage its employee-benefit package. It has a self-funded health-insurance plan in which the provider pays for its employee medical claims directly rather than pay premiums to an insurance carrier.

Platte River is the power wholesaler to the local electrical utilities for Estes Park, Fort Collins, Longmont and Loveland, and the combined 353,100 residents in those four cities.

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In a complaint filed in the U.S. District Court of Colorado Friday, Platte River alleges that Gallagher didn’t warn about the potential for heavy insurance costs if one of its employees brought on a dependent with serious long-term health problems. 

The suit also claims that Platte River’s stop-loss insurance policy didn’t have provisions that protected it against “lasers”, or increasing deductibles on a specific member of that plan if they have a chronic and expensive condition.

When a Platte River employee brought a newborn with long-term health issues onto the company’s plan in 2017, the utility claims that Gallagher gave options on the 2018 and 2019 plans in late December during the holidays, which left it with no choice but to accept insurance options with lasers of $1 million and $2 million deductibles for those years respectively.

Platte River said it began negotiations with new brokers last year, and learned through them that the type of health-insurance policies it uses can have various policies added to keep the deductible for the dependent child down.

The utility is demanding a jury trial for monetary damages and costs to be determined at court.

Gallagher and Platte River declined to comment Monday.

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