One of first class actions filed over defective insurance exchanges

Posted on: May 6th, 2014 by Steve Larson
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white crossA Las Vegas man who had trouble getting coverage through the state exchange’s Nevada Health Link website is a co-plaintiff in the first class action lawsuit filed over the troubled insurance marketplace.  The suit was filed on behalf of Larry Basich, who went uncovered even after paying premiums as far back as November, and a local woman named Lea Swartley, who also has gone without coverage despite paying for a plan and was due to give birth.

The lawsuit was filed in U.S. District Court of Nevada against the state of Nevada, Xerox and the Silver State Health Insurance Exchange, which runs Nevada Health Link.

The lawyer for the putative class said the lawsuit is not an indictment of the Affordable Care Act, which authorized insurance exchanges, or of the state exchange’s insurance plans.  “This has nothing to do with the ACA. This is 100 percent about Xerox, who won the bid from the state of Nevada to create this exchange. And they’ve failed. They absolutely failed,” The plaintiff’s lawyer said.

State officials said the hiring of Xerox was a standard procurement process that most state and national governments use.  They said the process started with a request for proposals to build the site. Four companies responded: Xerox, Deloitte Consulting, Choice Administrators and KPMG. The four bids were reviewed by a panel of state managers who have a background in either health or information technology.  Xerox won the job because it scored highest on criteria such as financial stability; demonstrated competence; experience and performance on comparable contracts; expertise and availability of key personnel; and cost. Nevada law requires any contract go to the highest-scoring company.

Basich’s case made national headlines after the retired local engineer ran up more than $400,000 in medical expenses for a Jan. 3 triple bypass. The state exchange sent his premium payments to the wrong insurer, and neither the insurer he chose nor the insurer that had his money could find him in their system.

Health Plan of Nevada has since stepped up to say it will cover him, though officials with the insurer told the exchange board on March 27 that they reserved the right to pursue legal action against Xerox for the mix-up.

Like Basich, Swartley has been paying for coverage since November. Her son was injured in a bicycle accident the day after her check to the exchange cleared her account, yet no insurer is paying her bills. Swartley was due to give birth the day the lawsuit was filed.