Three employees have filed a federal class-action lawsuit against several Lexington-based health care firms, alleging that their company health insurance was canceled because employers didn't pay the premiums.
The plaintiffs — Britney Thomas, Tammy Beltz and Cheryl Thompson — say they were not informed that their insurance had been terminated, and that they ran up thousands of dollars in medical bills before learning they had no coverage.
The plaintiffs allege that they will face more crushing medical expenses with no coverage. Thomas, for example, says in the suit that she must take a drug that costs up to $800 a month to control her Crohn's disease, a chronic intestinal disorder.
During a hearing in U.S. District Court in Lexington on Thursday afternoon, one of the owners of the defendant health firms testified that she has borrowed $154,000 to have employees' health insurance reinstated by Humana.
Afterward, however, attorneys for the plaintiffs contended that it's still unclear whether new medical claims filed in coming days will be covered under the restored insurance.
Plaintiffs attorneys also said they want more assurances as to how the defendants plan to resolve another issue in the case: contributions to employee 401(k) retirement plans that the companies have not paid.
The defendants are Paragon Family Practice, Horizon Healthcare Center LLC, Resources in Healthcare Management LLC, and Madison Primary Care LLC. According to the suit, the companies are jointly owned in a "web of related entities" operated from offices in Lexington.
Also named as defendants are Ann Giles and Lu Anne Wallace, described as owners or managers of the companies, and as many as 50 "John Doe corporate defendants" whose names are unknown.
The three plaintiffs filed the lawsuit as a class action on behalf of themselves and other similarly situated employees of the various corporate defendants. More than 300 employees could be involved, according to the suit.
The class action lawsuit, filed in Lexington Aug. 9, alleges that the defendants breached their fiduciary duties by failing to remit employee deductions to the company health plan, while "diverting those plan assets to other corporate and/or personal purposes."
U.S. District Judge Karen Caldwell previously issued a temporary restraining order in the case, directing the defendants to immediately reinstate the health insurance plan, and contribute to the plaintiffs' 401(k) plans all funds that were deducted from the plaintiffs' paychecks for that purpose.
But while Caldwell accepted Lue Anne Wallace's testimony Thursday that the health insurance has been reinstated, she also extended the temporary restraining order which otherwise would have expired Friday. Caldwell stressed that she wants assurances that employee health insurance will remain in effect while the case moves through court.
"I want to know if the ship can continue sailing until we get the case resolved," she said.
Plaintiffs Thomas and Beltz claim they didn't learn until mid-July that their company health insurance had been terminated retroactively to April 30, a period during which all three ran up substantial medical expenses. The suit claims that while the defendants gave repeated assurances that coverage would be restored, it never happened.
Beltz also alleges that her employer, Madison Primary Care, continues to deduct retirement contributions from her paycheck, even though it stopped putting that money into her 401(k) account in April or earlier.
Attorney Jeffrey Darling, who represents the defendants, told Caldwell during Thursday's hearing that his clients think they have enough money to bring payments into the employees' 401(k) accounts up to date. Darling also said the U.S. Labor Department is conducting an audit.
In her testimony, Wallace traced all the problems to the companies' recent difficulties in getting Medicaid reimbursement for health care services. As a result, it became harder for the companies to meet their obligations, she said.
Wallace said the companies offered to make partial payments to Humana for employee health coverage, but the insurer wouldn't agree.
Wallace testified, however, that she borrowed $154,000 and forwarded the money to Humana by wire transfer to cover the unpaid premiums. The defendants showed the judge an e-mail received from Humana earlier Thursday afternoon ostensibly confirming that coverage has been reinstated and that all claims would be covered retroactively from April through July.
Wallace testified she is confident her companies can afford to maintain the coverage in the future because they have laid off about 30 employees to cut costs.
Plaintiffs attorney Jennie Arnold questioned Wallace about where the $154,000 came from, asking whether it might come from some of the other companies that Wallace and fellow defendant Ann Giles own.
Darling, however, cut off the questioning with a series objections.
Arnold said attorneys called a Humana official after the hearing to confirm that future medical claims will be covered, but they could not reach one.