Osceola Schools' lawsuit against its ex-health insurance consultant won a legal battle in court.
U.S. District Judge Anne Conway denied the consultant's motion to dismiss the lawsuit last week.
For seven years, Gallagher Benefit Services helped the Osceola School District navigate through the insurance industry by analyzing and making recommendations about which carrier the district should hire.
In exchange, Gallagher was paid annual fees from the insurance companies but the School District set a cap at Gallagher's commissions at $195,650 "to avoid the self-serving incentives that could accompany this financial arrangement," the judge wrote in her order.
In a lawsuit filed last year, the district accused Gallagher of breaking that agreement and getting paid more than $2 million in "secret commissions from insurance carriers it recommended to the board," the order said.
"Gallagher sold itself as a company that was well-positioned to provide consulting and brokerage services to the Board. It also stated that it would (remain) impartial during all business transactions, disclose all compensation received,' and represent the Board's best interests in all ongoing interactions," the judge wrote.
The judge ruled the district's lawsuit against Gallagher can continue on despite Gallagher's objections over several matters, including the lawsuit not providing specific details how much and which insurance companies paid Gallagher the alleged secret payments.
For the Gallagher lawsuit, the School District is seeking at least $2 million from Gallagher's alleged secret payments to set up a fund for district teachers.
"The district is also seeking punitive damages for Gallagher's breach of fiduciary duty and fraud," the judge wrote. "In this case, the School Board's factual allegations provide a reasonable basis to believe that Gallagher committed intentional misconduct. These allegations of fraud are sufficient to state a claim for punitive damages. ... Greed, as the School Board points out, is a factor relevant to punitive damages."
"Punitive damages are the great equalizer, the one thing that can bring corporate America to heel when it acts wrongly," the district's attorney Tucker Byrd said when reached for comment Wednesday.
Gallagher had recommended Osceola Schools hire Cigna as its insurance carrier.
The relationship between Cigna and Osceola Schools eventually fell apart and led to more litigation in Osceola County Circuit Court.
The School District alleged Cigna "failed to conservatively approve treatment and failure to negotiate competitive prices for prescriptions and medical procedures forced the School Board to grossly overpay health care providers and pharmacies."
Cigna, on the other hand, denied the allegations. Cigna has sued the district, arguing the district didn't properly competitive bid out for new contracts after the school system decided not to renew Cigna's contract.
Cigna North Florida Market President Dean Mirabella told Florida Politics last year, "We previously provided health plan administration to the School District of Osceola County employees for almost 20 years. During this relationship our contract was continuously evaluated and voted on by the District's procurement and Insurance committee based on our successful track record of making health care affordable, predictable and simple for teachers, administrators and staff. ... As a valued partner for nearly two decades, we negotiated discounted rates that were fair and competitive for the customers we served."
Gallagher could not be reached for comment immediately Wednesday.
