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Broker fights insurer over plan structure

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LOVELAND, Ohio—Total Benefits Planning Agency Inc.'s decision to use a more than 50-year-old federal tax law to help small and midsize employers save money on health insurance nearly put it out of business.

Under the Loveland Ohio-based company's program, employers would essentially "refinance" health care costs by raising deductibles on existing group insurance policies and administering benefits through a medical expense reimbursement plan created under Section 105 of the Internal Revenue Code.

While other health insurance brokers also employed the strategy in other states to help their similarly situated clients save money, the Total Benefits Strategy went a step further. It also provided an option to exclude from the group policy certain high-risk employees, spouses and dependents and instead cover them with individual health insurance policies.

The Total Benefits Strategy is explained in detail in a book published last year and co-written by Total Benefits' founder Thomas J. Quigley and his attorney, Edward A. Lyon, titled "How to Beat the High Cost of Health Care."

"It takes Section 105 to its fullest, using individual health insurance, which is less expensive than group" in many cases, Mr. Quigley said. "The strategy works with any carrier that offers high-deductible plans."

Total Benefits claims its strategy has helped employers in Ohio, Kentucky and Indiana save 20% or more on their health insurance costs without cutting benefits. But his brokerage was forced to temporarily suspend use of the strategy when the insurer underwriting the high-deductible umbrella coverage canceled its contract as of July 2005.

"They said they would cancel our contract if we continued to sell individual policies," Mr. Quigley said.

So on Aug. 4, 2005, Mr. Quigley sued the insurer, Anthem Blue Cross and Blue Shield of Ohio; several of its affiliated companies; and a competing broker, Cincinnati-based Cornerstone Broker Insurance Services Agency Inc.-accusing all defendants of conspiring to restrict Total Benefits from selling its money-saving product.

The suit, filed in U.S. District Court for the Southern District of Ohio in Cincinnati, claimed the defendants violated federal antitrust law, defamed and libeled the Total Benefits Strategy to third parties as "unethical" and "illegal," and blacklisted other agents seeking to use the Total Benefits Strategy.

The insurer responded by filing a motion for dismissal, claiming exemption to federal antitrust law under the McCarran Ferguson Act, among other arguments.

On Sept. 8, the court ruled against Anthem's motion to dismiss the complaint.

Anthem is in the process of fully reviewing the opinion and considering its options, a spokeswoman said. A spokeswoman from Cornerstone declined to comment on the litigation.

In the meantime, Mr. Quigley has filed formal complaints against the carrier and the other broker with insurance regulators in neighboring states, including Indiana and Kentucky. He also sold Total Benefits' health insurance brokerage business and is now concentrating on providing benefits consulting services to other agents, brokers and employers.

Moreover, he's continuing to advocate the Total Benefits Strategy and has developed a software program called Benefits Coach that employers can use to set up their own Section 105 plans.

Total Benefits Planning Agency Inc., et al., vs. Anthem Blue Cross and Blue Shield, et al. Case No. 1:05CV519. U.S. District Court for the Southern District of Ohio Western Division.