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December 20, 2014

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Another disgruntled group files suit against Xerox and state

Insurance brokers sue over denied compensation in ‘inept system’

Updated Wednesday, Aug. 27, 2014 | 7 p.m.

A group of six insurance brokers are headlining a new class action lawsuit filed against the Silver State Exchange and the tech contractor Xerox.

The class represents at least 1,200 insurance brokers who say the exchange and Xerox owe them money for enrolling Nevada residents into health plans offered on the exchange, said Matthew Callister, legal counsel for the insurance brokers.

Agents or brokers who enrolled consumers into health plans were entitled to a commission.

But due to glitch-ridden payment and billing software for the exchange, they never received compensation.

Xerox “repeatedly failed” to forward information from “thousands of Nevada brokers and agents to the selected insurance carriers,” according to the lawsuit, “... thereby denying brokers and agents commissions to which they were entitled.”

“The vast majority of brokers have not been compensated,” Callister said.

The exchange board fired Xerox but will be working with the company until April. The relationship began in 2012 when the exchange awarded Xerox what ultimately became a $75 million contract. Xerox was hired to build software to enroll Nevada consumers and create a payment processing system for distributing compensation to insurance companies, which were then supposed to pay brokers.

Nevada was the only state to build its own payment and billing infrastructure rather than having insurance companies handle it.

Having the state collect payments from consumers has been a principal complaint of brokers since the exchange launched in October.

Insurance companies traditionally collected money from consumers and then paid brokers. But Xerox’s system changed that.

“It’s another example of an inept system that fails,” said Las Vegas insurance broker Pat Casale.

No broker has been more vocal about the failures of the exchange than Casale. He’s spent countless unpaid hours working with state and Xerox officials to enroll Nevadans who paid for coverage but didn’t receive it.

Casale recently received his first check for the Nevada Health Co-Op after spending months enrolling consumers into their plans without getting paid.

He said other brokers haven’t been as lucky.

One broker, he said, has enrolled 40 Nevadans and not received any compensation.

“You're working and putting in hours and you still have to chase your money,” he said.

The lawsuit from the brokers is the latest legal action taken against the exchange and Xerox. Callister is legal counsel in another class action lawsuit representing Nevadans who claim they paid but didn’t receive coverage. The Las Vegas Sun asked Xerox in June how many consumers paid but didn’t receive coverage. The company’s response: “We’re not at liberty” to disclose.

Nevada was one of 17 states to build its own exchange as a way to comply with the Affordable Care Act.

Gov. Brian Sandoval was the only Republican governor whose state opted to build its own exchange. He and other state leaders were leery of using the federal system, healthcare.gov.

Sandoval’s office was warned of serious flaws in the software that runs the exchange in the weeks before its Oct. 1 launch, according to an internal report from an outside auditor.

But the exchange still opened for business.

For the exchange’s upcoming enrollment period, Nevadans will have to enroll on healthcare.gov — the very system that Sandoval and other state officials wanted to avoid.

The 38,000 Nevadans who successfully enrolled, along with those who didn’t, will be forced to sign up using the federal system this November.

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