American contractor sues CINICO

A US company is suing the Cayman Islands National Insurance Company, alleging that CINICO failed to properly serve written notice of its intent to terminate a contract, causing some US$2 million in damages.

Filed 19 July in the US District Court for the Southern District of Ohio, the lawsuit pits CINICO against Simplifi Health Benefit Management, a Delaware corporation with headquarters in Columbus, Ohio. According to the filing, the Cayman government insurance company had “outsourced to Simplifi the processing, payment, and settlement of claims for health-care services, submitted by health-care providers for services provided to [CINICO’s] insured”.

Effective 1 July, 2011, the initial term of the contract ran through 30 June, 2013. According to the filing, the contract would automatically renew for 12 additional months unless either party served a written notice of termination at least 120 days before the expiration of the contract.

The lawsuit contends that CINICO CEO Lonny Tibbetts attempted to terminate the contract in February via email (with a termination date of 31 May). Simplifi’s position is that the email did not constitute proper written notice to the company’s legal department as detailed in the contract, namely “delivered in person”, “mailed, by certified mail, return receipt requested, postage prepaid”, “delivered by a commercial overnight courier”, or “transmitted by facsimile”.

The Caymanian Compass contacted Mr. Tibbetts for comment Wednesday afternoon and emailed him a copy of the suit. As of presstime Thursday, Mr. Tibbetts had not provided the Compass with a comment.

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In the filing, Simplifi is seeking a trial by jury to consider the awarding of damages, legal fees and interest. Simplifi claims that the inadequate written notice means the contract has been automatically renewed for 12 months, through 30 June, 2014, and is claiming that CINICO is already indebted to Simplifi in the amount of at least US$153,455 for the service period of July 2013.

Additionally, Simplifi claims that CINICO’s “failure to honour its obligations during the renewal term” means that “Simplifi stands to lose approximately US$1,800,000 in administrative service fees”.


According to the lawsuit, Mr. Tibbetts sent an email 6 February to Stoddard Lawrence, a member of Simplifi’s management, asking him to “accept this email as formal notice of termination of services on May 31, 2013”.

The next day, Mr. Lawrence sent Mr. Tibbetts and email “pointing out that the initial term of the agreement ran through June 30, 2013, not May 31, 2013”. Mr. Lawrence also asked Mr. Tibbetts to send a formal written termination notice as required by the agreement. Further, Mr. Lawrence asked to speak with Mr. Tibbetts to discuss transition issues. Mr. Tibbetts did not respond to that email, according to the lawsuit.

Mr. Lawrence sent Mr. Tibbetts another email on 21 March, and Mr. Tibbetts did not respond to this email either, according to the suit. On 19 April, Mr. Tibbetts replied to Mr. Lawrence’s 7 February email, stating, “Can we talk now”, and that was followed by a telephone conversation between Mr. Lawrence and Mr. Tibbetts. According to the suit, “Tibbetts told Lawrence that [CINICO] had not yet selected a new third-party administrator, but he would call Simplifi when that selection was finalised.”

On 29 May, Mr. Tibbetts emailed Mr. Lawrence stating that CINICO was finalising a contract with a new-third party administrator. “Simplifi, in turn, notified Tibbetts that the agreement renewed automatically for another year because [CINICO] did not provide written notice of termination as required by the agreement,” according to the suit.

On 13 June, Simplifi billed CINICO US$153,455 for administrative fees for July 2013.

“On multiple occasions in June 2013, Tibbetts informed Simplifi that [CINICO] would require Simplifi to continue providing services after June 30, 2013,” according to the suit. Simplifi continued to submit service requests up to and beyond 11 July.

CINICO “received the invoice of June 13, 2013 and has refused to pay despite a demand from Simplifi. As a result, Simplifi suspended services as of 11 July, 2013, due to non-payment. Even though services were suspended due to non-payment, Simplifi continues to incur costs relating to the agreement, such as retaining staff to process [CINICO’s] claims; performing client account and finance administration, account management, and other client services functions; maintaining [CINICO’s] data; supporting IT infrastructure; and paying third-party vendors and subcontractors to receive, store, transmit, scrub, and process data files that [CINICO] continues to send to Simplifi,” according to the lawsuit.

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  1. Should Simplifi win the case, who is going to pay the 2M? Policy holders? People of the Cayman Islands? Too long we have heads of departments in government and statutory agencies making mistakes that are costing this country! Question for Caymanian compass can the people of these islands sue government on the part of mismanagement of funds? Something needs to be done to put a stop to all this madness!