CINICO legal bills mount in US lawsuit

The Cayman Islands National Insurance Company has paid more than $150,000 in a legal fight with its former service provider in the United States over the past two years, according to records made available following a Freedom of Information request. 

Simplifi, which administered payments and services for CINICO’s nearly 15,000 customers, sued the insurance company in a U.S. court in July 2013 for allegedly canceling the contract without notice and not paying more than $150,000. CINICO denied breaking the contract and subsequently sued Simplifi in October 2013, claiming the company owes CINICO more than $700,000.  

CINICO’s chief executive officer, Lonny Tibbetts, said he “tried everything to reach an accord” but once the company was sued, “CINICO has to defend itself.” 

Mr. Tibbetts told the Cayman Compass that he will travel to the U.S. next week to take part in mediation with Simplifi, a nonbinding negotiation to see whether the two parties can settle the dispute without a costly trial. 

In 2012, one year into the Simplifi contract, CINICO put out a new request for proposals to look at other options to manage the accounts and payments for customers and hospitals. Simplifi submitted a new proposal but did not win the contract, Mr. Tibbetts said.  

Simplifi, he said, “weren’t bringing us what we needed” in terms of services for the insurance company and its customers. He said CINICO sent Simplifi notice that it did not get the new contract, and that should have been suitable notice to cancel the existing contract. 

CINICO’s new administration company in the U.S., a partnership between Automated Benefit Services Inc. and Ascension Health, began in January. Mr. Tibbetts said the transition has been a “rough period.”  

In an email earlier this year, Mr. Tibbetts wrote, “At the onset of the dispute, Simplifi ceased all services which significantly disrupted this entire process.” That left many claims unpaid and left CINICO without an accurate accounting of which hospitals the company owed money. 

CINICO has been trying to calculate claims and get the books back in order in-house, Mr. Tibbetts said. That has not been easy for the company, and some invoices have fallen through the cracks, he said. 

Since November, three lawsuits have been filed against CINICO for unpaid medical bills in Florida. Seven hospitals, across the three lawsuits, allege that CINICO owes more than $2 million. The unpaid bills range from $200 emergency room visits to hundreds of thousands of dollars for surgery. The two suits from late last year were settled, and CINICO paid the bills. The most recent suit, filed in January, is pending. 

Dueling lawsuits 

According to documents filed in the lawsuit, CINICO hired Ohio-based Simplifi as its third-party administrator to process insurance claims and make payments on behalf of the insurer. The agreement set a two-year term, which was to automatically renew on July 1, 2013 unless either CINICO or Simplifi gave written notice at least 120 days prior to the renewal date. 

The terms to end the contract are at the center of the initial lawsuit. It states that Mr. Tibbetts sent an email to Simplifi on Feb. 6, 2013 to give notice to end the contract. But, the documents show, termination had to be made with a physical letter or a fax; email was not included in the contract as a way to cancel the agreement. Simplifi’s lawyers wrote in the lawsuit that the company stands to lose $1.8 million in administrative service fees CINICO would have paid for the contract year. 

The lawsuit states that the Simplifi representative, Stoddard Lawrence, emailed Mr. Tibbetts in February and March of that year about sending formal notice to cancel the contract and about a transition plan to hand over the documentation to a new administrator. Mr. Tibbetts did not respond, the suit alleges, until April 19, 2013. In the April email and in another one at the end of May, the lawsuit states, Mr. Tibbetts said he was still finalizing an agreement with another administrator. 

In June of that year, Simplifi sent CINICO a bill for the next month’s service and the contract automatically renewed for another year, according to the suit. CINICO refused to pay that bill, and a month later Simplifi sued CINICO for breaking the contract. 

Three months later, CINICO filed a counterclaim against Simplifi, accusing the administrator of owing CINICO more than $700,000 for not processing all payments and paying claims that had not been authorized. Simplifi denies owing CINICO any money, according to court records. 

Lawyers for Simplifi declined to comment because the lawsuit is ongoing. 

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  1. Just another waste of time, as one can see Mr. Tibbetts clearly broke the contract. Thats why they have contracts to follow as a binding agreement. If you dont follow verbatim, then you have breached the contract. I bet this again is going to cost the people of these Islands a fortune. ; and he gets to keep his job.