CINICO legal bills top $250K, lawsuits not yet resolved

Legal bills have reached more than $250,000 in dueling lawsuits in the United States between the Cayman Islands National Insurance Company and Simplifi, which administered payments for the insurer.

Simplifi sued CINICO in an Ohio federal court in July 2013, accusing CINICO of canceling a contract without notice and owing Simplifi more than $150,000. CINICO denied the allegations and later filed a countersuit claiming Simplifi owes the insurer more than $700,000.

CINICO Chief Executive Lonny Tibbetts declined to comment on the lawsuit, but said in an email, “We can, however, confirm that as per the Hon. Magistrate’s instructions, we have begun discussions with the Plaintiff to examine the feasibility of a settlement.”

CINICO’s legal fees for the lawsuit, provided to the Cayman Compass after a Freedom of Information request, were $257,000 as of January, the most recent invoice available. The cost of the lawsuit so far also includes about $2,700 in travel expenses, according to the records.

In the original lawsuit, Simplifi accused CINICO of not using the proper procedure to cancel its contract with the payment administrator. Simplifi alleged that the contract required CINICO to cancel the contract in a letter, and that the insurance company’s email was not enough to stop the agreement from automatically renewing.

In a ruling on partial summary judgment in August, a judge found that while CINICO did not comply with the specific requirements in the contract, the email was enough to cancel the contract.

In ruling on that clause, the judge wrote, CINICO “is correct, however, that strict compliance with Section 10.12 was not necessarily required. Under Ohio law, failure to comply with a contractual notice provision may be harmless if actual or constructive notice is nonetheless accomplished.”

The judge did not issue a ruling on whether CINICO canceled the contract, saying that there were still questions over whether the notice was, in the judge’s words, “sufficient and unambiguous” given competing evidence.

The judge states, “While the Court notes that [the] defendant’s initial Feb. 6, 2013 email is compelling evidence of notice, the Court cannot ignore the plaintiff’s contrary evidence.” In the Aug. 2 ruling, U.S. District Court Judge Michael Watson encouraged the two sides to try to settle the dispute themselves and offered to have a magistrate help mediate.

Competing claims

According to the lawsuit, CINICO hired Simplifi to process claims and make payments to doctors and hospitals. Unless either party gave notice in writing at least 120 days before the end of the term, the contract was set to automatically renew on July 1, 2013.

Documents filed with the case show that Mr. Tibbetts emailed Simplifi in February 2013 to give notice to end the contract, though he did not send a letter or a fax as specified in the contract. The suit notes that Simplifi stood to lose $1.8 million in fees that CINICO would have paid for the next year.

A Simplifi representative emailed Mr. Tibbetts in February or March of that year reminding him that CINICO would still have to send formal notice to cancel the contract, according to the lawsuit. Mr. Tibbetts did not respond until April, the suit alleges, saying he was still finalizing an agreement with another administrator.

In June 2013, Simplifi sent CINICO a bill for the next month, but the insurer refused to pay and Simplifi sued a month later.

CINICO filed a counterclaim later in 2013, accusing Simplifi of owing more than $700,000 for not processing payments and paying claims that had not been authorized. Simplifi denies those charges.

Lawyers for Simplifi, reached by email Thursday, declined to comment on the ongoing lawsuit.