A federal court has ordered three companies to stop administering health plans for small businesses in Illinois and across the country after they allegedly failed to pay $26 million in members’ medical bills while keeping large amounts of money for themselves.
Illinois-based Black Wolf Consulting, along with Texas-headquartered AEU Holdings and one of its subsidiaries, allegedly failed to pay medical bills for many of the 14,000 members of health plans administered by the companies for small businesses in Illinois and across the country, according to the U.S. Department of Labor, which investigated after complaints from members. Black Wolf is based in Monee, according to court documents.
As of October, the companies’ health plans had nearly 1,700 members in Illinois from as many as 288 employers in the state, according to the Labor Department. The companies run what’s known as a multiple employer welfare arrangement, in which an employee benefit plan is marketed to small businesses. Such plans are not subject to state regulations, often making them more affordable for small businesses than traditional health insurance plans, according to the Labor Department.
The department obtained a temporary restraining order against Black Wolf and AEU on Nov. 3 in U.S. District Court for the Northern District of Illinois. The court also appointed an independent fiduciary to oversee operations of the companies’ benefit plans and determine whether the plans can pay the outstanding claims.
Joshua Buchman, an attorney for Black Wolf, said the company has been cooperating with the Labor Department investigation.
“We intend to vigorously defend the allegations against Black Wolf Consulting in the complaint,” said Buchman, who is a partner with McDermott, Will and Emery in Chicago.
AEU could not be immediately reached for comment.
Black Wolf has about 15 employees, according to the Labor Department. The company markets, enrolls and bills small businesses for participating in the benefit plans.
Black Wolf kept anywhere from 17 to 44 percent of the money employers and employees paid toward premiums, the Labor Department alleges.
“Black Wolf received unreasonable compensation and failed to disclose that compensation to participating employers,” the department said in a news release.
The department also accused the companies of other violations of federal law, such as not telling current and prospective clients about their failure to pay medical claims
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