Paterson pays $210,000 to settle alleged breach of contract with its former third-party insurance administrator
By Jayed Rahman
Published: October 15, 2016
The city paid out $210,000 to settle an alleged breach of contract with its former third-party insurance administrator.
Neptune-based Cannon Cochran Management Services (CCMSI) filed a lawsuit alleging breach of contract in February of this year. The firm alleged the city failed to pay 28-percent of total savings CCMSI obtained for the city in 257 separate medical claim bills, according to the company’s court complaint.
This amounted to $212,744 the city owed the company, according to court records. The non-payment constituted a violation of a contract the city entered into with the firm on March 19th, 2012.
The firm was responsible for handling medical insurance claims for the city’s self-insurance medical benefits program.
The city ended its service contract with the firm on April 26th, 2015. The firm was also entitled to $2,500 for transferring data over to the city’s new third-party administrator which the municipality failed to pay after the transfer was completed, according to the court complaint.
The city paid the funds owed to the company and its legal fees as part of the settlement, according to city records. The city wired $130,000 to the firm on September 30th, 2016 and the remaining $80,000 is to be paid in monthly installments.
The city will pay $5,333 every month beginning on October 17th, 2016 through December 17th, 2017, according to city records. Council members approved the settlement on Tuesday night without making any public comments.
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