Penn. A.G. files lawsuit against company that secretly stopped paying health care premiums‏

Nick Rees Oct. 14, 2009, 5:45pm

Tom Corbett (R)

HARRISBURG, Pa. (Legal Newsline) - The Pennsylvania attorney general's Health Care Section has filed a lawsuit against a Texas-based aviation parts manufacturing business and three of its corporate officers for allegedly failing to pay health care premiums for its Harrisburg, Penn.-area employees.

Turbine Airfoil and its corporate officers, despite failing to pay the health care premiums, continued to deduct employee contributions from paychecks, which left the employees with massive medical bills.

CEO of Turbine Airfoil Design John A. Walton, who also serves as president of TAD's parent company, Walton Johnson Group, Inc., President Benjamin C. Frazier, and CFO Anne C. Richie, are the officers named in the lawsuit.

"We have dozens of complaints from TAD employees who are now facing thousands of dollars in unpaid medical bills simply because they tried to use the health care benefits they were promised," Attorney General Tom Corbett said. "Company officials knew, or should have known, that non-payment of health insurance premiums would leave workers vulnerable, but failed to warn their employees or take steps to prevent a health disaster from striking these families."

The lawsuit alleges that TAD began to fall behind on its premium payments to Capitol Blue Cross for employee health care coverage in August 2008. The failure to pay resulted in multiple delinquency notices that were not disclosed to employees.

An additional payment plan established between Capitol Blue Cross and TAD was not completed by TAD, resulting in the cancellation of all health care coverage.

Employees did not receive notice of the cancellation of the company's health care plan until nearly six months after the cancellation.

Numerous employees sought medical care during the six month period without the knowledge that their claims had been suspended or that their PPO health care benefits had effectively been stopped.

During this time, however, TAD continued withholding health care contributions from employee checks of approximately 10 to 20-percent of each employee's premium costs.

Employees who were laid off were informed that they could continue their medical coverage under the federal COBRA guidelines, with some employees making payments to TAD for the continuing coverage even though a health insurance plan did not exist at that time.

"These workers made good-faith efforts to purchase health insurance coverage in order to protect themselves and their families, only to be victimized twice - with smaller paychecks and cancelled coverage," Corbett said. "Health care costs are a major concern for every Pennsylvania family and nobody should have to suffer through a crisis like this."

Corbett's lawsuit asks the court to require TAD and the three corporate officers to provide full restitution to all employees who suffered losses as a result of their conduct.

Additionally, civil penalties and fines of up to $1,000 for each violation of Pennsylvania's consumer protection laws are sought, with as much as $3,000 for each violation involving a victim 60 years of age or older.

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