AAG signs $3M deal with BISD as ‘overbilling’ charges loom in Lubbock

That the Brownsville school district’s third-party health care provider is facing possible litigation in Lubbock for alleged over bill-ing isn’t likely to change the status of its contract in Brownsville, according to school board members.

American Administrative Group was recently awarded a $3 million insurance contract to administer the school district’s health care claims.

Unknown to the board, however, was that AAG is currently in the middle of a dispute with the city of Lubbock over claims that the company overbilled it nearly $2 million.

“We didn’t know of the dispute in Lubbock at the time,” said board member Pat Lehman. “I would assume, however, that most carriers get into disputes. It shouldn’t put a dent in our contract with the company.”

Consultant Scott Gibbs of McGriff, Seibels, and Williams Inc., recommended AAG as the third-party health provider through the Health Smart network as well as ING for stop-loss and life retirement.

Trustees awarded AAG the contract by a vote of 6-1 with Trustee Joe Colunga casting the lone vote against the company.

Colunga said he voted against awarding AAG the contract despite Gibbs’ recommendation because the consultant couldn’t pro-duce definitive evidence that the company could follow through on promises to provide discounts, which would lower the district’s health care expenditure.

Brownsville ISD spends around $32 million per year on health care for its employees.

Gibbs leaned on recommendations from other AAG clients as evidence that the company would be able to fulfill its commitment. Colunga wasn’t satisfied with Gibbs’ answer.

With potential for litigation in Lubbock, Colunga remains skeptical.

“From my perspective the Lubbock situation is something to look into,” Colunga said.

The dispute in Lubbock is being fought over AAG documents, which the city claims would prove the company over billed ac-counts and collected fees inappropriately.

The city also claims that its costs increased under AAG despite promises that the company would actually provide a cheaper service.

In retaliation, AAG has filed suit against the city for slander and ruining its reputation. It is also threatening to leave Lubbock, tak-ing 300 jobs with it.

Superintendent Hector Gonzales said he would ask the board for approval to allow Gibbs and his company to continue assessing AAG once it began offering its services to school district employees.

Mutual of Omaha, the district’s longtime third-party health provider, was bought earlier this summer and it no longer is able to do business in South Texas, according to district officials.