EDITOR'S NOTE: This is the final installment of a three-part series detailing the city of Ishpeming's overpayment of health insurance premiums for two and a half years.
ISHPEMING - The city of Ishpeming continued to pay the health insurance premiums for two former Ishpeming Police Department officers, including those of former Ishpeming Police Chief Jim Bjorne while he was in the process of suing the city.
Bjorne, who was terminated in September 2011, filed a wrongful termination lawsuit against the city that December. He and the city settled the suit in August.
(Journal digital illustration by Selena Hautamaki)
Former Ishpeming Police Chief Jim Bjorne was one of the city employees left on the city’s health insurance after his retirement. Bjorne continued to use the health coverage during this time and while he was suing the city. (Photo courtesy Ed Anderson)
Bjorne confirmed to The Mining Journal that he was one of the former police officers described in the report. The city could not comment on whether Bjorne was one of the officers, due to protections of the federal Health Insurance Portability and Accountability Act.
The city paid for Bjorne's health insurance from his termination in September 2011 until December 2012, just after the Ishpeming City Council discovered at the end of that November that the city had overpaid a total of almost $200,000 in health insurance premiums for Bjorne and seven other employees over a period of two and a half years.
Bjorne and another Ishpeming Police Department officer, who retired in May 2010, were covered by benefits provided under the Consolidated Omnibus Budget Reconciliation Act.
COBRA provides continuation of health coverage at group rates for up to 18 months after an individual has been voluntarily or involuntarily terminated from his or her job or has had hours reduced.
In the case of the police department retiree, the city was supposed to provide nine months of city-paid coverage, as stipulated in the union contract.
According to a report, obtained by The Mining Journal through the Freedom of Information Act, which detailed the results of an investigation by the city into the insurance overpayments, the retired former police officer "was eligible for COBRA and was notified of his options," but didn't sign up. The city continued to pay his premiums from May 2010 until December 2012, though he didn't use the coverage.
COBRA participants generally have to pay up to 102 percent of their premium themselves - the 2 percent going to "administrative costs" - and while this is significantly more expensive than what they paid for insurance during active employment, when the city paid a large share of their premium, it is still usually less than the cost of individual insurance.
The report said that Anita Keto - then-city treasurer, who retired in February and who was responsible for the administration of COBRA benefits - may have "assumed that the city had COBRA administration through MEBS," but "should have been documenting whether a monthly check ... was being received by the city. She did not and did not follow up."
Keto said that COBRA benefits were previously administered by the city's health insurance provider, and when the city switched to the Michigan Employee Benefits Services, she was unaware that MEBS was not assuming responsibility for COBRA.
The city's health plan with MEBS went into effect Oct. 1, 2009.
Bjorne was entitled to enroll in COBRA benefits and did so, but was not billed, nor did he make any payments for his health insurance. Because he was not a retiree, the city was not responsible for any of his premiums - but paid them for 15 of his 18-month eligibility.
The report stated that Bjorne "should have been aware that he was responsible for payment since he was using the health care coverage," but said his "receipt of city-paid health insurance after his employment ended has not been addressed."
"When I left the city - when I was fired - on the 23rd of September, I knew what COBRA was and how it worked and I intended on taking advantage of that for health care until I could figure out what I was going to do," Bjorne said.
Bjorne said he emailed Keto and asked her what was the situation with his health insurance, because he wanted to make certain that he was still covered. He said that he got an email back several days later saying that he would be contacted, but never was.
"Time continued, I would still get explanation of benefits (notices) and when I'd go to the doctor they'd still accept my Blue Cross (Blue Shield) payments, so I just felt that the city was going to pay those until my (lawsuit) was resolved," Bjorne said. "I felt I did my obligation to say, 'Where do we go with this?'"
Bjorne also said after his initial contact with the city about his COBRA benefits, he consulted his lawyer, Jonny L. Waara, who was representing him in his lawsuit against the city, about what he should do next. Waara's advice was to "sit tight" and wait for the city to respond, which Bjorne said is exactly what he did.
In December 2012 Bjorne said he received a letter from the city stating that they had paid his premiums for the past 15 months and that if he wanted to continue his benefits, he would have to submit premium payments to the city in the monthly amount of $1,482 for the next three months of his eligibility. He did so through April 1, when his COBRA eligibility expired.
In August, Bjorne settled his suit with the city for $70,000 - which was covered by the city's insurance - and an agreement to accept a transfer of Bjorne's retirement benefits from his three years working at the Marquette County Sheriff's Office, though Bjorne is required to pay for any deficiencies in the county benefits out of his own pocket.
The Marquette County Board voted unanimously Tuesday to allow Bjorne to transfer his benefits from the county to the city.
The city now contracts with MEBS for COBRA administration, beginning Jan. 1, 2013.
Zach Jay can be reached at 906-486-4401.