Intel Worker Suit Charges Insurance Fees Inflate Health Costs

October 22, 2004 ( - An employee of Intel has filed a law suit charging that workers who buy life insurance and other similar coverage through their employers are unknowingly also paying hidden fees.

The suit, filed in US District Court in San Diego, alleges that a California broker is steering business to large group-benefit insurers in return for additional fees – which the suit claims amount to kickbacks – that are not disclosed to companies or their employees, according to the Wall Street Journal. The suit does not level allegations against the giant chipmaker.

Plaintiff Robert Scott Shirley charged in the suit that because insurance brokers don’t gather competitive bids, employers and workers have to shoulder higher premiums. Shirley, who requested class-action status for his suit, claimed that he paid inflated premiums for supplemental-life and accidental-death insurance purchased through Intel’s employee-benefits program.

The lawsuit said Universal Life Resources acted as the broker/adviser to Intel, and Universal Life placed supplemental-life insurance with UnumProvident Corp. of Chattanooga, Tennessee.

The issue of potentially higher health-coverage costs being passed on to employers and their workers comes after the recent launch New York Attorney General Elliott Spitzer’s investigation into bid-rigging and kickbacks paid to brokers by insurance companies (See  Spitzer Takes On Contingent Commissions ).The probe has now expanded to California, Connecticut, Pennsylvania, New Jersey, Virginia, Massachusetts, Minnesota, Florida, Illinois and Maryland where state authorities have launched their own inquiries.

In a statement, Universal Life President Doug Cox said the company was still reviewing the specific allegations but “categorically denies” receiving kickbacks from insurance companies.

A separate lawsuit against MetLife Inc., also seeking class-action status, was filed in US District Court in the New York, alleging the company misled investors by failing to disclose it paid tens of million of dollars in contingent fees in return for business.