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Post date: May 22 2014

A.G. Schneiderman Announces $30,000 Settlement With Group That Allowed Members' Health Insurance To Lapse

Gerald Burgin To Pay $30,000 To Cover Medical Expenses For Those Whose Policies Lapsed, Remainder To Be Returned To Members For Reimbursement Of Premiums Paid

Schneiderman: Those That Fail To Provide The Services They Charge For Will Be Held Accountable

BUFFALO – Attorney General Eric T. Schneiderman today announced a settlement with Gerald Burgin and the Arts and Culturals Collaborative, LLC, a group created to give members of the local arts community access to affordable group health insurance. This settlement will protect members of the group whose health coverage Burgin had allowed to lapse. 

“Gerald Burgin was entrusted to ensure that members of this group received the affordable health insurance they were promised, and he dropped the ball,” Attorney General Schneiderman said. “This settlement brings relief to the individuals who faced personal liability for medical bills as a result of their lapse in coverage, and sends the message that my office will hold those that fail to provide the services they promise – and charge for – accountable.”

Burgin created the Collaborative as a means of allowing members of the Western New York arts and cultural community to obtain affordable group health insurance. Members would pay the Collaborative for the health insurance premium and an administrative fee. Burgin, in turn, collected the payments and paid the group health insurance premium.

Despite repeated notices from the health insurance carrier that failure to pay the premiums would result in the cancelation of coverage, Burgin failed to pay the premiums for November and December 2013 and January 2014. The carrier continued to cover the members for the month of November but coverage lapsed on December 1, 2013. Neither Burgin nor the Collaborative notified the members that the Collaborative had fallen behind in its payments of the group insurance premiums or that their coverage was in danger of lapsing. By the time they learned of the lapsed coverage, some of the subscribers had incurred medical expenses for which they were personally responsible.

Attorney General Schneiderman’s investigation revealed that Burgin used the administrative fees for his own expenses. Burgin overspent the administrative fees thus eating into the funds required to pay for the premiums. As a result, the Collaborative slowly became insolvent, leading to its catastrophic failure at the end of 2013.

The agreement requires that Burgin pay $30,000 which will be used first to pay for the medical expenses of members that were not reimbursed as a result of the lapsed policy. The remainder will be returned to members as a pro-rata reimbursement of the health insurance premiums they paid. Burgin is forever barred from accepting advance payments from consumers for any service or product.

Because Burgin never paid the premium payments to the health plan, the plan terminated coverage for the thirty members.  The Health Care Bureau helped to reinstate all thirty members with the health insurance carrier to ensure that all members would continue to have health coverage.

This case was handled by Assistant Attorney General James Morrissey and Karen Davis, Senior Consumer Fraud Representative in the Buffalo Regional Office, which is led by Michael Russo, Assistant Attorney General in Charge. The Buffalo Regional Office is a part of the Division of Regional Offices, led by Marty Mack, Executive Deputy Attorney General for Regional Offices.The Health Care Bureau’s Peter Panych, Helpline Advocate, worked to reinstate the members to their health plan.