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Insurance premiums irritate BOE

8/1/2014

By JUDY SHERARD

jsherard@dailynews.net

Workers' compensation insurance premium issues continue to plague Hays USD 489.

At Thursday night's board of education work session, members discussed a short-term cancellation penalty they are being asked to pay United Heartland if they contract with another insurance company.

The board accepted a bid July 21 from the Kansas Association of School Boards for workers' compensation coverage with a $2,500 deductible, and declined a bid from Heartland, which was presented by Insurance Planning Inc.

In an email dated July 28 from IPI President Larry Caspers to Tracy Kaiser, USD 489 executive director of finance, Caspers stated since United Heartland "have provided coverage since 7-1-14 they have come back with there (sic) charges if we cancel the policy."

The cancellation penalty would be approximately $59,000, Dale Chaffin, IPI vice president, told the board Thursday.

"How are we liable for that when we never actually signed or agreed to go into the new policy?" BOE member Lance Bickle asked.

"In the state of Kansas, you can't go without workers' compensation," Chaffin said. "You had to do something."

"A policy was issued for $313,000 that we never authorized," Greg Schwartz said.

Chaffin said United Heartland was the best quote and asked Kaiser if she remembered "any conversation with Larry (Caspers) that we would obtain coverage, so there would be no lapse in coverage?"

"I never gave authorization," Kaiser said. "I don't have authority to do so, but yes, I understood there was not going to be a lapse in coverage."

A lapse in coverage could result in a fine of as much as $20,000 from the state, Chaffin said.

"And now we're being told to clean this up, you need to pay us $67,000 or ($59,000). I don't know which number it is, or we're getting strong-armed to take them and use them another year at a cost of another $2,000," Schwartz said.

The school district's insurance policy expires June 30 of each year. In the past, the board has approved premiums in July. After significant premium increases last year, the board asked to have premium information earlier in the fiscal year. Caspers first met with the board to discuss the policy March 31. The district requested renewal information from IPI on June 11 for the July 7 board meeting, and received the first proposal from IPI on June 26. On July 7, the board asked for revisions to the quote, according to a timeline prepared by the district.

United Heartland has submitted a revised premium of $239,652 for a policy with a $2,500 deductible if the school district continues with the insurance. Under the revision, IPI will receive no commission on the policy.

The KASB premium is $237,502 or $2,150 less than United Heartland's revised quote.

"The long and short is we have an offer on the table, which I think it's a pretty fair offer," Chaffin said.

Board member Josh Waddell asked why the price changed significantly from the first quote.

Chaffin said Caspers, the district's agent, negotiated the lower price with the insurance company.

A claim submitted last week to United Heartland is compounding the issue.

Though not all board members agreed, consensus was to seek legal advice on the latest issue before making a decision.

Marty Patterson, board vice president, said IPI has done a lot of good things for the district.

"I'm not going to bash Insurance Planning," Patterson said. "We're going to have to rectify this. If we can go back to work and get a match (with the KASB quote) and not pay a penalty and not get lawyers involved, I would be for that."

After board attorney Bill Jeter disqualified himself stating he had a conflict of interest, the board asked Superintendent Dean Katt to ask another attorney to attend the meeting Monday to advise them.

They also asked Caspers, Heartland and KASB insurance representatives attend.

The board also discussed the 2014-15 budget.

The total mill levy will be 46.209, down 0.152 from last year's 46.361.

USD 489 expenses listed on the budget total $42,091,649, an increase of $1,773,572 from last year's total of $40,318,077.

The budget hearing is scheduled for 6:30 p.m. Aug. 18.