October. 13, 2009

Attorney General Corbett announces lawsuit against Texas aviation business over "health care disaster" for Harrisburg, PA employees

HARRISBURG - Attorney General Tom Corbett announced that the Attorney General's Health Care Section has filed a lawsuit against a Texas-based aviation parts manufacturing business, along with three corporate officers, accused of failing to pay health care premiums for Harrisburg area employees while continuing to deduct employee contributions from paychecks - leaving employees to face massive medical bills.

Corbett said the consumer protection lawsuit was filed in Dauphin County Court of Common Pleas against Turbine Airfoil Designs (TAD), a Texas corporation operating at 1400 North Cameron St, Harrisburg. 

The lawsuit also names the following corporate officers:

• TAD chief executive officer John A. Walton, of Dallas, Texas, who also serves as president of TAD's parent company, Walton Johnson Group, Inc. 
• TAD president Benjamin C. Frazier, of Harrisburg. 
• TAD chief financial officer Anne C. Richie, of Beachwood, Ohio.

"We have dozens of complaints from TAD employees who are now facing thousands of dollars in unpaid medical bills simply because they tried to use the health care benefits they were promised," Corbett said. "Company officials knew, or should have known, that non-payment of health insurance premiums would leave workers vulnerable, but failed to warn their employees or take steps to prevent a health disaster from striking these families."

According to the lawsuit, TAD began falling behind on premium payments to Capitol Blue Cross for employee health care coverage in August 2008, resulting in multiple delinquency notices that were not disclosed to employees.  Additionally, a payment plan that was established between TAD and Capitol Blue Cross was not completed by the company, eventually resulting in the cancellation of all coverage.

Corbett said that employees were left particularly vulnerable because they did not receive notice until March 17, 2009 that their company health plan had been cancelled, and that their PPO coverage had actually ceased nearly six months before, on October 9, 2008.

According to the lawsuit, numerous TAD employees sought medical care during the period between October 2008 and March 2009, not knowing that payment of their claims had been suspended or that their PPO health care benefits had effectively stopped.

Corbett said that during this entire period, TAD continued to withhold health care contributions from employee paychecks - typically amounting to ten to twenty percent of each employees premium costs.  Those withholdings were supposed to be forwarded to Capitol Blue Cross to cover the employees' portion of the cost of group health care coverage.

Additionally, Corbett said that employees who were laid off were told that they could continue their medical coverage under federal COBRA guidelines, and some employees made payments to TAD for that continuing coverage, even though no health insurance plan existed at that time.

"These workers made good-faith efforts to purchase health insurance coverage in order to protect themselves and their families, only to be victimized twice - with smaller paychecks and cancelled coverage," Corbett said.  "Health care costs are a major concern for every Pennsylvania family and nobody should have to suffer through a crisis like this."

Corbett said the lawsuit asks the court to require Turbine Airfoil Design and all three corporate officers to make full restitution to all consumers who suffered losses as the result of their conduct. 

The lawsuit also seeks civil penalties and fines of up to $1,000 for each violation of Pennsylvania's consumer protection laws, or up to $3,000 for each violation involving a victim age 60 or older.

Corbett noted that this is an ongoing investigation.  He urged TAD employees to file formal complaints with the Attorney General's Health Care Section if they have been billed for health care services that were provided before Capitol Blue Cross issued a cancellation letter on March 17, 2009.

Additionally, Corbett asked TAD employees to contact the Health Care Section concerning health insurance claims submitted to Capitol Blue Cross that may have been improperly delayed or rejected prior to the cancellation of their coverage.

Corbett also requested that TAD employees contact the Health Care Section if they are receiving bills or collection notices directly from doctors, hospitals or other health care providers, for medical services that were performed prior to the cancellation of their coverage.  The Attorney General's Office will work with medical providers and consumers on a case-by-case basis to delay collection efforts until after the TAD lawsuit is resolved.

Consumers can file an online health care complaint or call the Attorney General's Health Care Hotline, at 1-877-888-4877.

The lawsuit was filed in Dauphin County Court of Common Pleas on October 8, 2009 by Deputy Attorney General Timothy A. Gates and Chief Deputy Attorney General Thomas M. Devlin, both from the Attorney General's Health Care Section.

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