Two insurers filed countersuits against Winston-Salem, N.C.-based Novant Health arguing they are not obligated to pay into the health system's settlement of an employee class-action lawsuit, Winston-Salem Journal reports.
In September 2016, Novant agreed to pay $32 million to resolve a March 2014 lawsuit filed by six current and former employees. The March 2014 lawsuit claimed Novant breached its fiduciary duties by causing the retirement plan participants to pay millions of dollars in excessive recordkeeping and administrative services fees owed to third-party service providers. The suit alleges a brokerage company that provided the retirement plans was paid excessive fees up to $9.6 million in the form of commissions, and an administrative and recordkeeping provider was paid excessive compensation of $8.6 million.
On April 25, Novant sued Federal Insurance Co., an Indianapolis-based subsidiary of The Chubb Corp., and Travelers Casualty and Surety Co. of America in Hartford, Conn., alleging each payer owed the health system $4 million toward the settlement. Novant claims its requested contribution reflects damages incurred by the payers' "breach of … obligations." The lawsuit moved to federal court June 8.
In response to Novant's lawsuit, Federal filed a countersuit June 23 claiming it met its financial responsibility and requested $4 million in reparations from the health system. Travelers filed a separate lawsuit June 23 arguing Novant owes Travelers $4.05 million.
Novant Health said in a statement to Winston-Salem Journal Wednesday it began "this legal action because the insurers did not honor their obligations to pay under liability insurance purchased by Novant Health. The insurers' claims are simply untrue."
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