By KAREN HAYNES
Conestoga Students Inc. was threatened with a $3.5-million lawsuit this summer after the student union tried to end its contract with Gallivan and Associates Student Network Inc.
Gallivan is a student benefits consultant and benefit buying group that partners with post-secondary student associations to harness their benefits purchasing power.
CSI was going to hold a referendum this summer, asking students if they wanted CSI to end its contract with Gallivan. However, according to CSI’s June board meeting minutes, the referendum was cancelled after the student benefits consultant threatened legal action for breach of contract.
CSI president Ciara Byrne was quoted in the minutes as saying, “We do not have insurance for breach of contract and we cannot take that risk,” about the lawsuit.
CSI’s contract with Gallivan runs out on Aug. 31, 2016. The original contract between CSI and Gallivan was signed in 2008 as a three-year term. In 2009, CSI extended its contract with the health broker an additional five years, all without ensuring fixed prices.
With the exception of the plan’s dental rate (which is locked in for two years) CSI has not been guaranteed the best health plan prices.
Gallivan’s renewal pricing is based on claims, therefore, pricing will mirror the fluctuation in claims, both up and down, Byrne said.
One way to decrease the health plan’s price is to decrease coverage, she said. Coverage was lowered the year before and was not considered an option this time around, she said.
By contrast, some brokers offer coverage for a single year with no expectation of any contract, she said.
“It’s just a handshake. You’re with them for a year. If you don’t like them you leave.”
Full-time Conestoga students paid $270 for their health plan this year. The plan, provided by Manulife Financial, includes prescription drugs, dental and vision coverage.
In March 2011, Gallivan proposed this academic year’s coverage be raised to $300 per student, which led to disgruntled CSI board members and the proposed referendum.
CSI was unhappy with a price increase by Gallivan and had lost faith in the broker, according to the minutes.
“We know they are not working in the best interest of our students,” Byrne said.
Four months after reaching the settlement, Byrne reflected on CSI’s relationship with Gallivan with an increased positive perspective.
“They’ve been great in training our people. They’ve been great up until now.”
Prior to the conflict, the college’s health plan office was operated by a Gallivan employee. As negotiated in June’s settlement agreement, CSI will operate and staff the health plan office starting September 2012. Making this change saves money and helped keep the benefit fee paid by each student at $270.
Included in its settlement with Gallivan, CSI agreed to a referendum exit clause that limits the terms of any future referendum regarding the health broker.
Until the contract ends, “we can only have a referendum if we no longer want to offer a health plan at all,” Byrne said.