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RG Steel Sues Health Plan

Bankrupt steelmaker claiming $1.45 million was mismanaged

January 26, 2013
By CASEY JUNKINS - Staff Writer , The Intelligencer / Wheeling News-Register

WHEELING - RG Steel liquidated its mills last summer, but the bankrupt company is now suing the Health Plan of the Upper Ohio Valley for allegedly mismanaging $1.45 million worth of funds.

The lawsuit - filed in U.S. District Court in Wheeling Jan. 18 by attorneys Charles J. Kaiser and Richard Beaver - accuses the health care provider of "negligently failing to apply the appropriate premium payments to the correct bank account."

According to the Health Plan's website, the company is West Virginia's first and largest HMO, while also servicing 41 counties in Ohio. It maintains an office east of St. Clairsville near the Ohio Valley Mall.

Article Photos

Photo by Casey Junkins
Even though the company is bankrupt, RG Steel is suing the Health Plan of the Upper Ohio Valley for $1.45 million for alleged breach of contract.

The complaint lists RG's headquarters in Sparrows Point, Md., which is the location of the steel mill of the same name that is now being demolished and sold. The suit claims that in 2004, the company that was then still known as Wheeling-Pittsburgh Steel Corp. entered into an agreement with the Health Plan to administer medical services for some steel retirees.

RG alleges the Health Plan mismanaged this account for retiree medical benefits by using "inadequate procedures and deficient forms" to administer the benefits. RG's complaint states these errors continued until last summer and were only discovered because the steelmaker conducted an audit of the plan.

RG states the Health Plan cost the bankrupt steelmaker the $1.45 million by placing the money into the wrong account. RG also claims to have letter signed by a Health Plan financial officer, which acknowledges and admits to the errors, dated July 26.

The complaint also alleges the health care provider had "woefully deficient check and balances with respect to its benefits administration policies and procedures." RG demands a trial by jury.

An official with the Health Plan declined to comment on the lawsuit when contacted this week, while also declining to identify himself.

Esmark Inc. previously owned all the former Wheeling-Pitt facilities before selling them to Russian steelmaker OAO Severstal for $1.23 billion in July 2008. Severstal, after idling the Steubenville and Mingo Junction plants in 2009, later sold the plants to RG, which liquidated its assets after filing for bankruptcy last year.

Meanwhile, officials with Buffalo, N.Y.-based Frontier Industrial are still looking for options for the Mingo plant they purchased out of bankruptcy for $20 million. The facility contains the electric arc furnace, which itself cost $115 million in the mid-2000s.

Records show that Wheeling businessman Quay Mull and accountant Joseph N. Gompers purchased the Martins Ferry RG mill for $2 million. RG also sold the idled Steubenville plant to a subsidiary of Herman Strauss Inc., a Wheeling-based recycling business. Strauss paid $4.3 million for about 103 acres, plus another $10.7 million for the scrap and machinery. Portions of the Steubenville facility are being removed.

After evaluating the situation last summer, Esmark Chairman and Chief Executive Officer James P. Bouchard entered a venture to purchase RG's Yorkville plant, as well as a 50 percent stake in the nearby Ohio Coatings Co. tin plate production facility. Officials are still awaiting an opportunity to restart the Yorkville plant, now known as the Ohio Cold Rolling Co.

 
 
 

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