Insurer files suit against Perrysburg network

June 28--Medical Mutual of Ohio filed suit Tuesday in Lucas County Common Pleas Court against Perrysburg-based FrontPath Health Coalition, calling it a "cartel" that unfairly uses its connections to local governments in the Toledo area to secure contracts.

Cleveland-based Medical Mutual claims that several local governmental bodies have awarded contract extensions without competitive bidding processes to FrontPath, which Medical Mutual says has board members from those governmental bodies. Each governmental-affiliated trustee -- as Medical Mutual calls them -- had unlawful interests in contracts between FrontPath and their employers.

Medical Mutual representatives said in an interview that they believe some governmental employees may have been in violation of Ohio ethics laws by having an interest in FrontPath's business when their employers were awarding governmental contracts.

"We don't think it's right, and we want an equal playing field at the end of the day," said Frank Bloomquist, Medical Mutual's regional vice president for Toledo.

Among FrontPath's clients, according to Medical Mutual, are the City of Toledo, Lucas and Wood counties, and the Perrysburg school district. Those clients also have trustees on the not-for-profit company's board. FrontPath's President Susan Szymanski said she was "shocked, but I'm not surprised that MMO would do something like this."

"I think the allegations are specious," said John McHugh, attorney for FrontPath. "It appears to me to be a case where somebody with a lot of money is seeking to challenge somebody with a lot of virtues."

FrontPath was formed in 1988 by a group of Toledo-area Fortune 500 companies. Now, all the company's trustees are or were public officials, according to Medical Mutual's lawsuit.

Medical Mutual alleges that several governmental entities have awarded contract extensions to FrontPath without competitive bids. Mr. Bloomquist said the company has competed with FrontPath for years, but recently decided to request public documents the company believes shows unfair practices.

Jared Chaney, chief communication officer for Medical Mutual, referenced a 2015 request for a proposal from Toledo for administrative services for the city's self-funded insurance program and for network rental. Mr. Chaney said the company was confident in its proposal, but that FrontPath won out.

Trish Decensi, general counsel for Medical Mutual, said the company is only alleging that FrontPath has acted unfairly, and isn't claiming that governmental entities violated any laws in their bidding processes.

"FrontPath through its actions has basically led the individuals down this path," she said, referring to trustees who are in local government.

Janet Schroeder, spokesman for the City of Toledo, said Tuesday evening she couldn't comment about the bidding process because she wasn't aware of Medical Mutual's concerns or the suit.

The lawsuit argues that each contract FrontPath won where a trustee was public official in that governmental entity is null and void, and has requested injunctions against FrontPath over performing those services. It called FrontPath a "collusive buying cartel" that uses its market power and knowledge of market prices to "fix prices and restrict competitive access."

That has caused FrontPath to become a monopsony -- a market with only one buyer -- for governmental self-insurance plans, decreased competition, and ultimately hurt taxpayers, Medical Mutual claims.

Along with the injunction, Medical Mutual wants compensatory and punitive damages awarded to the company.

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