UC sues Aon Hewitt over UC SHIP funding deficit

The University of California filed a lawsuit against Aon Hewitt Tuesday, accusing the financial consulting firm of providing “grossly negligent” services that cost the University more than $57 million.

The University hired Aon Hewitt to set premium rates for its student health insurance plans and structure “effective and efficient” health plans.

UC officials said, however, that Aon Hewitt failed to set rates high enough to cover the cost of the University’s health plans.

Because the premium costs were set too low, the University ran a multimillion-dollar deficit. Premiums for undergraduate health plans without dental went up about 16.1 percent from last year, while graduate plans went up about 17.6 percent for the 2013-2014 year.

UC officials demanded that Aon Hewitt pay back the University the $57 million deficit it incurred from UC SHIP.

“Indeed, Hewitt’s grossly negligent and reckless conduct … has left the University with a devastating deficit that threatens the very existence of SHIP,” UC officials said in the complaint. “Current and future students at the University cannot (and should not) be forced to pay higher premiums to help the University recover the deficit caused by Hewitt’s wrongdoing.”

In an emailed statement, Aon Hewitt spokeswoman Maurissa Kanter said the consulting company does not, per its policy, comment on pending legal matters. Kanter added that calculating cost projections is complicated and involves some factors out of Hewitt’s direct control.

“Calculating health care cost projections is a very complex process and involves many factors, including the quality of data we receive from our clients and their carriers. Plan design, data, communication and utilization can all contribute to variation in projected plan expenses,” Kanter said in the statement. “We take this matter very seriously and remain wholly committed to serving both the University of California and other higher education clients.”