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Insurer Wins Battle in Long-Running Dispute

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Independence Holding Company (IHC) says it has collected about $5.6 million in arbitration award payments from a benefit plan administration company.

The Stamford, Connecticut-based company says it will include the payments in its earnings for the third quarter. The third quarter ends Sept. 30.

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IHC is the parent of three insurance companies, including Standard Security Life Insurance Company of New York and Madison National Life Insurance Company.

FCE Benefit Administrators Inc., a San Mateo, California-based benefit plan administrator, was using coverage from Standard Security Life and Madison National Life to offer employee benefits for Chimes District of Columbia Inc., a nonprofit organization that helped people with disabilities get janitorial and maintenance services work.

FCE has contended that its compensation for administering the plan was at or below the regular market rate, but federal regulators expressed concerns about plan provider compensation.

IHC and FCE have been involved in arbitration, and in litigation in the U.S. District Court for the Northern District of Texas, in connection with disputes related to regulators’ concerns about the compensation. IHC summarized the state of the dispute in a quarterly report it filed with the U.S. Securities and Exchange Commission for the second quarter of 2019.

Steve Porter, FCE’s chief executive officer, said in a comment on the case, provided via email, that the arbitration is part of a larger claim that is still pending in the federal court in Texas.

FCE is seeking $11 million in damages, Porter said.

“IHC filed a motion to dismiss that action which was denied by the court,” Porter said. “FCE expects a large recovery against IHC which will nullify the smaller award issued in the arbitration.”

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