Cincinnati City Workers Won't Hit Class-Action Jackpot After All: Judge Tosses $55 Million Lawsuit

CINCINNATI (TDB) -- Big money was at stake for each city worker -- an average of $22,357. Just four months after certifying the case as a class action, U.S. District Judge S. Arthur Spiegel tossed out the lawsuit brought by 2,460 current and former City of Cincinnati employees. They claimed ownership of $55 million in proceeds from the conversion of their insurer, Anthem, to a stock company. Anthem, a unit of Indianapolis-based healthcare giant WellPoint (NYSE:WLP), made the switch from a mutual company in 2001. It gave 870,021 shares to the city as the group policyholder for its employees.

Seven years later the employees decided that they were the real policyholders and, under state law, deserved to split the money among themselves. They hired a four-lawyer team and filed suit in 2008 in U.S. District Court in Cincinnati. Last week, Spiegel granted Anthem a partial summary judgment and closed the case. Anthem's payment of $55 million to the city, he wrote, did not violate state law. Moreover, it conformed with the bylaws of the original insurer, Community Mutual Insurance Co., which merged with an Indiana company that became WellPoint. Spiegel declared in his 29-page ruling:

"As a general rule, 'policyholders' are the insureds, who are typically 'owners' and entitled to proceeds. However in some specific situations, like the one at bar where the city is indisputably the owner of the group policy, the insureds do not necessarily have equity rights."

There were 15 lawyers representing various parties in the case, which was filed as Mell, et al v. Anthem Inc, et al, Case No. 1-08-cv-00715, U.S. District Court Southern District of Ohio. Lawyers for the workers were Eric Zagrans, Michael Bender, Dennis Barron, and Al Gerhardstein. Zagrans and Bender are from Elyria near Cleveland. The Anthem (WellPoint) legal team was comprised of Adam K. Levin v, Craig Hoover and Peter Bisio of Hogan and Hartsone in D.C.; Vorys Sater lawyers Peter Wolfla, Kent Allen Britt, Robert Neal Webner and Glenn Whitaker in Cincinnati, and Christopher Scanlon and Anne K. Ricchiuto of Baker & Daniels in Indianapolis. Terence Nestor represented the City of Cincinnati. No word yet on an appeal.