Blue Cross of Idaho has denied some medical claims for employees and dependents in Coeur d’Alene after school district leaders refused to sign a contract to make monthly payments to cover their portion the Idaho School Benefit Trust’s $13 million shortfall.

But the district is still not signing the 12-month binding contract addendum, according to a letter Superintendent Shon Hocker sent to all district employees on Wednesday. The letter states the district learned that some employees have received claim denials or notices from Blue Cross, or their providers, for claims in July and August.

“We understand and share the concern and frustration this may cause,” Hocker wrote to his employees.

Trustees conducted an emergency meeting on Tuesday, which was not livestreamed or recorded, and voted to authorize the district to negotiate a “modified agreement that allows us to make monthly payments without compromising our legal standing.”

“If a fair resolution cannot be reached quickly, the Board authorized the district to pay the full lump sum to ensure our employees’ claims are processed without delay,” Hocker wrote.

The Idaho School Benefit Trust is a self-funded health care plan that more than 100 school districts and charter schools participated in during the 2025-26 benefit year, which ended on Aug. 31. The trust ran out of money this year and is unable to pay claims.

Debbie Hainke, the trust’s benefits manager, sent out a contribution call on Aug. 27 to member employers telling them to make a decision on how to pay their share of the $13 million shortfall — either a lump sum or monthly installments — by Sept. 10. Coeur d’Alene’s share is $1.86 million.

The Idaho Department of Insurance made it clear that if districts did not comply with that deadline, medical claims for their employees would be denied.

Coeur d’Alene School District did not meet that deadline.

Instead, Hocker wrote to the department on Sept. 10 and requested an extension to allow the district to consult with legal counsel and discuss payment options at a board meeting on Sept. 14.

“As stewards of taxpayer funds, we require additional information in order to pay an amount of this magnitude,” Hocker wrote.

Trustees then met on Sept. 14 and voted to authorize the district to make 12 monthly payments of $51,000, without signing the contract.

“We expressly reserve all claims, rights, and remedies,” Hocker wrote to the department on Sept. 15. “To be clear, it is our intention to remit the monthly payment of $51,784.68, under protest, without signing any contract addendum or waiving any rights.”

Blue Cross and the trust then informed the district that choosing the monthly payment option requires the district to sign the contract addendum to ensure payment of employee medical claims. Hocker wrote that legal counsel advised against signing the contract, “as it is not in the best interest of our district or employees.”

As EdNews reported, school districts across the state had trouble finding legal counsel before the Sept. 10 deadline. Many law firms had conflicts of interest.

Coeur d’Alene’s usual attorney,  Lyons O’Dowd, had a conflict. The district contracted with law firm Malek + Malek instead.

Hocker told employees with claim denials to show providers a copy of the letter he sent Wednesday. If providers request payments, he told his employees to inform them that the state is investigating the situation.

“If possible, ask that they place the claim on hold while the matter is being addressed,” Hocker wrote.

The denials are only for claims for medical services through Aug. 31. The trust is now fully insured through Blue Cross of Idaho as of Sept. 1.