Unauthorized Insurance Plans

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More to Read   Phony Insurance • Unauthorized Health Care
Alert to   Insurance Agents • Insurance Companies

Be aware that entities are selling insurance without a license to do so.

The Texas Department of Insurance (TDI) has become aware of an increase in unauthorized insurance plans and operators seeking to take advantage of Texas consumers in the health insurance marketplace. Individuals and entities who craft and market unauthorized insurance scams do not hold a license to sell insurance in Texas. They are often assisted in marketing their bogus products to Texas consumers through licensed insurance agents. Below is information about unauthorized insurance and press releases regarding unauthorized insurance plans that TDI has shut down.

EVERYONE INVOLVED IN THE SALE OF UNAUTHORIZED INSURANCE IS LIABLE FOR UNPAID CLAIMS.

Victims of unauthorized insurance plans should be aware of Tex. Ins. Code §§ 101.201 and 101.202. Section 101.201 provides that any "person who in any manner assisted directly or indirectly in the procurement of the [unauthorized insurance] contract is liable to the insured for the full amount of a claim or loss under the terms of the contract if the unauthorized insurer fails to pay the claim or loss." Section 101.202 provides that a plaintiff´s reasonable attorney´s fees may be awarded by a court if an unauthorized insurer or unauthorized person fails to pay under the unauthorized insurance contract within 30 days of a demand prior to filing suit.

Below is a listing of some recent orders issued where the Commissioner concluded that unauthorized insurance was involved. These orders may be useful to victims who choose to bring action against those involved in selling the unauthorized insurance.

• Service and Business Workers of America, Local 125, Order No. 04-0486
• IUNHCAMP (International Union for the Natural Health, Complementary & Alternative Medicine Professions) Health & Welfare Fund, Order No. 04-0372
• Managed Healthcare, Inc. No. 03-1256 | HTML version | PDF version
• International Property Owners Association Ltd./ Christopher Purser - No. 03-0340
• TRG Marketing LLC / TRG Administration LLC - No. 03-1000
• Benefit Plans of America - No. 03-0893
• Privilege Care Inc., Professional Industrial and Trade Workers Union (PITWU), Southern Plan Administrators Inc. and American Heartland Health Administrators, Inc. - No. 02-1295
• Local 16 National Health Fund - No. 02-1260
• North American Indemnity NV - No. 02-1129
• MarkeTrends Insurance Ltd. - No. 02-1128
• Britannia International Life & Casualty Ltd. / Lyndal Ray Stocks - No. 02-1043
• OTR Truckers Association / Rusk LeGrande Jones - No. 02-0881
• Over the Road Truckers Healthcare Fund / OTR Truckers Health and Welfare Fund - No. 02-1037
• Tesher Corp / John William Tesseyman III - No. 02-0587
• North American Marine General Insurance Co. Ltd. - No. 02-0569
• International Water Marine Safety Foundation - No. 02-0282
• Office and Professional Employees International Union / Solidarity Health and Welfare Benefit Trust / National Guild of Medical Professionals Health and Welfare Benefit Trust - No. 02-0487
• American Benefit Plans / United Employers Voluntary Employee Beneficiary Association / National Association of Working Americans / Robert David Neal - see, http://texasreceiver.com/pdf/Final_Judgment.pdf
• Ajax Health Benefit Plan (AHBP), Ajax Enterprises, Inc. (AEI) and Justin Michael Sciarra - No. 02-0279
• Employers Mutual, L.L.C. / American Benefit Society / William Kokott / Nicholas Angelos - No. 01-0960
• Control Systems, Inc. - No. 01-0831
• SAI Plus, LLC - No. 01-0273

Enrollees may obtain copies of the above orders from the Department of Insurance by contacting:

Seven Criminally Charged with Unauthorized Health Insurance Fraud

On June 1, 2004, the Travis County District Attorney´s office announced the indictment of seven people in connection with an insurance fraud scheme involving bogus health insurance products. Three of the defendants are former Texas insurance agents whose licenses have been revoked: Donald Smith, Rhonda Porter, and Scott Rutherford. The other defendants are based in New Jersey and Pennsylvania: Michael DeBello, Chris Ashiotes, Michael Divece, and James Doyle. The defendants utilized phony companies, associations, and unions to claim that the products were ERISA plans and therefore not subject to state regulation. A variety of company names were involved in the scheme, including Employers Mutual LLC, American Benefit Society, Privilege Care, Inc., Professional Industrial Trade Workers Union, International Union Industrial and Independent Workers, International Union of Petroleum and Industrial Workers, and International Union of Public and Industrial Workers. The indictments are the result of investigative work by the Fraud Unit of the Texas Department of Insurance and are being prosecuted by the Travis County District Attorney´s office. Unauthorized insurance is a third degree felony punishable by two to ten years in prison and a fine of up to $10,000.

Cease and Desist Orders entered against Privilege Care / Professional Industrial and Tradeworkers Union (PITWU) and Southern Plan Administrators / American Heartland Health Administrators.

On December 13, 2002, the Commissioner entered an Emergency Cease and Desist Order against thirty-three entities and individuals, involved in offering health insurance nationwide to employers attempting to provide health benefit plans for their employees. The Order affects all health plans offered by Privilege Care Inc., Professional Industrial and Trade Workers Union (PITWU), Southern Plan Administrators Inc. (SPA) and American Heartland Health Administrators, Inc. (AHHA).

Cease and Desist Orders entered against North American Indemnity NV and Marketrends Insurance Ltd.

On October 31, 2002, the Commissioner entered Emergency Cease and Desist Orders against North American Indemnity and Marketrends, unlicensed companies issuing insurance policies to Texas employers attempting to provide health benefit plans for their employees.

Cease and Desist Order entered against Britannia International Life & Casualty Ltd. and Lyndal Ray Stocks.

On October 2, 2002, the Commissioner entered an Emergency Cease and Desist Order against Britannia and Stocks for operating an unlicensed insurance company out of Houston, Texas. Britannia primarily provided stop loss insurance to employers attempting to provide health benefits to their employees.

Corporate Benefit Services of America, Inc. ("CBSA") - Agreed Order Modifying Emergency Cease and Desist Order No. 02-0487

On June 12, 2002, the Commissioner entered the following modification order regarding Corporate Benefit Services of America. The modification order modifies the scope of Emergency Cease and Desist Order No. 02-0487 to only prohibit that company from participating in health plans affiliated with the NGMP Health and Welfare Benefit Trust and the Solidarity Health & Welfare Benefit Trust.

Commissioner´s Order No. 02-0487
Click here for Adobe pdf version of Commissioner´s Order No. 02-0487

OPEIU/Solidarity/NGMP Cease and Desist Order No. 02-0487

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Click here for Adobe pdf version of Order

Insurance Fraud

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Montemayor Shuts down Two More Health Plans

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Texas Insurance Commissioner Jose Montemayor has issued an emergency order directing two unlicensed health plans that catered to independent medical professionals to stop doing business in Texas.

One of the plans, National Guild of Medical Professionals Health and Welfare Benefit Trust Plan (NGMP) located in Austin, allegedly owes more than $4 million in unpaid claims. A new plan, created and operated by some of the same parties and accepting some of the old plan enrollees, Solidarity Health Plan (SHP), was also ordered shut down. (May 10, 2002)

Another Health Plan Ordered Shut Down

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For the fourth time in one year, Commissioner Jose Montemayor today issued a cease-and-desist order to stop an unauthorized entity from selling health insurance policies to Texas consumers. (March 27, 2002)

Alert on Unauthorized Health Insurance Scams

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COMMISSIONER´S BULLETIN NO. B-0009-02

Montemayor Warns of Fraudulent Health Plans

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Commissioner José Montemayor today cautioned Texas employers against unlicensed health care plans that may offer bargain-basement premiums but inevitably vanish when claims start piling up. (March 15, 2002)

Agents Warned Against Selling Bogus Health Plans

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Commissioner Jose Montemayor today warned Texas insurance agents that they risk license revocation, felony prosecution and personal financial liability if they sell health care plans offered by unauthorized insurers. (March 22, 2002)

Judge Blocks Unlicensed Health Plan

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A state district judge appointed a receiver to manage the assets of American Benefit Plans. Consumers may contact the receiver and obtain information about this plan by calling 1-800-551-4650 or online at www.texasreceiver.com

Good News for Consumers in Employers Mutual Case

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Commissioner Jose Montemayor today issued an emergency cease-and-desist order to stop Employers Mutual, L.L.C., from selling health insurance policies or collecting premiums in Texas after learning that the company has quit paying claims. (October 4, 2001)

SAI Plus Agrees to Leave Texas and Pay Restitution

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SAI Plus, LLC, of Rockville, Maryland, agreed today to stop its unlicensed health insurance business in Texas and to pay restitution to people whose medical bills should have been - but were not -- paid by the company. (March 29, 2001)

Also see, Danger! Unauthorized Insurance

For more information contact: ConsumerProtection@tdi.state.tx.us