Montemayor Orders Unauthorized Insurers Out of Texas

Texas Insurance Commissioner Jose Montemayor issued an emergency cease-and-desist order directing 33 individuals and entities to immediately halt unlicensed health insurance operations marketed primarily under the names of Privilege Care Inc., Professional Industrial and Trade Workers Union (PITWU), Southern Plan Administrators Inc. (SPA) and American Heartland Health Administrators Inc. (AHHA).

According to the Texas Department of Insurance, the alleged marketers of the illegally operating health plans targeted small employers and their employees.

“Requiring health insurance plans to be licensed isn’t a mere legal technicality, it’s essential to protect consumers,” Montemayor said. “Operators of unauthorized health plans knowingly operate outside the law and inevitably leave their customers in the lurch.”

Texans covered by the unauthorized health plans are at “serious risk of loss” and the plans “are in a hazardous financial condition,” according to the C&D order.

Privilege Care Inc. has addresses in Moorestown, N.J., and Oklahoma City, Okla. It operated in concert with PITWU, a purported labor union based in Cherry Hill, N.J. The Texas Department of Licensing and Regulation fined Privilege Care Inc. $5,000 in August for operating a staff leasing service without the required license from that state agency.

Nationally, the Privilege Care/PITWU plans had at least 2,800 enrollees. These included 825 Texans, not counting their dependents.

Health care claims left unpaid nationwide by these unauthorized health care plans may exceed $7 million, according to TDI investigators. Some unpaid claims are for medical services provided as far back as 11 months ago.

TDI learned about Privilege Care/PITWU from individuals who were previously enrolled in an unauthorized health plan called Employers Mutual L.L.C., which Montemayor banned from Texas in October 2001. These people checked with TDI after being approached by Privilege Care/PITWU because they did not want to repeat the experience they had with Employers Mutual.

David Weinstein, who has addresses in Oklahoma City and Moorestown, N.J., is shown as the controlling person of Privilege Care. A Florida court convicted Weinstein in August of two felony counts of communications fraud in connection with an unauthorized health care plan that was shut down by the Florida Department of Insurance.

Southern Plan Administrators and American Heartland Health Administrators are affiliated third-party administrators based in Houston. They provided coverage to the employees of at least 64 Texas employers through their own plans. Starting November 1, 2002, SPA became the administrator of the Privilege Care/PITWU plan.

TDI learned of the unauthorized insurance activities of SPA and AHHA from complaints about unpaid claims.

SPA and AHHA also have been involved with MarkeTrends Insurance Ltd. and North American Indemnity, NV, European entities previously investigated by TDI. On October 31, 2002, Montemayor ordered MarkeTrends and North American Indemnity to cease and desist conducting unauthorized insurance operations in Texas. TDI staff allege that AHHA and SPA have continued accepting premiums and paying claims for MarkeTrends in violation of the cease-and-desist order.

The Oklahoma and Louisiana insurance departments have both issued cease-and-desist orders against the Privilege Care operation. The Colorado Division of Insurance issued a cease-and-desist order against AHHA, SPA and MarkeTrends. The Mississippi Insurance Department issued a cease-and-desist notice to AHHA.

The full list of individuals and business entities named in the cease and desist order is as follows:

Privilege Care Inc.; David Weinstein; Michael Garnett; Mark A. Maccariella, Privilege Care Health & Welfare Fund, also known as Privilege Care Employee Health & Welfare Fund; Privilege Care Marketing Group Inc.; James M. Doyle; Susan Messner; Christopher S. Ashiotes; Michael DiVece; Scott Rutherford; Donald R. Smith; Five Star Marketing; Professional and Industrial Trade Workers Union, also known as Professional Industrial and Trade Workers Union; James Campbell; Franklin J. Militello; Dante A. Georeno; Cynthia Holloway; Sheila Bushong; Loretta Smith; Tim Foster; PITWU Health & Welfare Fund, also known as Privilege Care PITWU Health & Welfare Fund; Union Privilege Care Inc.; Oak Tree Administrators Inc.; Cherille G. Shelp; Aldrostar, S.A.; Brokerage Concepts Inc.; Spectrum Review Services Inc.; Southern Plan Administrators Inc.; American Heartland Health Administrators Inc.; Jack H.M. Ferguson; Edwin W. Ehler also known as Edward Ehler; and James A. Glidewell.