Tennessee Association Insurance Agents Deny Wrongdoing

Representative of two Tennessee companies accused by authorities of selling phony medical insurance policies to thousands of people nationwide said Tuesday that they are not to blame for piles of unpaid medical bills.

State officials filed a lawsuit against the companies claiming they pose “an immediate danger” to the public and have allegedly duped many people in their scheme. The companies have been investigated over accusations that they sold bogus plans to unsuspecting people, some of them chronically ill and seeking relief.

The state seized control of the two companies in March after a lengthy investigation and complaints from several states. No criminal charges have been filed, but a federal prosecutor who handles white collar crime cases for the U.S. Attorney’s office in Nashville attended Tuesday’s hearing.

A lawyer representing American Trade Association and Smart Data Solutions of Springfield argued in court that his clients never sold the insurance.

“My client has been victimized by some of these insurance carriers,” Nader Baydoun, a lawyer representing the companies and two of their agents, said outside the courtroom.

The arguments came during a hearing to determine whether the state can liquidate the assets of the companies to help pay some of the outstanding claims of those who purchased the medical insurance.

The state maintains that the companies acted as insurers but were not licensed in the state of Tennessee.

Baydoun argued that the trade association was simply a private organization that helped members purchase group discounts, including health insurance. He acknowledged that the company was not licensed as a third-party benefits administrator in the state of Tennessee.

The lawyer argued that the health insurance was sold by Service America Assurance, and it wasn’t his clients’ fault that the company didn’t deliver on its promises.

No representative of Service America Assurance showed up for the hearing. It’s been described as a subsidiary of a Pakistani company that is not licensed to sell insurance anywhere in the U.S.

The attorney emphatically denied allegations that Service America Assurance was a shell company set up by his clients to collect premiums.

Representative of ATA and SDS want Davidson County Chancellor Ellen Hobbs Lyle to avoid the drastic action of liquidating the assets. They also want the judge to dismiss a lawsuit the state filed against the companies and their representatives.

Baydoun said they’d found a reputable insurance carrier for the trade association and offered to let someone else administer the benefits.

Lyle said she expects to rule within a week.

An official with the Tennessee Department of Commerce and Insurance said that at least 12 other states have taken action against the companies to stop them from doing business. They include: Arkansas, Connecticut, Florida, Indiana, Illinois, Kansas, Michigan, Missouri, Montana, North Carolina, Oklahoma and Washington.

U.S. Attorney Ed Yarbrough declined to say whether the companies and their agents were the subject of a federal probe.

Former employees of SDS and ATA told The Tennessean newspaper they lied to sick people and constantly denied them benefits while claims languished for years without getting paid.

“People would call in crying, but we were instructed to tell them that their claims were ‘in process’ and to call back in 30 days,” Lisa Hernandez, who worked for SDS, told the paper. “We were told to flat-out lie to people just to get them off the phone.”

Topics Agencies Tennessee