Head of troubled state insurance system leaving

Friday, Jan. 30, 1998 | 10:35 a.m.

CARSON CITY -- David Thomas, who has headed state's problem-plagued health insurance program, is quitting his $72,000 a year job to go into private business.

Thomas, who has been state risk manager for 6 1/2 years, said Thursday he's not leaving because of the turmoil in the $93 million-a-year insurance program in which thousands of medical claims from state workers and their dependents have gone unpaid for months.

"It anything, it's made my decision more difficult," Thomas said of his resignation. "All my career there have been challenges that have driven me. I hate to leave with issues hanging out there and not resolved."

But he said he and his wife have been working for three months to swing a deal to buy a garden nursery in Douglas County and Wednesday "everything came together."

"After 25 years in government, it's time to do something else," said Thomas who turns 47 next week.

The insurance system covers 26,000 state workers and their dependents. It ran into trouble last year when L&H Administrators, the company hired to process claims and pay medical bills, fell behind in its work.

The state Committee on Benefits fired L&H and hired UICI of Texas which discovered a backlog of more than 70,000 claims from doctors, hospitals, diagnostic labs and other medical personnel.

Some companies were owed more than $1 million and no payments were made for more than six months in some cases. There were myriad complaints from health professionals and other clients who said that in some cases, they were being forced to pay their bills which should have been covered by the state insurance.

Thomas and the benefits committee were criticized for taking too long to act in dismissing L&H and for failing to verify that the firm did not have a state license to perform the type of work for which it was hired.

Despite the trying times and mounting complaints, Thomas said he enjoyed the job because "it was helping people, especially the retirees who did not have anyone to turn to, whether we got thanks or not."

A legislative audit, released earlier this month, said Thomas' division has major problems in its accounting system. There was a $3 million difference between what the division billed to collect insurance premiums from the state agencies and what was paid. The division lost $63,000 because it paid premiums to managed care organizations to cover workers who had already left the state.

The audit found the risk management division "has significant internal control weaknesses over cash receipts."

That financial examination was done on one part of the operation and another audit was ordered Thursday by the Legislative Commission at the request of Assembly Speaker Joe Dini, D-Yerington.

Dini complained there were "serious problems including large claims backlogs, untimely payments to providers, lost preferred provider discounts and in some cases providers requiring cash payment prior to rendering health care services."

Dini said he wants to clear the air so the 1999 Legislature will be ready to make changes, if needed, in the state insurance system. It's clear, Dini said, that the state had no control over L&H Administrators which caused the problem. He said the structure that governs the system may have to be changed.

Personally, Dini said he had three claims that he submitted and they got lost. He has had to present them again to get reimbursed for bills he paid.

"Only with a legislative audit will we be able to obtain an independent and objective assessment of the current situation," Dini said.