State probing health insurance provider

Chris Jones

Wednesday, Feb. 27, 2002 | 11:02 a.m.

The Nevada Division of Insurance is investigating a series of consumer complaints against a bankrupt heath insurance provider that allegedly defrauded its policyholders.

The state claims SAI Plus LLC of Rockville, Md., sold unlicensed health insurance plans to an undisclosed number of Nevada consumers and later failed to pay for their medical care, said Ben Gillard, chief investigator for the state insurance division.

While details of the state's case are still being compiled, a complaint against SAI Plus was filed last June by Betty Baker, counsel for the insurance division. The state held hearings late last year to discuss possible actions against the company and is scheduled to reconvene hearings on the subject March 25-26 in Las Vegas.

Gillard said he's currently aware of seven or eight Southern Nevada businesses that offered SAI Plus' health care plan to their employees, although he is still investigating how many individuals purchased policies from the company.

The Las Vegas Country Club paid SAI Plus more than $175,000 in premiums over a 13-month period beginning in January 2000, according to the state's complaint. Employees from a local orthodontics office paid more than $30,000 in premiums, while another business, the Family Health Care Center, paid more than $20,200. Gillard said other victims could surface as his investigation continues.

"We don't have the exact total of claims yet because we haven't discovered all of them," Gillard said. "We think there are a lot of people out there who may have just written their losses off and haven't contacted us yet."

Efforts to contact representatives of SAI Plus were unsuccessful.

SAI Plus has a history of trouble in multiple states. Last March, it agreed to stop the sale of its unlicensed health insurance products in Texas after consumers and medical care providers in that state filed more than 140 unpaid claim complaints.

Through a March 29, 2001, agreement with the state of Texas, the company agreed to pay its policyholders restitution for unpaid claims within 60 days or be subjected to a $1 million fine. By June 1, however, the company filed for protection in the U.S. Bankruptcy Court's Maryland District.

At the request of the Texas Department of Insurance, the case was shifted to the Northern Texas District bankruptcy court last September. Robert Yaquinto, a Dallas-based attorney who is acting as trustee, said SAI Plus accumulated nearly $1.3 million in unsecured claims before it was shut down.

Yaquinto said Monday that the company's sellable assets have included little more than used computers and telephone equipment.

"There's not a lot of money that's been generated from the liquidation," Yaquinto said.

Hawaii's insurance commissioner, Wayne Metcalf, called the company's health plan an unauthorized insurance product and linked its sale to the recent closure of two additional companies, Hawaii HealthCare Alliance (HHA) and TRG Marketing.

Hawaii's insurance division took control of HHA in October 2000 after it determined the company was operating below the state's minimum reserve requirements. Rather than attempt to secure additional financing, Metcalf said HHA's owner, Darren Larson, attempted to sell his customers unauthorized SAI Plus insurance plans through a company called TRG Marketing.

Citing poor financial health, a circuit judge closed HHA in January 2001. TRG Marketing voluntarily ceased operations last November, although Metcalf warned its troubles could continue under new entities.

Metcalf said he knows of at least four unauthorized insurance plans that are being marketed toward former TRG Marketing customers.

Metcalf said all four companies are under investigation and warned consumers to avoid their products. Gillard echoed that warning.

"These companies extend like spider webs and we're worried about other companies doing the same thing," said Gillard, who hopes Nevada's investigation of SAI Plus will prevent other unlicensed insurers from operating in the state.

Earlier this month, a federal judge shut down a Nevada-based health insurance company called Employers Mutual LLC after it allegedly bilked consumers out of nearly $15 million in premiums.

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