For Immediate Release - June 04, 2009

Division of Insurance Issues Order to Show Cause against HMA Direct of Newton

Company used employees' health status to determine eligibility

BOSTON - June 4, 2009 - Commissioner of Insurance Nonnie S. Burnes today issued an Order to Show Cause against several insurance licensees affiliated with HMA Direct of Newton. These licensees, through HMA Direct, offer access to health insurance to businesses in the Commonwealth. The Order, filed against HMA MGU, LLC, New England Custom Health Plan Administrators, LLC, Jedediah L. Brettschneider and Mark Allan Celentano, includes 33 claims of wrongdoing. The Order alleges that HMA Direct and its affiliated entities and employees marketed self-funded group health plans to Massachusetts employers. In doing so, HMA Direct and its affiliates used employees' health status to make the employees ineligible or no longer eligible for the employers' self-funded group health plan. Employers were then allegedly forced to obtain individual health insurance policies for the ineligible employees. These actions allegedly caused the employers' self-funded health plans to violate the anti-discrimination provisions of HIPAA (Health Insurance Portability and Accountability Act). The Order further details allegations of misrepresentation on certain insurance license applications of the respondent licensees. The Division of Insurance is seeking revocation of the individual and business entity insurance licenses of all respondents, as well as fines. The Division's investigation is on-going. "Through Massachusetts' landmark health care reform effort, hundreds of thousands of our citizens now have access to health insurance. We are vigilant in ensuring that consumers and business have access to a fair system," said Commissioner Burnes. "The Division of Insurance will not tolerate unfair business practices and will use its resources to protect consumers and employers who are trying to comply with our laws." The Division of Insurance also issued a Consumer Alert to employers of the risks of self-funded health plans. The alert advises employers and others of the important questions they should ask when purchasing health insurance for themselves and their employees. The Division of Insurance encourages any consumer or business that may have questions to contact their Consumer Hotline at (617) 521-7794. ###

Order to Show Cause, Docket No. E2009-16 pdf format of OrderToShowCause.pdf
file size 1MB pdf format of Exhibits.pdf file size 2MB
Exhibits A(1) through M to Order to Show Cause, Docket No. E2009-16 pdf format of Exhibits_A1_M.pdf
file size 4MB pdf format of NoticeOfProcedure.pdf
Certificate of Service, Docket No. E2009-16 pdf format of CertOfService.pdf

Consumer Alert: Beware of the Risks in Self-Funded Health Plans