January 29, 2002
(617) 521-7333

Division Of Insurance Assisting Bay State Consumers Victimized By Nationwide Health Insurance Scam

U.S. Department of Labor alleges at least $4.5 million in unpaid claims by unlicensed Nevada-based Employers Mutual, LLC

(BOSTON, MA)The Massachusetts Division of Insurance is asking employers and individuals who purchased health insurance coverage from representatives of Employers Mutual, LLC of Carson City, Nevada to contact the agency. Employers Mutual purported to provide health insurance benefits to more than 22,000 beneficiaries throughout the United States, more than 900 here in Massachusetts. On December 5th and 14th of 2001, the Division took action to halt the sale of the insurance coverage in question in Massachusetts and cease the forwarding of all premiums to Employers Mutual or its agents.

The Division's actions were in concert with a temporary restraining order obtained by the U.S. Department of Labor on December 13, 2001, freezing the assets of Employers Mutual, its principals and affiliated associations. The lawsuit filed in federal court in Reno, Nevada alleges that Employers Mutual's principals diverted more than $6 million in health plan assets to personal accounts in the form of administrative expenses paid to them.

"We moved very quickly to identify affected Massachusetts residents as this is a company that was not licensed to sell insurance in any state nor had the product it was offering been approved anywhere to my knowledge", said Insurance Commissioner Linda Ruthardt. "In truth, whether claims were paid early-on or not at all, these consumers were without coverage that was either federally or state regulated. Anyone who hasn't already done so, needs to find viable coverage now, Ruthardt said.

With information gathered from other insurance regulators and licensees who sold the Employers Mutual product here in Massachusetts, the Division sent letters to over 400 known policyholders on December 21, 2001 requesting any and all information relative to the sale of the coverage, amount and frequency of premium paid, the number and amount of any claims submitted that have not been paid and any collection notices policyholders may have received from health care facilities or providers. Today, the Division wants to ensure that all policyholders have been located.

"To this point, we've identified more than $100 thousand in unpaid claims in Massachusetts and we expect that amount to increase. The Division's investigators have worked hard to identify those affected, but we need to hear back from them so we can get their information to the court-appointed authority now managing Employers Mutual's remaining assets," Ruthardt said.

Employers Mutual allegedly collected $14 million in premium between January and October 2001 and paid out only $3 million in claims. A federal judge will reportedly reach a decision soon on the U.S. Department of Labor's request for a preliminary injunction. In the meantime, an independent fiduciary has been appointed to identify all creditors of Employers Mutual and to collect and administer all assets.

Any Massachusetts consumer or employer who purchased or believed they had coverage from Employers Mutual is asked to contact the Division of Insurance if they have not already done so. Respondents should include all relevant documentation and mail the information to:

Commonwealth of Massachusetts
Division of Insurance
One South Station
Boston, MA 02110
Attn: Market Conduct/Employers Mutual

Or Call:
(617) 521-7329

Any Massachusetts consumers or employers who need assistance with understanding their health insurance options may phone the Division's Health Unit at (617) 521-7374 or view the non-group and/or small-employer group health insurance options at the Division of Insurance website ( www.mass.gov/doi).