February 14, 2002
(617) 521-7333

Policyholders Shielded From Employers Mutual's Creditors

Insurance Commissioner Ruthardt cites federal court decision as protecting consumers

(BOSTON, MA) The Division of Insurance is informing all Massachusetts policyholders and beneficiaries of Employers Mutual, LLC this week that a federal court judge has ruled that all health care providers and collection agencies are precluded at this time from seeking payment from beneficiaries for claims that the unlicensed Nevada entity failed to pay. So far, the Division of Insurance has identified more than 1,100 individuals who believed they had health insurance coverage through Employers Mutual, a Carson City-based company that was unlicensed to sell insurance in every state in the nation.

"At this point, we're aware of about $270 thousand in unpaid claims here in Massachusetts and we're still gathering information from beneficiaries," said Commissioner Linda Ruthardt. "We're very pleased that the Court has seen to it that victims of what amounts to fraud will not be penalized. It's also encouraging that all of the beneficiaries we've heard from so far have not had difficulty getting credit for previous health insurance coverage from their new insurers," Ruthardt said.

Following actions taken by the Division to halt the sale of the Employers Mutual coverage and cease the forwarding of premium to the company, the Division issued a bulletin to insurers requesting that they give credit for the previous coverage as qualifying coverage toward any pre-existing condition period so as not to penalize those who may have been victims of fraud.

Employers Mutual allegedly collected $14 million in premium countrywide between January and October 2001 and paid out only $3 million in claims. An independent fiduciary has been appointed to identify all creditors of Employers Mutual and to collect and administer all assets. The Division has sent letters to all known policyholders and beneficiaries 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.

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).