State Insurance Department wins $51 million claim against insolvent HMO

A Louisiana Supreme Court decision awarding Oklahoma approximately $51 million means most claims resulting from the insolvency of an Oklahoma health maintenance organization likely will be paid, Insurance Commissioner John Doak announced this week. .

“This is great news for unpaid claimants of AmCare Health Plans of Oklahoma,” Doak said. “It is believed that most claims against the company will eventually be paid in full.”

AmCare was a health maintenance organization (HMO) licensed to do business in Oklahoma, Texas and Louisiana until it was placed in receivership in 2003.

According to Oklahoma Insurance Department General Counsel Owen Laughlin, the Louisiana Supreme Court recently ruled in favor of the Oklahoma Insurance Commissioner and the states of Texas and Louisiana in a lawsuit that challenged the 1999 sale of AmCare Health Plans of Oklahoma, Inc., by Heath Net, Inc. The three states alleged the sale led to AmCare’s insolvency.

“The total amount of the judgment of over $181 million was shared by the three states, with approximately $51 million belonging to Oklahoma,” Laughlin said. The money will be deposited in an account with the Oklahoma Receivership Office for the benefit of claimants against the company’s estate, he said.
“This is the reason we continue to aggressively pursue those responsible for insurance fraud and insolvency,” Doak said in a statement sent to CapitolBeatOK. “Oklahoma rate payers will reap the benefits of these efforts.”  

The Department monitors the solvency of insurance companies, including health maintenance organizations, doing business in Oklahoma. Solvency is based on a company’s ability to pay the benefits of the policies it issues. When a company fails to meet established solvency criteria, the Insurance Commissioner can place the company into receivership. AmCare was placed in receivership by the Oklahoma Insurance Department in July, 2003.

While in receivership, a company falls under the control of the Insurance Commissioner as court appointed receiver. The Commissioner is responsible for preserving the company’s assets and determines whether the company can continue to do business in Oklahoma. Creditors, including policy holders, are paid from the assets of the company and from recoveries the Insurance Commissioner makes.