Texas Ag, Farmers Make a Deal:
According to Texas Attorney General Greg Abbott, the state reached a settlement with Farmers Insurance Group that requires the company to refund an estimated $2.4 million to about 13,000 Texas motorists who may have paid more for vehicle repairs than was required under their policies. The agreement is unrelated to a proposed $117.5 million settlement with the state involving allegations the company deceived homeowners and misused credit scoring data. The AG's office said the unlawful practice known as "betterment" involves supposedly increasing the value of a policyholder's vehicle by paying for repairs with better or newer parts. The state's top attorney noted that companies such as Farmers have routinely reduced the amount to be paid to the motorist for repairs by an amount believed to equal the improved value of the vehicle because upgraded parts were installed, such as new rather than rebuilt transmissions. Under the settlement, Farmers will refrain from deducting for betterment on its policyholders' claims. The company agreed to refund the amount charged for betterment, plus interest, to policyholders who had an auto repair claim paid from Feb. 14, 1996, to the present. Farmers will mail checks directly to policyholders who had electronic estimates that indicated the company made these deductions for betterment. For those policyholders whose deductions cannot be identified though electronic estimates, Farmers will mail notices requesting that eligible persons make a written claim. Farmers will review the written claim file and send a refund check if the file indicates the company deducted for betterment. Farmers agreed that this settlement will not affect its insurance rates. It will also pay $175,000 in attorneys' fees and other expenses to the AG's office.
Eureste Disbarred for WC Fraud:
Texas Mutual Insurance Company reported that the Texas State Bar has permanently disbarred Bernardo Eureste, a Houston attorney and former San Antonio city councilman. Eureste has not practiced law since June 2002, when he was sentenced to three years' probation for workers' compensation fraud-related charges. Eureste's workers' comp problems began when Texas Mutual (then known as the Texas Workers' Compensation Insurance Fund) uncovered billing irregularities by Eureste's law firm. The investigators shared their findings with the Texas Workers' Compensation Commission (TWCC) and the FBI. Eureste was found to have devised a scheme to defraud his clients by submitting false claims and often billing identical hours on different clients without any variation. Eureste reportedly billed for an average of 90 hours a week, including billings for weekends and holidays. The scheme allowed Eureste to receive up to 25 percent of his clients' temporary income benefits (TIBs). Assistant Disciplinary Counsel Michael E. McClendon said Eureste had stolen from his clients, many of whom were poorly educated, lower income injured workers. It was estimated that Eureste over-billed his clients by as much as $1.4 million in a one-year period.
Okla. Agency in Conservatorship:
The Oklahoma Insurance Department announced that Aviation Insurance Group Agency Inc. of Bethany, was placed in conservatorship by Oklahoma County District Court Judge Leamon Freeman. The agency is accused of deceiving its clients out of hundreds of thousands of dollars. Aviation was previously placed under supervision following accusations of hiding money from people who bought insurance through the agency even though they were due refunds that had been paid by the insurance companies it represented. Freeman's order allows the department to run the agency. According to the OID, repeated calls to the agency's owner asking her to sign payroll and other checks have gone unanswered. In addition, Aviation officials sued an Oklahoma City bank for honoring a request by the department to cover payroll checks issued July 11. Testimony at the hearing indicated Shirley Porter-Hart, president of the group, was unable to sign the payroll checks due to family illness. In making his ruling, Freeman found public welfare would be jeopardized by waiting until an already scheduled Aug. 28 hearing on the agency's status. In addition to payroll checks, Porter-Hart has not signed checks forwarding premium money to insurance companies on behalf of their clients.
Illegal Plan Fined Millions:
Texas Insurance Commissioner José Montemayor levied fines totaling $12.5 million against the operators and chief marketer of a fraudulent health care plan that enrolled approximately 7,200 Texas residents. The unlicensed plan, called Employers Mutual LLC (EM), allegedly left patients, physicians and providers with up to $50 million in unpaid claims, nationwide. One unpaid Texas claim totaled $70,000. Montemayor's order fined William R. Kokott and Nicholas E. Angelos, both of Carson City, Nev., $5 million each. It levied a $2.5 million fine against American Benefit Society (ABS), later renamed Association Benefit Society of Turnersville, N.J. Kokott and Angelos were EM's sole managers and officers. Agents recruited by ABS received commissions in the range of 30 percent to 40 percent. To date, more than 30 agents who sold the EM plan have been fined and ordered to pay the unpaid health care claims of their victims. Many had their licenses revoked and additional agent cases are pending. The order found that Kokott, Angelos and ABS had illegally engaged in the business of insurance in Texas without the licenses required by state law and had misrepresented EM as a legitimate insurance plan. Montemayor ordered EM in October 2001 to stop selling insurance in Texas. EM and its principals also are under a Nevada federal court's preliminary injunction halting its nationwide insurance activities and freezing its assets. Employers can verify whether a plan is licensed by calling TDI at (800) 252-3439. Some scams claim to be "ERISA" plans exempted by federal law from state licensing requirements. However, legitimate ERISA plans are created by employers and/or labor unions and, therefore, are not sold.
Okla. to Hold WC Hearing:
The Oklahoma Board for Property and Casualty Rates approved a Sept. 11 hearing for a proposed 6.4 percent increase in a key component of workers' compensation rates. Insurance Commissioner Carroll Fisher promised a thorough and fair review of the request, which was filed by officials with the National Council on Compensation Insurance. NCCI represents private workers' comp carriers in Oklahoma. Fisher noted that he would have preferred to see a request for a rate decrease. Under the board's scheduling order, the filing goes to an independent actuary, as well as an actuary working for Attorney General Drew Edmondson, who represents consumers in the matter. The filing would affect the "loss cost" portion of workers' comp rates for the private insurance industry. CompSource, formerly know as the State Insurance Fund, sets its own rates and is not affected by the filing. CompSource provides coverage for more than 50 percent of the insured market. NCCI said the increase was needed due to medical inflation and high attorney involvement in Oklahoma.
