Tennessee officials are trying to shut down operations of two Robertson County companies accused of defrauding more than 12,000 consumers nationwide who sought affordable health insurance.
Some of the $14 million that Springfield-based American Trade Association and Smart Data Solutions took in over a 16-month period was used to buy automobiles, real estate and make donations to the University of Alabama Tide Pride booster club in the name of one of the owners, according to court filings obtained this week by The Tennessean.
The state is seeking to place the companies in receivership. A hearing is set for today.
“The actions by respondents constitute a massive deception on the public,” according to the state’s petition, which also included seizure of Serve America Assurance Ltd., an alleged Bermuda-based insurance company.
“The most pervasive fraud is the misrepresentation of the product as legal and that there is an authorized insurer underwriting the coverage.”
The petition names owner Bart S. Posey and his wife, Angie, who live in Springfield; Obed W. Kirkpatrick and his wife, Linda, who live in Franklin; and Richard H. Bachman of Austin, among others. No criminal charges have been filed.
The state said ATA marketed health insurance policies by recruiting “members” using various Web sites, fax blasts and telemarketers. SDS was identified as the claims administrator for the association. Premiums ranging from $200 to $500 a month were automatically deducted from individual members’ personal bank accounts.
“The deception is happening on a national scale,” the petition said, adding that, “The policyholders are located in all 50 states and District of Columbia, with the greatest concentration of policyholders in Florida, Texas, New York, New Jersey and California.”
Bank records filed with the state’s petition show that Posey also donated money from the company bank account to the University of Alabama’s booster club, including a check for $38,000 in February. He also made payments from SDS accounts totaling at least $9,000 to his son, Bart S. “B.J.” Posey Jr., who is a dispatcher for the Robertson County Sheriff’s Office and is currently enrolled in the department’s police academy.
Most of the health claims filed by policyholders were never paid, the state said.
One of the companies’ customers, 51-year-old Karen Saltsman of Mt. Juliet, said she’s pleased that the state has moved to take over the two companies. She paid more than $1,200 in premiums to ATA from November through February without ever having any of her medical claims paid.
“It’s about time,” Saltsman said. “Where have they been? I’m glad they’ve shut the place down, but it should have happened a long time ago.”
In the petition, the Tennessee Department of Commerce and Insurance said it began its investigation into ATA and SDS in October 2008. Since then, however, Posey and his companies have been allowed to continue operating without restriction, according to The Tennessean.
In February, ATA was the subject of an investigative report on the CBS-TV Early Show, which featured regulators from the Oklahoma Insurance Department and a policyholder in that state whose claim for a heart pacemaker was denied by SDS.
Oklahoma Insurance Commissioner Kim Holland said she called state and federal authorities in Nashville in late January to request a criminal investigation.
The department has declined to answer questions from The Tennessean about the investigation or why it took so long to act against the companies.
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