Insolvent HHA fined, banned from Hawai’i As settlement of administrative proceedings, principals of Hawai’i HealthCare Alliance have been fined $50,000, had their insurance licenses revoked and been prohibited from doing insurance business in the state. The company is no longer
Insolvent HHA fined, banned from Hawai’i
As settlement of administrative proceedings, principals of Hawai’i HealthCare Alliance have been fined $50,000, had their insurance licenses revoked and been prohibited from doing insurance business in the state.
The company is no longer in business in Hawai’i, said David J. Gierlach, attorney for Hawai’i HealthCare Alliance (HHA) principal Darren Larson, who lives in Texas.
Terms of the settlement cover Larson, his wife Linda Larson and mother Lydia Graham.
The settlement was announced earlier this week by Wayne Metcalf, commissioner of the state Department of Commerce and Consumer Affairs’ Insurance Division.
The terms of the settlement end the state’s administrative claims against Larson, but may not finalize all possible legal action, Metcalf said.
The settlement does not affect liquidation of HHA “under the general supervision of the court, and does not preclude the liquidator from seeking compensation from all responsible parties contributing to HHA’s insolvency,” Metcalf said.
He said Larson has agreed to the Insurance Division’s conditions in settling the three administrative cases currently pending against him.
“This was a case involving a lot of disputed facts, and we arrived at a settlement that seemed to be fair and reasonable from everybody’s point of view, and we’re glad that it’s over,” said Gierlach. “As a result of this settlement, the disputes have been settled. They’ve been resolved. So there are no further disputes between us and the insurance commission.”
Gierlach said the settlement “is an adequate resolution to this matter. Our position has always been that we paid all legitimate claims, and the liquidator is trying to determine whether that’s correct or not.”
Earlier this year, Honolulu Circuit Court Judge Sabrina S. McKenna ordered the liquidation of HHA, citing the company’s deteriorating financial condition.
HHA was insolvent and lacked the financial resources to meet its obligations, the court found.
“HHA was using new premium payments to pay old bills, and was unfairly denying payments for services to avoid paying claims,” Metcalf said.
Under state law, the insurance commissioner becomes the liquidator of HHA’s assets in attempts to gather funds to pay off HHA creditors.
Wilcox Health System (Wilcox Memorial Hospital and Kaua’i Medical Clinic) is one of HHA’s creditors.
The 157 Kaua’i policyholders of HHA could eventually be reimbursed for claims that were denied improperly, or for premiums paid to the company, as a result of the settlement and continuing liquidation of HHA assets, Metcalf said.
HHA marketed itself largely to self-employed people and offered a month’s medical, dental and vision coverage for $340 for a family of four.
HHA was marketing “a product at less than half the price of a typical, individual medical plan coverage,” Metcalf said of the offer, which drew 1,000 policies covering 3,000 people statewide during the eight months HHA operated in Hawai’i.
Metcalf earlier called HHA’s tactics a “scheme” rather than a legitimate business enterprise. The medical coverages were marketed to small businesses, the self-employed and others not covered by the state’s mandatory medical-insurance coverage law.
“We believe that substantially all legitimate claims have been paid,” Gierlach said.
Staff Writer Paul C. Curtis can be reached at mailto:pcurtis@pulitzer.net or 245-3681 (ext. 224).
