State Takes Over Medicare HMO

Dec 11, 2014

Florida Healthcare Plus, a Medicare HMO with 10,000 members, was declared insolvent Wednesday and turned over to state authorities.

In such cases, state and federal officials help patients move into other health plans or to traditional Medicare. More information is expected on that today or Friday.

Circuit Court Judge George S. Reynolds III
Credit Credit Florida's Second Judicial Circuit

The state Division of Financial Services took over the Coral Gables-based plan immediately after the order was issued Wednesday by Circuit Court Judge George S. Reynolds in Tallahassee. DFS is expected to sell off the company’s assets Jan. 1.

The three-year-old company was already reeling. In September, the state suspended the plan from signing up any  more members, only weeks before Medicare open enrollment.  Worse was to come in November with a federal indictment  of 11 people, including two former executives and four other plan ex-employees, in an alleged Medicare and Medicaid fraud ring.

As the U.S. Attorney’s Office described it, the plot was audacious: The 11 alleged participants enrolled 1,200 residents of Nicaragua and the Dominican Republic – U.S. citizens who had retired overseas -- in the Medicare HMO by giving them phony addresses in Miami-Dade.  Prosecutors said the con artists stole $25 million from Medicare and Medicaid, of which $10.5 million went to Florida Healthcare Plus.

The company itself was not charged with wrongdoing. In fact, Chief Executive Officer Susan Rawlings Molina says she is the one who discovered the books didn’t jibe and blew the whistle in August, eight months after taking over the job.  

On Tuesday, she and the firm’s attorney Jaime Guttman told Health News Florida that an unidentified investor group was considering supplying the cash that would enable the company to survive. That did not come through, and Judge Reynolds granted DFS’ petition.

DFS initiated the action at the request of the Office of Insurance Regulation, after OIR conducted a special examination of the company in September. It found that the company’s assets as of the end of June had been overstated by $4.9 million and its liabilities understated by $9.8 million.

OIR officials calculated that the company, which had claimed a surplus, was actually $11.8 million in debt.

Those charged in the conspiracy included former Florida Healthcare Plus Chief Operating Officer Pedro “Peter” Hernandez and former Marketing Director Abram “Abe” Rodriguez.

--Health News Florida special correspondent Carol Gentry is part of WUSF Public Media in Tampa. Contact Gentry at Health News Florida receives support from the Corporation for Public Broadcasting.