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HNF Stories

Trip-insurance losses huge

By Mary Jo Melone
1/6/2010 © Health News Florida
 
More than 300 would-be travelers across the country who booked cruises through Florida travel agents but had to cancel because of illness have filed complaints, saying the trip cancellation insurer didn’t pay. 
 
Given the average price of the cruises, the losses run into the millions of dollars. The insurer, Prime Travel Protection Services of Arvada, CO, declared bankruptcy last January and went out of business shortly before Colorado authorities issued a cease-and-desist order against its owners. 

Florida’s Department of Financial Services, which began investigating the matter a year ago, says the insurer wasn’t licensed to do business in Florida and travel agents shouldn’t have arranged the coverage. But DFS officials say the state can’t prosecute travel agents unless it can prove they knew the company lacked a license and had "criminal intent."

Orange County, CA., college professor Barry Resnick accused Florida officials of "gross incompetence" for failing to notice that an owner of Prime Travel Protection was previously involved with another travel insurer that failed to pay claims. It took too long to connect the dots, Resnick said. 

Some who lost money say they suspect there was more afoot than an ordinary business bankruptcy, that the collection of money and failure to pay was orchestrated. Florida officials "haven't looked at the big picture, that the whole affair was not just an unlicensed product," said  Peter Lay of Danville, CA., who lost $4,300 when his wife’s illness forced cancellation of their September 2008 cruise.

Health News Florida reported troubles with the travel insurer last month after a civil suit was filed against a travel agency, but the extent of the losses wasn’t clear until a few days ago when DFS released the number of complaints and some documents.

The earlier story described charges in a lawsuit filed by Richard Glazer, 71, a retiree near Tampa who says  he faced $61,000 in unpaid travel and medical expenses when he suffered a heart attack during a cruise. He had paid $710 for a policy from Prime Travel Protection Services when the cruise was booked by Legendary Journeys in Sarasota, he said. 

The DFS Division of Insurance Fraud file on Legendary Journeys contained 400 pages of documents sent in by customers who said the insurer never paid their claims. Nevertheless, investigators closed the case against the travel agency.
 
“There are ethical implications” for Legendary Journeys, one investigator wrote, but no criminal statute covers what happened. 

The news of the case-closing stunned Linda Ferrall of St. Augustine, who lost $6,700 on a cruise through the Baltics she had planned with husband Ed for August 2008. Just before the trip, she was diagnosed with a blocked carotid artery and needed immediate surgery. She was told the travel insurance claim would be paid in four months. It wasn’t. 

"I'm speechless," she said. “I’ve not just lost my funds. I’ve lost my trust.” 

Al Ferguson, an owner of Legendary Journeys who spoke to Health News Florida last month, could not be reached for comment this week. At the time he said he had “satisfied” 25 clients who lost money and was cooperating with the state investigation.

According to Colorado records, Prime Travel Protection Services was owned by Jerry A. Watson and his wife Christine C. Watson. They could not be reached for comment.

The records say Jerry Watson used to work for Trip Assured, a Tennessee travel-insurance company that was ordered shut down by authorities in 2006 after customers complained that it wasn’t paying claims. By the time that happened, Watson was no longer with the company, records say. 

In addition to the Watsons, DFS continues to investigate three travel agencies: Vacation Superstore Network doing business as Best Price Cruises, a web site called SmartCruiser.com, and Super Travel of West Palm Beach. The owner of Vacation Superstore Network, Ron Russo, could not be reached. A lawyer for SmartCruiser.com, Dan Newman, declined to comment. Super Travel of West Palm Beach could not be located.
 
DFS ordered a few agencies that did business with Prime Travel Protection to reimburse a handful of customers: Cruise Options of Plantation was ordered to pay back two customers; Cruise Supermarket of Plantation, three; and High Performance Travel of South Daytona, one. The majority of agencies and complaining customers are not affected by the orders. 

One Boca Raton couple, Ruth and Ted Krakover, say they lost $41,000 on a four-week cruise from Singapore to Rome scheduled for March 2008. Just before the trip, Ruth Krakover developed what looked like a recurrence of cancer and needed tests. 

The Krakovers never got their $41,000 back. They have declined to talk about what happened to them because they have sued Prime and their travel agency, Vacation Superstore Network doing business as Best Price Cruises, of Port St. Lucie. The lawyer for Best Price Cruises, Daryl Krauza, declined to comment. 

The Krakovers’ lawyer, Steven Meyer, said Jerry Watson could not be served with the lawsuit because he could not be found.

--Mary Jo Melone, an independent journalist in Tampa, can be reached by e-mail.