Medova ordered to stop selling unauthorized medical insurance in Washington

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August 11, 2022

OLYMPIA, Wash. – Medova Healthcare Financial Group, LLC (Medova) of Wichita, Kansas and its president and CEO, Daniel Whitney, were ordered to stop selling illegal medical insurance in Washington state and agreed to a $310,000 suspended advantageous. Medova and Whitney also surrendered their insurance producer licenses and agreed to stop doing insurance business in Washington. 

Medova sold unauthorized medical insurance plans called Lifestyle Health Plans to roughly 140 small businesses and their 1,487 employees through Washington chambers of commerce. The corporate misrepresented the character of the coverage and who was financially chargeable for paying claims. Medova committed similar actions in at the least 38 other states and agreed in March to a federal consent order that appointed a federal independent fiduciary to manage the corporate and manage its claims. Nationwide, it provided health advantages to greater than 35,000 employees. 

“I do know that many businesses need to offer the perfect advantages they’ll for the staff at an affordable price,” said Insurance Commissioner Mike Kreidler. “I feel for those employers who bought plans from Medova and are facing expenses they didn’t expect. I encourage anyone who sees an insurance plan they don’t fully understand to contact my office before they buy. Taking that extra step can prevent losses afterward. We will inform you if its legitimate.” 

Medova didn’t adequately explain the character and risks of the plans sold to small businesses, by marketing the plans as complete health advantages package designed to be just like traditional insurance coverage for his or her employees. Quite, these plans were self-funded ERISA (Worker Retirement Income Security Act) health profit plans. ERISA plans are regulated by the federal Department of Labor and never Washington state. Under an ERISA plan, the employer is chargeable for paying for its employees’ claims and the insurer that sold the coverage only administers the plan. 

Medova also improperly handled and accounted for the employers’ premium funds. For instance, Medova collected premium from the small businesses and as an alternative of keeping each employer’s premium and paying their claims individually, it pooled the cash and doled out claim payments for every employer group from that source of cash. Some claim payments were delayed, and others are still pending. Under an ERISA plan, the employer is financially accountable for any unpaid claims. 

In May, Kreidler’s office sent letters to the 140 employers explaining the role of the federal independent fiduciary and inspiring them to contact their insurance agent to help them with navigating this issue and assessing their insurance options. Kreidler’s office also encouraged these employers to contact an ERISA attorney to explore their legal options and contracts with Medova. 

Anyone with unpaid medical claims from Medova’s Lifestyle Health Plan should call the receiver at 615-370-0051.

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