Texas insurer told to halt business in Md.

September 01, 1994|By Patricia Meisol | Patricia Meisol,Sun Staff Writer

Maryland insurance regulators have ordered a Texas firm, United Service Association for Health Care -- also known as USA for Health Care -- to stop selling insurance policies in Maryland because it doesn't comply with state laws.

According to a cease-and-desist order issued by the Maryland Insurance Administration, the U.S. Labor Department has determined that the firm is operating as a multiple employer welfare arrangement that is not fully insured and that it falls under state, not federal, regulation.

Groups of employers who self-insure or purchase the proper insurance to guarantee health benefits to subscribers may bypass state regulations and operate under federal labor laws. But in recent years, a growing number of companies selling insurance products have operated outside state laws by citing the federal exemption even when they do not comply with it.

The Grand Prairie, Texas, firm did not respond to a request for comment yesterday, and it could not be learned how many customers it has in Maryland. As part of the order, state regulators have asked for a list of customers and agents selling the policies.

The order gives the company a choice of complying with Maryland laws, which would mean selling an insurance plan that contains all the benefits mandated under state law; becoming a regulated insurer with an adequate reserve fund of its own; or purchasing insurance through an insurer whose finances would be subject to state oversight.

In a second, unrelated case, state insurance regulators have ordered a Towson health benefits consulting firm that advises small businesses and consumers about insurance benefits to cease operations.

Regulators said the company, Wilkinson Benefit Consultants Inc., lacked the required license to offer such advice.

Roy Wilkinson and Lisl Dutterer-Wilkinson, owners of the firm, have agreed to sit for the licensing test in the next 30 days and abstain from insurance advising in that time, Mr. Wilkinson said yesterday.

He said he was unaware of the license requirement. State law requires anyone advising customers about insurance options or analyzing plans to obtain an insurance adviser's license.

About 10 percent of Wilkinson's business is in Maryland and much of it is unrelated to insurance, Mr. Wilkinson said. The firm has 2,000 clients nationwide and offers claims auditing and cost or quality reviews, he said.

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