Insurance Administration

The health care company at the center of the bribery and extortion case against former state Sen. Larry Young improperly diverted $3.6 million in state and federal funds that were supposed to be used to provide medical care to welfare recipients, state examiners charge.The alleged diversion by PrimeHealth Corp. of Lanham, along with millions of dollars in other questionable expenditures by the company's executives, are spelled out in an extensive report made public this week by the Maryland Insurance Administration.

The Maryland Insurance Administration announced yesterday that it will pay $500,000 -- its largest payout ever -- to 171 consumers who lost deposit money when Regency Homes filed for bankruptcy protection in July 1998.The money will come from proceeds of a surety bond that Regency filed with the administration just months before it filed Chapter 7. However, the amount being released represents a little less than half of the $1.02 million that the administration could verify Regency had on deposit.

The state health department will launch an HMO quality assurance unit, Dr. Martin P. Wasserman, the state health secretary, said yesterday."We've always had the responsibility for quality, but we had read the statute narrowly in the past," Wasserman said.Last year, he said, he decided that a "more expansive" reading of the department's authority was "consistent with what everybody wanted us to do."The new unit will divide the work of monitoring health maintenance organizations with the Maryland Insurance Administration, which has a complaint unit and, under a new law effective this year, a hearing process for determining if HMOs are denying medically necessary care.

Charging that he was discriminated against because he is an African-American, the chief owner of a health-care firm placed under state supervision has asked a federal court to block the impending sale of his company by the Maryland Insurance Administration.Christian E. Chinwuba, a key prosecution witness in the recent trial of former state Sen. Larry Young, filed the civil rights suit this week in U.S. District Court in Greenbelt.The insurance administration is reviewing proposals submitted by a handful of firms interested in taking over the health maintenance organization, PrimeHealth Corp.

The Maryland Insurance Administration has fined an HMO $100,000 for arbitrarily "downcoding" claims submitted by a doctor -- that is, paying for a routine office visit when the doctor performed additional services.Half of the fine will be suspended if NYLCare Health Plan of the Mid-Atlantic complies with insurance rules for the next year, said Insurance Commissioner Steven B. Larsen.As part of the terms of the consent decree issued by Larsen and not challenged by NYLCare, the health maintenance organization has appointed a compliance officer to make sure it follows the rules.

Robert C. Fraser, 73, NASA executiveRobert C. Fraser, an executive at NASA for more than 20 years, died Monday of heart failure at his Severna Park home. He was 73.Mr. Fraser began work at the National Aeronautics and Space Administration in 1960 as public information officer for Space Sciences and Applications and for Manned Space Flight. He later was a public relations manager for Martin Marietta Corp. in Middle River and a marketing manager in the Washington offices of Lockheed Corp.He returned to NASA about 1979 as executive assistant to the associate administrator for Space Sciences and Applications and Manned Space Flight.

Health insurance industry representatives urged Maryland's insurance commissioner yesterday to allow the free market to control rising prescription drug plan premiums and the growing use of benefit caps rather than resorting to government intervention."

The agitation felt when shopping for auto or homeowners' insurance can be eased by following a basic rule of thumb -- determine precisely what coverage you are seeking, and then shop around. Consumers who don't do their research may pay higher premiums or end up underinsured, the experts say."When shopping for insurance, it's not always good to just look for the lower price. It's important to shop for quality," says Sheila Stevens, an insurance agent for 12 years who opened her own agency, SIS Insurance Agency, two years ago in Baltimore County.

Citing what he called an insurmountable $7.2 million deficit, state Insurance Commissioner Steven B. Larsen put on the auction block yesterday the Lanham health care firm that figured prominently in the political demise of former state Sen. Larry Young.The commissioner, in a two-page announcement, said the Maryland Insurance Administration will accept bids for Prime-Health Corp. until Sept. 10.If a suitable bid is not submitted by then, Larsen said, the company will be liquidated and its 14,763 patients will be forced to pick another HMO participating in the state and federally funded HealthChoice program.

In the first test of the state's new HMO appeals law, the Maryland Insurance Administration yesterday ordered Prudential HealthCare to pay for in-hospital rehabilitation for an 18-year-old honors student nearly paralyzed by a case of viral encephalitis.Prudential did not appear at a hearing on the case yesterday, but later filed procedural objections that could lead to a court challenge.The health maintenance organization had denied coverage, essentially arguing the patient could not be helped by hospital rehabilitation.

Insurance companies doing business in Maryland will have to disclose their histories of slavery-related insurance before 1865, under a bill signed into law this week. Similar initiatives have become law in California, Illinois and Iowa, and advocates say the mandatory disclosures will add to public knowledge of the slave-era economy in Maryland. "As a genealogist and someone interested in my own history, this allows me to look at records that perhaps are not public records and that are held by insurance companies," said Sen. Lisa A. Gladden, a Baltimore Democrat who sponsored the bill unanimously passed by the General Assembly this year.

While city, state and federal leaders held a conference yesterday announcing the new Maryland mortgage fraud task force devoted to prosecuting scam artists, Baltimore lawyers assured a federal judge that they had proof that Wells Fargo Bank was one of the bad guys. The bank's "predatory lending" caused vacant properties and increased crime in the city's black communities, according to a federal lawsuit filed by the city last year. Wells Fargo mortgage brokers purposely steered black "prime borrowers into subprime loans," attorney John Relman said.

Although some physicians who do not accept health insurance could be considered insurance providers, many "boutique" or "concierge" practices can avoid being regulated by state insurance administrators by following market-value guidelines for services they provide and by going over their contracts with the Maryland Insurance Administration, according to findings issued by the agency. The report, released last month, was prompted by the insurance administration's concerns about some doctors' switching their business models to charge patients an annual, flat fee for services, rather than continue to accept health insurance.

The Maryland Insurance Administration is investigating complaints that some psychiatric patients have been forced to wait hours - in some cases, several days - to be hospitalized because their insurance companies have not responded quickly when emergency room doctors called to verify coverage.The Baltimore health department has sent the state agency information about 10 cases in recent months in which patients endured long waits to be admitted to hospitals because their insurance companies could not be reached for approval.

William L. Jews, the former chief executive officer of CareFirst BlueCross BlueShield, has sued Maryland's top insurance regulator over its decision to deny him about $9 million in severance and other pay, calling the regulatory move unconstitutional. The lawsuit, filed in U.S. District Court in Baltimore this week, takes issue with a ruling last month by state Insurance Commissioner Ralph S. Tyler that cut Jews' $18 million severance package in half. Tyler found that CareFirst's board violated a 2003 state law requiring executive pay for the nonprofit to meet a "fair and reasonable" standard.

A new law requires Maryland health insurers to cover dependent college graduates up to age 25. The idea behind yet another "mandate" for Maryland insurers was to build a bridge for young adults moving from university to the work force. But the law doesn't apply to most Maryland families. It doesn't cover small-group policies. So if you work for a company with fewer than 50 employees, there is no requirement to insure dependents until they are 25. Likewise for insurance offered to federal employees, says Karen Barrow, spokeswoman for the Maryland Insurance Administration.

William L. Jews, who was fiercely criticized by legislators when he tried to engineer the sale of CareFirst BlueCross BlueShield, is expected to appear before insurance regulators tomorrow to defend a $17.65 million severance and retirement package that state officials say is excessive for a nonprofit health insurer. Maryland's insurance commissioner ordered the inquiry after Jews stepped down as chief executive in a 2006 management shake-up, which triggered salary and bonus payments spelled out in his employment contract.

When his insurer demanded more money on a homeowner's policy he had already paid for, Harry M. Trebing turned to the Maryland Insurance Administration. Soon the Baltimore County resident was fighting not only the company but also the state agency he had hoped would help. The insurance administration sided with the company. But it reversed itself last year - after the little-known office of the People's Insurance Counsel intervened. Since opening two years ago, the office has been an independent advocate for consumers and a lightning rod for criticism of the insurance administration's handling of the roughly 16,000 complaints a year it receives.

The troubled bond insurer ACA Financial Guaranty Corp. has agreed to give the Maryland Insurance Administration far-reaching authority in running the company's operations, and could be forced to turn over control of the company to the state regulator. ACA must seek the agency's approval before paying dividends or engaging in major transactions, the company said in a filing with the Securities and Exchange Commission late Wednesday. The state insurance agency, which regulates New York-based ACA because it's incorporated in Maryland, could put the company into receivership if it decides it is insolvent.

The Maryland Insurance Administration fined Allstate Corp. and its affiliates $750,000 - the largest penalty ever from the regulatory agency - for failing to give tens of thousands of consumers proper notice about their policies, not making required filings with the state, and miscalculating some premiums. Regulators, in announcing the penalty yesterday, said the company has exhibited a pattern of violating state laws regarding consumer notifications. The violations involved the company and its affiliates under the Encompass brand.