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 » Federal Agents Raid Bankrupt Florida Health Insurer

Federal Agents Raid Bankrupt Florida Health Insurer

The news keeps getting worse for Universal Health Care Group, a St. Petersburg, Florida-based Medicare insurer accused of financial impropriety and mismanagement. State regulators began investigating the company in August, 2012, and it filed for bankruptcy in February, 2013.

More recently, authorities placed the company into receivership under the control of the Division of Rehabilitation and Liquidation at the Florida Department of Financial Services.

Then, on March 28, 2013, Federal agents raided Universal’s St. Petersburg headquarters, ordering hundreds of employees out of the building.

The raid came shortly after the trustee in the company’s bankruptcy case alleged a “pattern of dishonesty or gross mismanagement.” Examples cited included a transfer of $18.3 million to a company controlled by Universal’s founder, Dr. Akshay Desai, and over $2 million is bonuses paid to executives in 2012.

Following Universal’s bankruptcy filing, state insurance regulators had already begun liquidating the company’s assets when the federal raid happened.

Desia founded Universal Health Care in 2005. It quickly grew to be the fourth-largest Medicare HMO in Florida. Companies like Universal combine Medicare payments and membership fees to provide coverage that expands upon that offered by Medicare. It eventually expanded its services to 23 states and boasted 140,000 members.

The first public news indicating the extent of Universal’s troubles came when Georgia’s insurance commissioner requested that it halt sales of new policies there, citing the company’s $22.1 net loss in the first half of 2012.

Over 800 former employees are now without a job. In a recent filing in Universal’s bankruptcy case, the company sought to eliminate employment agreements in place for seven executives. Universal’s motion said it no longer required the executives’ services, five of whom were hired less than one year ago.

Employees said they had not received 60 days’ notice before losing their jobs, as is often required before large numbers of layoffs.

Thousands of Universal customers were also left in the lurch, forced to search for new Medicare plans. Members who did not select their new coverage before the April will have to wait until the first of May for the switch to take effect.

The biggest losers, though, will likely be Universal’s investors, including Desai’s fellow doctors, who contributed capital in the company’s early years. Dr. Zachariah P. Zachariah, who chairs the Florida Board of Medicine, invested some $6 million. Zachariah, who was removed from Universal’s board in 2009, has a lawsuit pending against Desai.

Posted on Tuesday, May 7th, 2013 at 10:55 am under Bankruptcy, News and Press.
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