Insurance regulators in both Oklahoma and Washington state have issued sanctions against companies they say are illegally selling health coverage in their states.

Their actions follow similar protection orders and warnings in other states, including North Carolina, Indiana, Connecticut, Arkansas and Michigan, against Serve America Assurance, Ltd. and American Trade Association (ATA), both of Springfield, Tenn.

A vice president with ATA told IFAwebnews.com that claims and vendors are being paid on time and the firm is “very hopeful that this problem with be resolved very shortly.”

Mike Kreidler

The Washington state cease-and-desist order concerns not only Serve America and ATA, but also associated companies Beema-Pakistan Co. Ltd., Smart Data Solutions and Real Benefits Association.

The order also names Bart Posey, Colin Youell, William Worthy II, Obed Kirkpatrick, Richard Bachman, David Clark and Saifuddin Ahmed, who, like the named companies, are not properly licensed to sell health insurance or discount plan products in the state.

Washington state Insurance Commissioner Mike Kreidler is ordering the companies and individuals named in the order to turn over a list of all Washington customers, report all premiums paid by those individuals and inform their state customers of the cease-and-desist order.

Kriedler’s office has identified 70 state residents who purchased coverage from the companies listed in the order, some of whom have reported problems with delayed or unpaid claims.

‘Bargain-basement products’ offered

“These companies are not playing by the rules that our state set up to protect consumers,” said Kreidler in a statement. “With authorized companies, we review their policies and finances to make sure that they’ll be able to make good on their promises. With these companies, consumers have no such assurances.”

He added that the consumers “buying these bargain-basement products are the people who can least afford to be taken advantage of.”

The order finds that the companies “have acted in concert” to sell state residents a product consisting of a mix of insurance and medical care discounts which is not authorized in Washington state.

Based on faxed solicitations and the statements of telemarketers selling the coverage, the order states that “consumers are led to believe that the product offered constitutes comprehensive health insurance, and the bank and credit card accounts of consumers who agree to purchase the product…are immediately debited.”

Oklahoma Insurance Commissioner Kim Holland is also accusing American Trade Association of violating a previous cease-and-desist order for illegal sales in her state. The regulator has levied a $75,000 fine against ATA for its continued actions and ordered all the companies listed in the Washington state order and other affiliates of ATA to immediately cease operations in the state.

Company ‘preyed upon’ customers

“With the decline of the national economy this past year we have seen an increase in insurance fraud,” Holland said in a statement. “It is egregious that hardworking Oklahomans, in their greatest time of need, are being preyed upon by scam artists who purport to offer legitimate insurance.”

Holland’s office said one Oklahoma family was sending “hundreds of dollars” to the company each month, but when one of them was diagnosed with cancer and bills started to mount, they discovered their insurance policy was fake.

Holland alleges ATA and Smart Data Solutions fax unsolicited ads and use unlicensed agents and the Internet to market their products that are unlicensed and falsely claim affiliations with licensed insurance companies.

Company working to resolve issues

Richard Bachman, a vice president at ATA named in both orders, told IFAwebnews.com, that the company has worked with an off-shore captive insurer for “several years very successfully” to pay claims in a timely manner and according to contracts by the administrator.

Bachman said that after talks with both Washington state and Oklahoma, ATA “has worked diligently to negotiate with several carriers,” and as of Jan. 1, signed a contract with Andone Insurance Co., a Bermuda domiciled carrier with offices in New Jersey, eligible to write in all 50 U.S. states. Bachman said the carrier’s block of business is reinsured by Prudential.

“The officers and consultants and legal counsel of Andone have contacted representatives from both states and are working with them to resolve the outstanding issues in the favor of the ATA,” he said. “No court, nor judge or legal court has found the ATA or its affiliates guilty of any violations and with the new carrier and its founders and officers strong insurance reputations we are very hopeful that this problem with be resolved very shortly.”