Thomas R. Sullivan

Thomas R. Sullivan, chairman of the NAIC’s life insurance and annuities committee and Connecticut insurance commissioner, offered the statement during a day-long hearing in Washington, D.C., investigating whether STATs are legal or might need additional consumer protection.

“These scams are like cockroaches. For every one you see, there are most likely hundreds in hiding,” Sullivan said. “Unfortunately, there is no way of knowing the full magnitude of this problem, but regulators are taking a diligent look at the conditions surrounding these sales and practices.”

Testimony focused on the “suspect practice of targeting seniors and terminally ill patients by inducing them to purchase an annuity largely for the benefit of investors or intermediaries,” according to an NAIC statement on the meeting.

Two industry groups, the National Association of Insurance and Financial Advisors (NAIFA) and the Insured Retirement Institute (IRI), called for greater regulation of STATs.

“It is NAIFA’s belief that STATs are contrary to established public policy and could potentially undermine the intended use of life insurance and annuity products to the great detriment of the insurance industry and American public, which relies on our products for protection and financial security,” said Gary Sanders, NAIFA’s vice president for securities and state government regulation, in prepared comments.

He called STATs “troublesome,” comparing them to stranger-owned life insurance transactions (STOLI), which 29 states have banned. In both STOLIs and STATs, investors get seniors or terminally ill people to obtain policies, for which they are paid a fee, but the investors eventually obtain the death benefit.

The IRI in its prepared comments said STATs are unlawful. “At the very least, these transactions allegedly involve fraud and material misrepresentations,” said Lee Covington, senior vice president and general counsel for the group.

The hearing, which Sullivan convened after receiving questions about STATs from other insurance commissioners, included testimony from various industry groups, including trade organizations, life settlement firms and associations, and alleged victims.

Robert Mizzoni, 83, of Cranston, R.I., told regulators how he and his wife were victims of an annuity scam, and federal prosecutors are investigating a Rhode Island attorney who placed ads in church newspapers offering immediate cash to individuals with terminal illness. The attorney’s goal was to take advantage of the death benefit built into many variable annuities, according to the NAIC.

Adam Hamm, vice chairman of the committee and North Dakota insurance commissioner, said in a statement that “further safeguards are needed to protect consumers from unscrupulous practices.”

NAIC committee asked to regulate stranger-owned annuities via IFAwebnews.

Dan Danner

The National Federation of Independent Business (NFIB), a non-profit group representing small and independent businesses, has joined the effort in what the group says is part of its mission to “promote and protect the rights of small businesses and the self-employed to own, operate and grow their businesses,” according to a statement by president and CEO Dan Danner.

“This health care law directly undermines this core value,” he said. “The outpouring of opposition to this new law was overwhelming and our members urged us to do everything in our power to stop this unconstitutional law.”

Danner added that small business owners across the nation are “rightfully concerned that the unconstitutional new mandates, countless rules and new taxes in the health care law will devastate their business and their ability to create jobs.”

The NFIB’s inclusion in the suit comes one day before the Internal Revenue Service is to announce rules for small businesses to claim a new federal tax credit for health insurance through the Patient Protection and Affordable Care Act, according to media reports.

The credit is set to cover 35% of premiums small businesses pay for their employees beginning later this year.

Reform ‘a national disgrace’

Originally filed a day after President Barack Obama signed federal health reform into law, a multi-state lawsuit challenging the constitutionality of federal reform was amended May 14 to include new parties, according to Florida Attorney General Bill McCollum, who is overseeing the suit.

“We firmly believe the government has exceeded its constitutional authority and we are prepared to do anything in our power to protect the people from irresponsible and unconstitutional actions by the federal government,” said McCollum in a statement. “As [the new] filing indicates, our challenge continues to gain support.”

In addition to the NFIB, the states of Alaska, Arizona, Georgia, Mississippi, Nevada and North Dakota have joined the federal suit, filed in Florida.

“The Reid/Pelosi/Obama Nationalized Health Care plan is a national disgrace and their legislation clearly exceeds constitutional authority,” Nevada Gov. Jim Gibbons said in a statement. “It is patently unconstitutional for the federal government to break the backs of Nevadans by trampling the Constitution, and then threaten to use IRS agents to enforce this ridiculous plan.”  Gibbons noted that the plan marks the first time in American history that the federal government is trying to “regulate inactivity.”

The multi-state suit claims the new law infringes upon constitutional rights by mandating all citizens and legal residents to secure health insurance or face a penalty, that the tax penalty under the law also violates the U.S. Constitution and that the new law infringes on the sovereignty of the states and the Tenth Amendment by “requiring the state[s] to spend billions of additional dollars without providing funds or resources to meet the state’s cost of implementing the law,” according to McCollum.

The U.S. Justice Department recently defended the constitutionality of the new reform law in court papers in response to a suit by the Thomas More Law Center.

Small business group joins 20 states in fighting federal health reform via IFAwebnews.

Sonny Purdue

Purdue announced that he has appointed Frank C. Jones as one of eight pro bono “special attorneys general” to direct Georgia’s participation in a federal lawsuit filed by 18 other states and led by Florida’s attorney general.

“The importance of this legal challenge demands the very best representation possible and that is exactly what the state is receiving from Frank C. Jones,” Perdue said in a statement. “Frank is one of the best and most respected lawyers in the state. We are grateful he recognizes the importance of this challenge and is taking up the cause on behalf of Georgians.”

Jones has worked for a pair of Georgia law firms dating back to 1950 and his experience includes past service as a 22-year member of the House of Delegates for the American Bar Association and president of the State Bar of Georgia.

In addition to Jones, Purdue also appointed seven other “deputy special attorneys general,” from state law firms and a law professor from Mercer University.

In March, Georgia Attorney General Thurbert Baker rejected Purdue’s request to challenge the Patient Protection and Affordable Care Act, indicating there was not “a viable legal claim” his office could pursue through such a suit.

Indicating in a letter that the proposed litigation, “is likely to fail and will consume significant amounts of taxpayers’ hard-earned money in the process,” Baker declined Purdue’s request.

Florida Attorney General Bill McCollum, who is leading the multi-state federal suit, welcomed Georgia to the list of plaintiffs “as we continue fighting to protect the constitutional rights of American citizens and the sovereignty of our states.

“On behalf of the residents in Florida and the states joining our efforts, we are committed to aggressively pursuing this lawsuit to the U.S. Supreme Court if necessary to prevent this unprecedented expansion of federal powers, impact upon state sovereignty and encroachment on our freedom,” he said in a statement.

Joining Georgia in the federal suit are Alabama, Arizona, Colorado, Florida, Idaho, Indiana, Louisiana, Michigan, Mississippi, Nebraska, Nevada, North Dakota, Pennsylvania, South Carolina, South Dakota, Texas, Utah and Washington.

Virginia filed its own federal lawsuit challenging reform mandates.

Georgia governor bypasses AG, files own anti-health reform lawsuit via IFAwebnews.

Bill McCollum

Florida Attorney General Bill McCollum, who is leading the multi-state lawsuit filed in his state, said attorneys general in each of the five states have joined “as we continue fighting to protect the constitutional rights of American citizens and the sovereignty of our states.

“On behalf of the residents in Florida and the states joining our efforts, we are committed to aggressively pursuing this lawsuit to the U.S. Supreme Court if necessary to prevent this unprecedented expansion of federal powers, impact upon state sovereignty, and encroachment on our freedom,” he said in a statement.

The suit alleges that new federal health reform infringes upon the constitutional rights of residents in the 17 states listed as plaintiffs, especially by requiring each American to secure private health insurance by 2014. Such a mandate, the suit argues, violates several sections of the constitution.

The suit also claims that reform measures signed into law by President Barack Obama violate the 10th Amendment of the Constitution by imposing “onerous new operating rules” states must follow as well as requiring each state to spend billions of dollars for added health care without federal aid.

In his state, such a mandate, McCollum said, comes “when Florida faces severe budget cuts to offset shortfalls in an already-strained budget.”

In addition to Florida and the five new states, attorneys general in Alabama, Colorado, Idaho, Louisiana, Michigan, Nebraska, Pennsylvania, South Carolina, South Dakota, Texas, Utah and Washington have joined the suit.

A hearing on the matter is scheduled for April 14 in Pensacola, Fla.

Five more states join suit challenging federal health reform via IFAwebnews.

Wayne Stenehjem

Wayne Stenehjem said his state is joining the suit, filed in the Federal District Court in the Northern District of Florida, naming the U.S. Departments of Health and Human Services, Treasury and Labor as defendants. Those agencies are tasked with implementing the provisions of the Patient Protection and Affordable Care Act.

The suit, similar to one filed by the Commonwealth of Virginia, calls into question an individual mandate to secure private insurance by 2014 with the threat of fines for failure to comply. The federal government requiring such a purchase, the attorneys general argue, is a direct conflict with the U.S. Constitution.

“Even the supporters of the legislation concede it contains serious flaws,” Stenehjem said in a statement. “This lawsuit will test the most objectionable of those flaws, the so-called individual mandate.”

The Commerce Clause in the Constitution gives Congress authority to regulate commerce among states, but the suit claims with the individual mandate, legislators are overstepping their boundaries.

“The U.S. Constitution grants enumerated and limited authority to the federal government,” Stenehjem said. “It may only act in areas that are specifically permitted. In enacting this legislation, Congress stretches its authority under the commerce clause beyond the limit.”

North Dakota’s attorney general called the individual mandate “unprecedented” as Congress, under the Commerce Clause, has never required Americans to purchase a particular good or service, “and it certainly has never claimed the commerce clause regulates citizens who decline to participate in the marketplace by refusing to purchase goods or services.”

North Dakota joins the following states in the federal suit:  Alabama, Colorado, Florida, Idaho, Indiana, Louisiana, Michigan, Nebraska, Pennsylvania, South Carolina, South Dakota, Texas, Utah and Washington.

N. Dakota joins federal suit against ‘objectionable’ health mandate via IFAwebnews.

Republican attorneys general in states, including Alabama, Florida, Pennsylvania, Texas and Washington state, announced their intent to protect citizens in their states from the impact of a bill passed by the U.S. House March 21. These state officials join Virginia’s Republican attorney general, Ken Cuccinelli, who has announced that once the president signs the bill into law, he will file a federal suit to block its various mandates.

Cuccinelli’s most notable target in his threatened a suit is the individual mandate for individuals nationwide to secure health coverage or be subject to a fine, with certain exemptions for lower-income Americans.

Meanwhile, once Obama signs the bill, the U.S. Senate is expected to begin debate on so-called “fixes” House Democrats want added to the law. Many of those fixes were to appease House Democrats and ensure their vote on the measure last weekend.

Greg Abbott

Texas Attorney General Greg Abbott said the health reform bill already approved by both the House and Senate “violates the U.S. Constitution and unconstitutionally infringes upon Texas’ individual liberties.

“To protect all Texans’ constitutional rights, preserve the constitutional framework intended by our nation’s founders, and defend our state from further infringement by the federal government, the State of Texas and other states will legally challenge the federal health care legislation,” he said in a statement.

Pennsylvania’s attorney general, Tom Corbett, said in a statement he believes the courts will find the health care reform legislation unconstitutional as well.

Attorney General Jon Bruning of Nebraska said the new law “tramples on individual liberty and dumps on the states the burden of an unfunded mandate that taxpayers cannot afford.

“If the President signs this constitutionally flawed legislation, we will join with other state attorneys general to protect the liberty of our citizens and sovereignty of state governments,” he said.

Other states pledging participation in a suit are North Dakota, South Carolina, South Dakota and Utah.

State lawmakers also are taking action against federal health reform.

A Florida House committee voted March 22 to a state constitutional amendment to prohibit anyone, including employers, from following any federal mandate for health coverage. The measure would need 60% voter approval if places on a November ballot.

The Kansas House is set to discuss a similar measure today (March 23).

Attorneys general in 10 states to file suit to block health reform bill via IFAwebnews.

The North Dakota Insurance Department announced in an order signed by Commissioner Adam Hamm that the nonresident license of Michael J. Antonello, 58, was revoked effective March 8. The order states that since Antonello’s resident producer license was revoked late last year, North Dakota law allows his nonresident license to be revoked based on that action.

Antonello had his license suspended in April 2009 by the Minnesota Department of Commerce for allegedly using fraudulent means to purchase 44 life insurance policies for one man, totaling $127 million. Six months later, Antonello consented to his license revocation and to the revocation of the agency where he served as chairman, Wealth Management. He and the agency were ordered to pay a $250,000 fine in Minnesota.

“Mr. Antonello has shown himself to be extremely untrustworthy in working with insurance consumers,” Hamm said in a statement. “This revocation bars him from doing any insurance business in North Dakota.”

According to the Minnesota order, Antonello and his firm obtained excessive life insurance, made material misrepresentations on applications, profited by selling life insurance policies to life settlement companies and forged a signature on and tried to do business on behalf of a company two which he was not appointed.

Loss of Minnesota license costs agent North Dakota rights as well via IFAwebnews.

In his weekly address, President Barack Obama said in light of last week’s White House Health Summit, there are still disagreements between the two parties, but that “no final bill will include everything that everyone wants.

“That’s what compromise is,” Obama said. “The tens of millions of men and women who cannot afford their health insurance cannot wait another generation for us to act. Small businesses cannot wait. Americans with pre-existing conditions cannot wait. State and federal budgets cannot sustain these rising costs.”

The president added, “It is time for us to come together. It is time for us to act…So let’s get this done.”

That sense of urgency was echoed House Speaker Nancy Pelosi, appearing on ABC’s “This Week” Feb. 28, who said the time to move forward is now as Americans are struggling with the economy and providing health care coverage for themselves and their children. She pointed out that it was March 5, 2009, when the Obama Administration started gathering input on reform measures.

“Time’s up, yes,” Pelosi said. “If your family has a pre-existing condition or if you are denied coverage or if you have a rescission, if your insurance has been withdrawn just as you’re about to need a procedure, you know that it’s long overdue. And what’s the point of talking about it any longer?”

Pelosi said that following last week’s summit, “We’re ready for the next step, which is to write legislative language, and then go from there.”

Reconciliation is ‘political kamikaze’

But not everyone is ready for that next step, or is clear on what that step would be.

Lamar Alexander

Appearing on the same program, Sen. Lamar Alexander (R-Tenn.), who gave his party’s opening statement at the summit, called Obama’s plan “not a good bill.” He added, “If he’ll put his bill aside and renounce jamming the bill through, we can go to work on this the way we normally do in the United States Senate, which is in a bipartisan way.”

Alexander, like others in his party, are staunch opponents to passing health reform through the budget reconciliation process, requiring only 51 votes in the U.S. Senate to pass some reform measures, rather than 60 votes to pass a health reform bill as is. Using that approach Democrats could pass the bill without any Republican votes.

Alexander said while the process has been used in the past, it has never been used for “anything of this size and magnitude and complexity.

“It would really be the end of the United States Senate as a protector of minority rights, as a place where you have to get consensus, instead of just a partisan majority, and it would be a political kamikaze mission for the Democratic Party if they jam this through after the American people have been saying, look, we’re trying to tell you in every way we know how, in elections, in surveys, in town hall meetings, we don’t want this bill,” he said.

Alexander found agreement on the reconciliation process from a Democrat, Sen. Kent Conrad of North Dakota, who chairs the Senate Budget Committee. On CBS’ “Face the Nation,” Conrad had his doubts about how health reform could become a reality in this way.

“I think I understand how reconciliation works and how it can’t work,” he said. “The major package of health care reform cannot move through the reconciliation process. It will not work.”

Time to begin again

What will work, according to several Republicans, is starting over with health care reform after nearly a year of discussions.

Appearing on “Face the Nation,” Sen. Tom Coburn (R-Okla.) said the current stalemate could be broken one way: starting over from scratch.

“I think it could change if we start it over and we actually worked and treated the disease that is plaguing American health care,” he said. “The disease is cost. And until we put in the incentives to change the dynamics – the market dynamics, the fraud dynamics, the defensive medicine, that’s $250 billion a year in defensive medicine costs. What we need is not more government; we need more market-oriented, patient-centered health care rather than government-centered health care.”

His sentiments were echoed by Rep. Marsha Blackburn (R-Tenn.), who said it is time “to look at starting again and addressing what the American people want to address.

“They want to make certain that we take a focus on cost containment and do some work there, that we look at across-state-line purchasing, look at what you could pull out of the cost of health care if you address medical liability reform,” she said. “What they [Democrats] want to do is let…the federal government have the overshadow of all of this and make the decisions of what the states can do. What we’re saying is we don’t need more government in health care, we need to free people up and let them get outside of this and make decisions.”

Pelosi says ‘time’s up’ on health reform; Republicans want restart via IFAwebnews.

Kyle Cuypers of Dickey, N.D., signed a consent order from the North Dakota Insurance Department dated Feb. 12 barring him from selling, soliciting or negotiating insurance in the state.

According to the department, Cuypers applied for a resident insurance producer license on Feb. 3, 2009.

On his initial application and on a second application for an additional line, Cuypers did not indicate convictions of any crimes.

However, in November 2009, Cuypers reported to regulators that he had been convicted of driving under the influence a month earlier. Following that report, the department said it received information that he had also been convicted of three other crimes that went undisclosed, including making false reports to law enforcement in 2005 and fleeing or attempting to allude police in 2006.

In a statement, North Carolina Insurance Commissioner Adam Hamm said Cuypers “falsely represented himself” to obtain his license and, “has shown himself to be dishonest, and this revocation ensures he can no longer work with North Dakota’s insurance consumers.”

N.D. agent’s report of his DUI opens door to his license revocation via IFAwebnews.

Nancy Pelosi

In a letter to Pelosi (D-Calif.), Consumer Watchdog, which bills itself as a “nonpartisan consumer advocacy group,” urged her to fulfill her promise that the House would take a tougher stance with the industry and provide greater affordability for consumers.

“With the public option apparently off the table, thanks to a single senator allied with the insurance industry, it is more important than ever for the House to insist on comprehensive regulation of the industry to ensure affordability and accountability for Americans who will now be required to buy private insurance,” according to a letter, signed by four of the group’s staff members.

Press reports indicate that the House is willing to abandon a government-run public insurance program not featured in the Senate’s measure in order for tougher oversight of private health insurers. Both chambers of Congress begin meeting this week to discuss merging their bills to forward to Obama.

Among the reforms called for by Consumer Watchdog are rate regulation, fully defined benefits, legal accountability for all health insurers and a tougher ban on policy rescissions.

The group also calls for the preservation of superior state patient protections, noting that the Senate bill’s new “multi-state” plans and the House and Senate bill’s interstate “compacts” still allow insurance companies to override more protective state patient laws.

“Federal health care reform must continue to allow states to be laboratories of innovation in health care and utilize their ability to respond quickly to local needs. Minimum federal standards should set a floor, not a ceiling, on state health care protections,” the group wrote.

Consumer Watchdog also seeks a change to Senate filibuster rules to provide that legislation can be approved without a 60-vote supermajority, which led to negotiations with Democratic holdouts in order to get its health reform bill passed on Christmas Eve 2009.

“Real health care reform and the coming climate change legislation are too important to be held hostage by one lawmaker with parochial, personal or industry-allied motives, be it Joe Lieberman, Kent Conrad or Ben Nelson,” the group wrote.

Consumer Watchdog urges Pelosi to reform health insurance industry via IFAwebnews.