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Post date: August 26 2003

Attorney General Sues Unlicensed Health Insurer

Attorney General Spitzer, State Superintendent of Insurance Gregory V. Serio and State Health Commissioner Antonia C. Novello, M.D. today announced the filing of a lawsuit against a New York City health plan for operating without a license and certificate of authority.

The lawsuit, filed in New York Supreme Court, alleges that Blanca Jaravata used a number of aliases and operated several unlicensed health maintenance organizations and insurance companies. Among the names Javarta used for the illegal HMOs were: Metro Health Managed Care, Inc., Metro Health Plan, Metro Health Care Plan, MHMC, Inc. and Metro Health Care Services Inc. The suit further alleges that Jaravata engaged in fraudulent and deceptive business practices and falsely represented that the HMOs were non-profit and charitable organizations. The plan has a business address at 176 E. 106th St. in Manhattan.

"With legitimate insurance premiums soaring, consumers need to be especially vigilant of health plans that offer cut rate premiums that do not live up to their promises or the law," Attorney General Spitzer said. "Unfortunately, many vulnerable consumers will be tempted by the lure of lower premiums, only to learn when they are sick and in need of insurance that the coverage purportedly provided does not exist."

"Honest premium-paying New Yorkers who thought they were insured with health insurance coverage were deceived by these individuals and this will not be tolerated in New York State," said Superintendent of Insurance Gregory V. Serio. "By shutting down this illegal business, the Insurance and Health Departments and the Attorney General's office are sending a clear message that it is the State's priority to protect and maintain consumer confidence in the health insurance system. To best protect yourself and your family I would advise consumers to contact the Insurance Department at 1-800-342-3736 before purchasing health coverage to ensure that they are buying insurance from a licensed insurer." Health Commissioner Antonia C. Novello, M.D. said: "This case is an excellent example of state agencies moving together against a real threat to the health and safety of New Yorkers. It is intolerable for unscrupulous individuals and the entities they operate to risk the financial and physical health of New Yorkers by enrolling them in unlicensed and unauthorized health plans."

The case began with investigation of consumer complaints made to the Attorney General's Health Care Bureau and the Insurance Department. The joint investigation found that Jaravata and her associates falsely represented Metro Health had a network or doctors and hospitals to provide care and would pay 100% of a member's medical expenses after the member paid premiums, deductibles and co-payments. It was also revealed that Jaravata and her associates engaged in "claims avoidance" by failing to pay legitimate claims, discouraging members from using benefits, and terminating members to avoid payment of claims.

Health plans offering benefits like those offered by Metro Health are required to be licensed by the State Insurance Department and to obtain a certificate of authority from the Commissioner of the State Health Department.

One member with osteoporosis was denied coverage by the HMO for a prescription for Fosamex, a drug which has approved by the U.S. Food and Drug Administration for this condition. The denial was based on the HMOs claim that drug is "experimental." The member spent $860 in premium payments to Metro Health Plan and $296 on Fosamex before dropping the plan and enrolling in Medicaid, which is providing coverage of Fosamex for her.

Another member enrolled in the plan because Metro Health Plan's list of participating physicians included a doctor she had previously visited. However, when she went to the doctor for a routine physical, he said he had never heard of the plan. When the member called Metro Health Plan to confirm coverage, she was told that she did not need a physical and was asked whether she took drugs and practiced safe sex. Subsequently, the member's claims were not paid, her policy terminated and her premiums not refunded.

The case is being handled by Sandra Jefferson Grannum, the Deputy Bureau Chief of the Attorney General's Health Care Bureau.