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Post date: August 13 2003

State Settles With Unlicensed Health Insurer

Attorney General Spitzer and State Superintendent of Insurance Gregory Serio today announced the settlement of a lawsuit against an Albany health plan for operating without a license.

Under the terms of the settlement, Millennium Business Association of America, Inc., of Albany; Marketing Business Associates of America, Inc. (MBAA), of Albany; principal owner, Robert Aldunate and an employee, Joanne Aldunate, both of Clifton Park; have agreed to put up over $100,000 to pay claims for health care services that should be covered under the health plan. Additionally, Millennium, MBAA and the Aldunates agreed to a court-ordered injunction against operating an unlicensed health plan in the future.

"With less than $90,000 in reserve, MBAA was one premature baby, organ transplant or other large claim away from insolvency," Attorney General Spitzer said. "Unlicensed health insurers like MBAA skirt state consumer protection laws that require licensed insurers to have enough reserves to pay for contracted benefits. Without such protections, consumers hard hit by escalating health care costs who are lured by cut-rate coverage will find that the benefits they were promised are not there when they need them most."

State Superintendent of Insurance Serio said: "MBAA posed a serious risk to consumers in New York who purchased their health insurance in good faith. The Insurance Department worked aggressively and expeditiously with the Attorney General's Office and the United States Department of Labor to shut down MBAA and prevent it from taking advantage of more honest New Yorkers. This case serves as a good reminder to all New Yorkers to call the Insurance Department at 1-800-342-3736 before purchasing any type of insurance coverage to verify that the insurer is licensed by the state."

The lawsuit alleged that MBAA and others who established, marketed and administered MBAA's health insurance plan, called Universal Value Care, were operating or aiding an unlicensed insurance business, engaging in deceptive business practices, and failing to demonstrate adequate reserves from which to pay promised benefits. On February 10, 2003, Albany County Supreme Court granted the State's request for an order temporarily restraining MBAA and others from operating or aiding the health plan.

There were approximately 200 individuals enrolled in MBAA's unlicensed health plan, most from Long Island and the New York City area.

Insurers such as MBAA are required to be licensed by the State Insurance Department. Insurers are also required to keep a certain level of reserve funds in case their members' claims exceed the amount of money generated from premiums.

The settlement further provides that Group Health Incorporated (GHI) will act as receiver and will adjust claims from providers and members insured under MBAA's health plan. Members will receive a notice from GHI instructing them how to submit claims.

In addition, the settlement provided for penalties for the owners and operators of the unlicensed health plan as follows:

  • MBAA, $15,000;

  • Robert Aldunate, $15,000;

  • Joanne Aldunate, $5,000; and,

  • Millennium Business Association of America, Inc., $2,500.

The foregoing owners and operators will also pay $2,000 each in costs.

Licensed insurance brokers who sold the unlicensed insurance plan will pay the following penalties:

  • Joseph Kirby, Jr., of Mineola, $7,000;

  • Michael Grasso, of Mahwah, N.J., $1,500; ,

  • Susan Baker, of Albany, $1,500; and,

  • National Administrative Services, of Albany, which provided services to the unlicensed health plan, $1,500.

The case was handled by the Health Care Bureau's Albany Section Chief Troy Oechsner and Assistant Attorney General John Powell and Supervising Examiner John Chaskey and Senior Examiner Thomas McDermott of the Insurance Department.