Insurer under fire for unpaid claims

Department of Insurance looking into complaints about Miami trust

Jill Krueger   Staff Writer
Orlando Business Journal
11-1-02

ORLANDO — A Miami-headquartered insurer unlicensed by the state has landed in Brevard Circuit Civil Court, the upshot of a Melbourne couple's complaints that their health care bills went unpaid by the firm.

"We had 30 or 40 people contact us" about Nationwide Public Employees Trust, says attorney James Conway, a Melbourne attorney representing John and Susan Stack.

The allegations are unfounded, responds the Orlando attorney representing Nationwide. "The Stacks' claim substantially lacks merit," says Michael David Crosbie.

However, even without the couple's lawsuit, Nationwide is facing other questions about payments. "We've gotten complaints recently about unpaid claims," says Nina Bottcher, spokeswoman for the Florida Department of Insurance. "We're looking into it."

Unlicensed and legal

Nationwide Public Employees Trust, like some other insurers operating in Florida, is not licensed by state insurance regulators — nor does it have to be.

Bottcher cites "very narrow" exemptions under federal law that allow an unlicensed insurance entity to operate in the state.

Specifically, says Crosbie, Nationwide does not need to be licensed by the state because it is a trust and not an insurance company. Still, unlicensed insurers are a growing area of concern for the state.

Over the last two years, the Florida Department of Insurance has seen a major rise in unlicensed insurance activity as a result of a hardening in the insurance market and the economic downturn, Bottcher says.

During that time, the department has shut down six unlicensed health insurance entities.

While an unlicensed insurer may offer what appears to be significant savings on premiums, she says there's no guarantee that insurer is setting aside reserves to cover payments. "Unlicensed insurers almost invariably lead to complaints because they can't keep up with claims, or had no intention of paying claims," she says.

Too little coverage?

John and Susan Stack took out a health insurance policy with Nationwide Public Employees Trust, which provides health, life insurance and employee benefits for law enforcement officers in Miami-Dade and Broward counties.

The couple has incurred significant medical expenses since: Bills submitted to Nationwide for repayment include surgery and care for a serious hand injury and treatment for diagnosis and care for breast cancer.

According to their suit, Nationwide failed to pay all of the Stacks' medical bills, a breach of contract.

However, Nationwide denies that all the treatments cited by the Stacks were covered by the policy. Further, the company's attorney writes, "Medical claims covered by the policy have been or will be paid in the normal course of business."

At the same time, Foley & Lardner's Crosbie says, "Nationwide has and continues to honor its obligation to the Stacks but is going to defend itself against baseless claims."

The Stacks are seeking a jury trial.