OPERATORS OF UNLICENSED ENTITY TRG MARKETING, LLC, PLEAD GUILTY, ACCEPT PRISON SENTENCES
Florida’s Chief Financial Officer Tom Gallagher announced that the operators behind one of the most extensive and costliest insurance fraud schemes in Florida have agreed to accept prison terms and make restitution for their roles in the operation of an unlicensed health insurance plan that left more than 7,200 Floridians with millions of dollars in unpaid medical claims.
Carmelo Zanfei and William Paul Crouse, who operated Indiana-based TRG Marketing, LLC, pleaded guilty this week to felony charges in the Ninth Judicial Circuit Court. Zanfei pleaded guilty to conspiracy to commit racketeering, and Crouse pleaded guilty to racketeering. Both men also pleaded guilty to four counts of unlawful transaction of insurance. As part of their plea agreements, Zanfei will be sentenced to two years in prison and Crouse will be sentenced to four years in prison. Both defendants will also be sentenced to 20 years of supervised probation and restitution is expected to be at least $2.8 million. They faced up to 60 years in prison if convicted. The Office of Statewide Prosecution prosecuted the charges.
"This is a major victory in our ongoing fight against unlicensed insurance operators who prey on Floridians," said Gallagher, who oversees the Department of Financial Services and the Division of Insurance Fraud, which conducted the investigation that led to the charges. “Through education and prosecution we have hope of ending this scourge.”
Cindy Baker, of Okeechobee, told detectives that her husband killed himself because he was distraught over unpaid claims and credit damage that resulted when TRG refused to cover Ms. Baker after she had major surgery in 2001.
Richard Baer, a small business owner in Deerfield Beach, enrolled in the TRG plan and then incurred medical expenses in excess of $45,000 as the result of open heart surgery. TRG failed to pay any of the claims.
Teresa Orr, of Monteverde, Fla., was left with $250,000 in unpaid claims stemming from her late husband’s cancer treatment that they thought would be covered by TRG. Pete Orr, a NASCAR-circuit driver, died of cancer in 2002 with bills piled up because TRG refused to pay his health care bills. Mrs. Orr has steadfastly declared that she believes her husband died because he could not get timely access to medical care he needed.
Orr’s death and the story of the family’s financial hardship led to the passage of the "Pete Orr Bill" in 2003. Senate Bill 1680 significantly increased criminal penalties for individuals who operate an unlicensed insurance entity and gave victims the right to civilly sue such operators and their unlicensed entities.
Since February 2001, investigations by the Department of Financial Services have led to orders to shut down being issued against 18 unlicensed entities in Florida, and administrative actions or criminal charges against more than 200 insurance agents and unlicensed entity operators. Investigations are continuing.
More than 30,000 Floridians have reported being left with unpaid claims as a result of being duped, many by their agents, into buying coverage from unlicensed entities. Because these entities are not licensed in Florida, there are no assurances of their ability to pay claims.
The charges against Zanfei and Crouse were based upon their marketing of the health plan to citizens of Florida and 43 other states without seeking a certificate of authority to sell the plan in any of these states, claiming that the self-insured plan was exempt from the licensing and certification requirements of state law. The health plan was insufficiently funded and failed to pay millions of dollars of claims resulting in tremendous damage to the citizens who believed they had valid health insurance.
Although the health plan was illegally marketed in 43 other states, Florida was the only state to seek criminal charges.
Employers, health care professionals and individuals shopping for insurance coverage are urged to check with the department to be sure they are dealing with a Florida-licensed insurance company and a Florida-licensed insurance agent.
To check on the license status of a company or agent, consumers should visit www.MyFloridaCFO.com, and click on Verify Before You Buy, or call the Department of Financial Services' Helpline at 1-800-342-2762.
Sarasota County courthouse was built in 1925 and was praised as one of the most artistic public buildings in the United States.