TRG OPERATORS HANDED SENTENCES, ORDERED TO REPORT TO PRISON IN OCTOBER
More than three years after Florida’s Chief Financial Officer Tom Gallagher ordered TRG Marketing, LLC., to stop selling its bogus health plans here and directed the Department of Financial Services’ insurance fraud detectives to pursue criminal charges against the operators, Floridians left with millions of dollars in unpaid claims have won their day in court.
Carmelo Zanfei and William Paul Crouse, who operated the Indiana-based company, were sentenced to two and four year prison terms respectively, for a scheme that left more than 7,200 people with unpaid medical claims in one of the most extensive and costliest insurance fraud schemes in Florida. The investigation by the department’s Division of Insurance Fraud led to today’s sentences. They are ordered to report to the Orange County Jail on Oct. 12. A restitution hearing is scheduled for Dec. 9.
“Many Floridians suffered physical and mental anguish because of these two individuals,” said Gallagher, who oversees the department. “I am relieved to see these scam operators will serve time behind bars and that restitution is pending.”
Sentences were handed down today by Judge Julie H. O’Kane in the Ninth Judicial Circuit Court in Orlando. 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. 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. The Office of Statewide Prosecution prosecuted the charges.
Cindy Baker, of Okeechobee, told detectives that her husband killed himself because he was distraught over unpaid claims and the resulting credit damage.
Teresa Orr, of Monteverde, Fla., was left with $250,000 in unpaid claims stemming from her late husband’s cancer treatment. Mrs. Orr has steadfastly declared that she believes her husband Pete Orr, a NASCAR-circuit driver, died because he could not get timely access to medical care he needed. Orr’s death led to the passage in 2003 of the "Pete Orr Bill" which 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
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.
Investigations by the Department of Financial Services have led to emergency cease and desist orders against 19 unlicensed entities in Florida, and administrative actions or criminal charges against more than 200 insurance agents and unlicensed entity operators. Investigations are continuing.
Just this week, Florida’s Insurance Commissioner Kevin McCarty ordered Global Property & Casualty to immediately cease operations in Florida, based on information from CFO Gallagher that agents were being contacted to offer wind coverage on behalf of the unlicensed company.
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 to 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. In April the Daily Journal in Indiana ran a story with a headline declaring “Florida deserves praise for pressing TRG fraud case.”
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.