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Gallagher Shuts down Phony “Union Health Plan”

10/8/2002

Orders: Order1.pdf ,
Order2.pdf

GALLAGHER SHUTS DOWN PHONY "UNION HEALTH PLAN"
Unlicensed plan is the seventh to be ordered to stop doing business in Florida

TALLAHASSEE - Treasurer and Insurance Commissioner Tom Gallagher announced today that he has shut down another phony health insurance scam, this one posing as a union plan. Service and Business Workers of America (SWBA) Local 125, based in Juno Beach, was ordered to stop selling unlicensed insurance coverage to individuals and independent contractors.

"Unlicensed entities pose a serious risk to consumers who purchased coverage in good faith," said Gallagher. "Fortunately, in the case of SWBA Local 125, we worked quickly with the U.S. Department of Labor to quickly shut down this plan and prevent them from taking advantage of more Floridians."

SWBA Local 125, headed by Harry Briglio, claimed to operate as a "union," offering health coverage to its "members," and was exempt from state licensure requirements. The company pointed to the federal Employers Retirement Income Security Act (ERISA) which allows, under certain circumstances, an individual employer, union or association to establish and self-insure a health plan for its own employees or members without state licensure.

However, the department's order charges that SWBA Local 125 was not a union but merely a façade for selling phony health coverage. The order points out that SWBA Local 125 failed to perform functions that a legitimate union provides, such as serving as employees' bargaining representative with their employer. SWBA Local 125 also enrolled "independent contractors," such as real estate agents who are not subject to unionization.

SWBA Local 125 attempted to legitimize its business operation by claiming to be backed by two insurance companies: United International Insurance and Brittania International Life & Casualty Limited. However, neither company is licensed in Florida or any other state.

A typical fraudulent health insurance scam, like SWBA Local 125, attempts to recruit licensed insurance agents to sell its plan. The coverage is offered regardless of the applicant's health condition and at lower rates with better benefits than can be found from licensed insurers. While claims may be paid initially, the scam will soon begin to delay payment and offer excuses for failure to pay. Unsuspecting consumers who thought they were covered and are then left responsible for huge medical bills.

Unlicensed entities do not participate in a state guaranty fund, which covers unpaid claims in the event a licensed insurer goes bankrupt. In addition to potentially being left with unpaid claims, many employers and individuals who have purchased unlicensed health plans have reported finding difficulty securing new coverage because of pre-existing conditions and the subsequent lapse in continuous coverage.

The department has also filed an administrative complaint against Richard Oleck of Boca Raton, one of the licensed agents who marketed SWBA Local 125's unauthorized products. Under Florida law, if an unlicensed entity fails to pay claims, agents who sold the unlicensed coverage may be held responsible for unpaid claims. Oleck also faces the revocation of his agent license.

This year, the Department of Insurance has sponsored a public awareness campaign warning employers and individuals to stay away from buying insurance from unlicensed entities. The campaign's slogan is "Verify Before You Buy." The department urges those who are considering the purchase of health insurance to call our toll-free consumer helpline at 1-800-342-2762 to be sure that they are dealing with licensed insurance companies and agents.