Pa., N.J. Officials and Feds Nab Illegal Benefits Trust; Recover $1 Million

Through a collaboration betwee state and federal regulators, the Pennsylvania Insurance Department has helped to recover approximately $1 million in unpaid health claims for Pennsylvania policyholders, Acting Insurance Commissioner Randy Rohrbaugh announced.

The department collaborated with the New Jersey Department of Banking and Insurance and the U.S. Department of Labor (DOL) in its action against Nassau Employee Benefits Trust (NEBT), an illegal, unlicensed insurer operating out of New Jersey.

“Nassau Employees Benefits Trust violated multiple insurance laws and put thousands of policyholders at risk,” Rohrbaugh said. “As a result of our action, the policyholders who were victimized will have their claims paid.”

Consumers suffered unpaid claims because AllStaffing Inc. of Lansford, Carbon County, enrolled Pennsylvania employers in NEBT. Although it was not a licensed insurer, NEBT issued accident and health coverage to Pennsylvania employers and employees. NEBT became bankrupt and, last month, agreed to the appointment of an independent fiduciary, assigned by the DOL, which is in the process of notifying medical providers that any legitimate covered claims will be paid.

According to the consent order, Gerber Life Insurance Co.’s agent, Elite Brokerage Services, did not ensure that the health plan offered by NEBT was a legitimate, licensed insurer. As a result, all unpaid claims relating to the NEBT plan from Jan. 1, 2005 through Dec. 31, 2005, totaling about $1 million, will be paid by Gerber Life Insurance Co.

The Insurance Department also issued a cease and desist order against AllStaffing and revoked the producer license of its president, Stanley Costello.

“This case is a reminder of the importance of verifying the licensing status and legitimacy of that any entity that approaches you — whether as an individual or a business group — to sell, solicit or negotiate the business of insurance,” Rohrbaugh explained. “Fraudulent companies may have slick marketing materials or websites, but consumers should always stop to ask one simple question: ‘Are you licensed?'”

Source: Pennsylvania Department of Insurance