August 11, 2022
OLYMPIA, Wash. – Medova Healthcare Financial Group, LLC (Medova) of Wichita, Kansas and its president and CEO, Daniel Whitney, were ordered to stop selling illegal health insurance in Washington state and agreed to a $310,000 suspended fine. Medova and Whitney also surrendered their insurance producer licenses and agreed to stop doing insurance business in Washington.
Medova sold unauthorized health insurance plans called Lifestyle Health Plans to approximately 140 small businesses and their 1,487 employees through Washington chambers of commerce. The company misrepresented the nature of the coverage and who was financially responsible for paying claims. Medova committed similar actions in at least 38 other states and agreed in March to a federal consent order that appointed a federal independent fiduciary to administer the company and manage its claims. Nationwide, it provided health benefits to more than 35,000 employees.
“I know that many businesses want to offer the best benefits they can for the employees at a reasonable price,” said Insurance Commissioner Mike Kreidler. “I feel for those employers who bought plans from Medova and are facing expenses they didn’t expect. I encourage anyone who sees an insurance plan they don’t fully understand to contact my office before they buy. Taking that extra step can prevent losses later on. We can tell you if its legitimate.”
Medova failed to adequately explain the nature and risks of the plans sold to small businesses, by marketing the plans as complete health benefits package designed to be similar to traditional insurance plans for their employees. Rather, these plans were self-funded ERISA (Employee Retirement Income Security Act) health benefit plans. ERISA plans are regulated by the federal Department of Labor and not Washington state. Under an ERISA plan, the employer is responsible for paying for its employees’ claims and the insurer that sold the coverage only administers the plan.
Medova also improperly handled and accounted for the employers’ premium funds. For example, Medova collected premium from the small businesses and instead of keeping each employer’s premium and paying their claims individually, it pooled the money and doled out claim payments for each employer group from that source of money. Some claim payments were delayed, and others are still pending. Under an ERISA plan, the employer is financially liable for any unpaid claims.
In May, Kreidler’s office sent letters to the 140 employers explaining the role of the federal independent fiduciary and encouraging them to contact their insurance agent to assist them with navigating this issue and assessing their insurance options. Kreidler’s office also encouraged these employers to contact an ERISA attorney to explore their legal options and contracts with Medova.
Anyone with unpaid medical claims from Medova’s Lifestyle Health Plan should call the receiver at 615-370-0051.