Missouri Agents Issued Cease and Desist Order

Missouri Department of Insurance Director Doug Ommen has issued a cease and desist order against Kevin Louderback, Springfield, and Justin Barnes, Battlefield, for their reported participation in a fraudulent health insurance scheme.

An investigation by the Consumer Affairs Division reportedly revealed Louderback and Barnes employed deception and forgery to take advantage of Missouri consumers, Mo HealthNet and two insurance companies.

The order states that Louderback and Barnes acted as representatives of Premier Financial Services and a non-profit corporation, Citizens for Aids Assistance and Prevention (CAAP & Associates) to enroll over 800 employees in a small business group plan through UnitedHealthcare Insurance Company. A majority of enrollees were Medicaid-eligible and had applied for the Health Insurance Premium Payment Program (HIPP) to pay the health insurance premiums. The HIPP program determines if it is more cost effective for Mo HealthNet to purchase health insurance or pay straight Medicaid on medical claims.

The agents reportedly misrepresented the work hours of eligible employees and the amount of premium the employer would pay for each employee on their insurance application with UnitedHealthcare to obtain a small group health policy. Before submitting information to the HIPP plan for coverage, they reportedly artificially increased the premium rates charged by UnitedHealthcare to receive the entire premium (rather than only the employee’s share) and an unallowable broker’s fee (in some instances, more than double the UnitedHealthcare premium rate) from HIPP.

On March 29, 2007, HIPP reimbursed CAAP & Associates $537,847.75 for April 2007 insurance premiums, but the agents only owed $444,317.97 to UnitedHealthcare. To date, CAAP & Associates and the agents have not paid UnitedHealthcare the $444,317.97 owed for the health insurance premiums.

After United Healthcare became aware of the issue in the January 2007, company representatives performed an audit and terminated their contract with CAAP & Associates. Upon termination, Louderback and Barnes reportedly sent communication to employees stating a new policy with a different company had been put in place when, in fact, no new policy was in effect.

In an effort to obtain another small group plan with Coventry Insurance, the agents reportedly presented a letter from Mo HealthNet to The Coventry Group, which stated the HIPP program would continue to work with CAAP & Associates in the future for funding because of their excellent working relationship with them for the past two years.

The Consumer Affairs Division, Mo HealthNet Division and UnitedHealthcare worked to move all HIPP members back to the regular Mo HealthNet system as soon as possible in order for recipients to resume coverage of health care.