Ohio Director Terminates Insurer’s COA; Dept. Seizes Control of Peoples Health Plan of Ohio

March 6, 2003

Ohio Insurance Director Ann Womer Benjamin signed an agreed order terminating the certificate of authority (COA) of Canton-based Peoples Health Plan of Ohio, Inc. The COA is required to operate as a health insurer in Ohio.

On March 3, Peoples agreed to a termination of its COA, and further agreed to be placed into rehabilitation by the Department if it fails to abide by the agreed terms.

“The Department has made every responsible and appropriate attempt to work with Peoples,” Womer Benjamin said. “We will continue to work with vigilance to resolve this matter to ensure Ohio consumers are protected.”

The Department placed Peoples into supervision on March 28, 2002, after a thorough investigation of the company’s operations and financial condition revealed that the company reportedly did not meet minimum net worth requirements under law to conduct business as an HMO in the state.

Under terms of the agreed order, Peoples must dismiss a lawsuit filed on Feb. 18 in the Franklin County Court of Common Pleas that challenged the Department’s authority to regulate the company.

Last November, the Department announced its intention to revoke the company’s certificate of authority to conduct business in the state and to provide Peoples an opportunity to respond to 11 counts of alleged violations of Ohio insurance laws and regulations. A scheduled hearing in February was postponed when the company agreed to enter settlement negotiations with the Department. Settlement discussions were rebuffed by the company when it abruptly filed a lawsuit instead.

In its November notice to the company, the Department alleged the company had made false representations regarding its assets, misrepresented cash infusions designed to lift supervision, and failed to notify the Department of significant changes to its operations.

The Ohio Department of Job and Family Services (ODJFS) had contracted with the Medicaid HMO to provide coverage for some of its Cuyahoga County Medicaid beneficiaries. In November, ODJFS gave notice of its intent to terminate its contract with Peoples and to move its Medicaid subscribers to other insurers, effective Dec. 31, 2002. Under the terms of the agreed order, Peoples waives its right to contest the ODJFS action.

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