Jury Convicts 2 in HMO Case

May 14, 2008

A federal jury has convicted two officials of The Oath for Louisiana in a scheme to inflate the defunct health maintenance organization’s net worth and ability to pay claims in reports sent to the state Insurance Department.

Barry Scheur, Oath’s owner and a health care consultant who faced a 14-count indictment, was convicted of three counts of mail fraud and four counts of wire fraud. Robert McMillan, Oath’s chief financial officer who also faced a 14-count indictment, was convicted of three counts: conspiracy, mail fraud and wire fraud.

Sentencing for both is scheduled for Aug. 13, along with Oath executive vice president Rodney Moyer. He testified against his former colleagues in exchange for being allowed to plead guilty to the conspiracy count.

Each count on which the men have been convicted carries a maximum possible sentence of five years in prison and up to $250,000 in fines.

The jury acquitted accountant Danette Bruno on all 13 counts of the indictment in which she was named.

The government argued The Oath, which insured more than 80,000 residents, had a $45-million deficit when it was shut down in April 2002.

Prosecutors claimed the defendants began a pattern of illegal conduct in September 2000 when the Oath was struggling financially and they feared the business wouldn’t be able to meet its legally required minimum net worth of $3 million.

They claimed The Oath officials were lying about the company’s value while illegally enriching themselves by continuing to collect premiums from those insured and by having the HMO pay management fees to Scheur’s firm.

Scheur attorney Shaun Clarke said the decision is one step in the legal process. McMillan attorney Herbert Larson said he hoped for a better result on appeal.

Source: The Times-Picayune.

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