Company Ordered to Stop Selling Health Insurance in Washington State

August 10, 2005

Washington’s Office of the Insurance Commissioner (OIC) has issued a cease and desist order against Evolution Services Inc. of South Jordan, Utah for selling illegal health insurance in Washington.

Evolution Services Inc. has reportedly been operating as an unauthorized Multiple-Employer Welfare Arrangement (MEWA). MEWAs are established to provide health and welfare benefits to employees of two or more unrelated employers who are not involved in a collective bargaining agreement.

In concept, MEWAs are designed to give small employers access to low cost health coverage on terms similar to those available to large employers. Under Washington law, they must be licensed with the state and meet solvency requirements.

Evolution Services contends that it is merely self-insuring its own employees and therefore is a single employer plan exempt from state law.

To date, the agency knows of seven small businesses that have enrolled in Evolution Services’ health plans. The employers received access to the health plan in return for signing a stock option agreement with Evolution Services. Although these businesses physically retained control of their employees, the reported intention of the agreements was to transfer control of their company to Evolution Services in order to shirk state regulation.

“If an agent or broker comes to you and says they have a health insurance plan for you or your employees that sounds too good to be true, call us immediately,” warned Insurance Commissioner Mike Kreidler. “Taking the time before you sign up to understand what coverage you’re being offered and if it’s legitimate insurance can save you time and money.”

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