A large Florida-based health insurance provider has filed for bankruptcy. The move comes after months of state scrutiny and allegations of financial impropriety.
Universal Health Care Group Inc., based in St. Petersburg, has filed for Chapter 11 protection. Meanwhile, state regulators seek to take over two subsidiaries of the company.
The Florida Office of Insurance Regulation (FOIR) referred Universal Health Care Insurance Co. Inc. and Universal Health Care Inc. to the Division of Rehabilitation and Liquidation at the Department of Financial Services to initiate state receivership.
The company has so far withheld consent for the takeover and will have the opportunity at a court hearing to demonstrate why it should not be required to go into receivership.
Florida began formally investigating Universal in August, 2012, after auditing firm Ernst & Young refused to sign off on some of the company’s 2011 financial statements, alleging their internal controls contained “material weaknesses.”
State investigators now claim to have proof that the company is insolvent. That proof also points to a pattern of improper financial management, according to the state. They allege that United misrepresented its balance sheet and misled state regulators and its creditors.
Florida law provides for an HMO to be a candidate for state receivership if it is the victim of “embezzlement, wrongful sequestration, conversion, diversion or encumbering of its assets; forgery or fraud or other illegal conduct” that threaten its solvency. In an interview with the Tampa Bay Times, FOIR counsel Belinda Miller said that all of those violations apply to Universal.
Jeff Atwater, Chief Financial Officer for Florida, wants to liquidate the company. Insurance Commissioner Kein McCarty is working with federal and state law enforcement to determine whether criminal or civil action is appropriate.
A Tampa Bay Times report said that according to documents filed with the state, the company admitted to being insolvent as of the end of 2012 and required a cash infusion of $30 million in order to continue operations.
At about the same time, officials in Georgia and Ohio reached agreements with Universal under which the company could not sign up new Medicare members.
Miller said that it wanted instead to prove that the company was insolvent.
Universal is pursuing a merger of three of its HMOs in Texas, Florida and Nevada with America’s 1st Choice, owned by Tampa philanthropist Dr. Kiran Patel. Patel has offered $36.5 million for the companies. Universal must now seek the authorization of the bankruptcy court to move forward with the sale, the company said in a statement.
O. Reginald (“Reggie”) Osenton is the Owner and President of Osenton Law Offices, P.A. If you need a Brandon bankruptcy lawyer, Tampa bankruptcy lawyer, or Tampa bankruptcy attorney, call 813.654.5777 or visit Brandonlawoffice.com.