Workers expect their defined contribution plans to play a greater role in their retirement income than annuities.
Feb. 09--ST. PETERSBURG -- Troubled insurance company Universal Health Care could be rehabilitated, sold or dissolved, according to state officials who moved this week to take control of the insolvent insurer.
The Florida Department of Financial Services wants to place Universal into receivership, or state custody, so it can liquidate the company's assets to pay outstanding policy claims and pay off its millions of dollars of debt.
More than $45 million in debt, the beleaguered company, which is headquartered in downtown St. Petersburg, filed for Chapter 11 bankruptcy on Wednesday, according to court records.
Officials at Universal, which provides Medicare Advantage health plans in 19 states and a Medicaid HMO in Florida, have demonstrated a "pattern of mismanagement," overstating the company's financials, releasing misleading information and failing to maintain sufficient capital to sustain thousands of insurance policies, according to regulators.
A court will ultimately decide whether the state takes over the company or if it can be sold to a private buyer, such as WellCare founder Dr. Kiran Patel of Tampa, who has made an offer to purchase it.
Universal policyholder Betty Harrison said she's been worried by news of the company's uncertain future.
"I've been with them six years, and so far the health care has been wonderful, but you do get concerned about where this is going," said Harrison, who lives in New Port Richey.
"It leaves you kind of hanging in the air."
Nothing will change for policyholders, until the state court schedules a hearing, which should happen within a few weeks, said Alexis Lambert, communications director for the Department of Financial Services.
That's when Universal President and CEO Akshay Desai will be allowed to make his case that his company has a plan to fix his troubled finances.
Desai wrote to state insurance regulators on Feb. 1 that Patel's bid to buy the company would infuse $45 million of capital and bring it into compliance with regulatory requirements.
That same day, though, Florida Office of Insurance Regulation Commissioner Kevin McCarty recommended that Chief Financial Officer Jeff Atwater place Universal into receivership. The Department of Financial Services' application says regulatory approval of the sale to Patel's company is "questionable at this time."
The court determines whether an insurance company is placed in state control for the purpose of liquidation or rehabilitation or whether the company can proceed with its own plan to repair its financials, Lambert said.
If the state liquidates the company, its assets would be used to pay existing claims, and policyholders would be referred to new insurers. In the case of rehabilitation, state agents work with the company to improve its finances, and it will continue to serve existing customers.
"The department's goal is to work very closely with policyholders to communicate any changes and to ensure no lapse in their health care coverage," Lambert said.
Insurance companies that are in rehabilitation can be sold, but a sale becomes unlikely when they go into receivership, she said.
Patel, a Tampa cardiologist and philanthropist, offered to buy Universal last week, days after a private equity firm backed out of a deal. He has said he expects regulators to approve his offer, but he was uncertain when he would have a firm answer.
In a letter to state regulators, Desai wrote that Universal Health Care Group had a capital deficit of more than $45 million. He wrote that Universal planned to eliminate its debt through the sale to Patel's company, by selling the company's corporate office at 100 Central Ave. and making other internal changes.
Universal's bankruptcy filings show that its biggest debts are $6 million to HCA in Palm Harbor and $4 million to Trizetto, a Colorado health care IT company.
The company has not had sufficient capital to pay for the number of policies it provides for several years, prompting insurance officials in Georgia and Ohio to issue consent orders to stop Universal from enrolling new members, according to Department of Financial Services documents.
Universal has also overstated its financials in recent years and misled one of its creditors, Bank United, when borrowing $60 million last year, according to an affidavit.
The company has had frequent turnover in its chief financial officer position, with five different CFOs in the past six years and no one in that role from May 2011 until last October, documents state.
State officials want to stage a deep investigation of the company during receivership to determine its true financial condition, according to documents.
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