Alleged health insurance scam led to millions in unpaid bills

Owner of Centennial, Colorado-based Rural Health Plans Initiative faces up to 20 year imprisonment for defrauding school districts and others looking for affordable health insurance for employees.

CENTENNIAL, CO (Denver Post) April 6, 2011 -- The owner of a bankrupt rural health-insurance brokerage, which left dozens of employers and thousands of employees holding millions in unpaid medical bills, has been indicted for embezzlement, fraud, and money laundering.

The 59-year-old owner of Centennial, Colorado-based Rural Health Plans Initiative (RHPI) will be arrested on appearance April 6 and faces up to 20 years imprisonment and millions in fines, according to a U.S. attorney.

The man sold himself and his company as a third-party administrator for small nonprofits and private companies that had trouble finding affordable health insurance for employees.

He signed up many school districts, small-town administrations, nursing companies, and others, and promised to handle claims and provide backup insurance for catastrophic illnesses.

In the summer and fall of 2010, many of those businesses began hearing their claims with hospitals and doctors had never been paid.

The indictment, after joint investigation by the U.S. attorney, the IRS, and the Labor Department, said he and RHPI defrauded employers in at least three states.

RHPI's bankruptcy filing showed it had $8.7 million in revenue in 2009 and was down to $2.9 million through most of 2010.

In addition to the individual employees who were told they are liable for their bills, many health care providers have been hurt in the scheme.

The HealthOne hospital group has said it had more than $1 million in unpaid bills from patients who thought they were insured through RHPI.

Link: http://www.denverpost.com/news/ci_17780421

Source: DHS Daily Open Source Infrastructure Report