Ruling near on closure of Springfield companies accused of insurance fraud

Chancellor Ellen Hobbs Lyle intends to make a final ruling by Wednesday on whether the state can permanently close a pair of Springfield businesses accused of selling bogus health-insurance policies to thousands of consumers nationwide.
Hobbs took testimony on the financial condition of the unlicensed insurance operation on Monday, hearing from state regulators who raided the American Trade Association and Smart Data Solutions LLC in late March.

The state has since taken control of the companies' operations and bank accounts.

The Davidson County chancellor had already ruled after an April 6 hearing that the two companies, owned by Springfield residents Bart and Angie Posey, would be liquidated, but she postponed the order's effective date until she could hear from both sides on whether the companies are broke.

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During Monday's testimony, state insurance department officials said they found that more than $7 million in medical claims remain to be paid to consumers in all 50 states, but that the companies have only about $2 million in the bank.

Certified public accountant Paul Eggers, appointed by the state to serve as receiver for the seized companies, said that when the state took control, he found hundreds of unpaid medical claims in file cabinets and in boxes on the floor throughout the firms' offices, "even in the reception area."

Some of the claims were at least six months old, and an examination of the companies' books suggested there "had not been enough money to pay claims for a number of months" before the state's raid, Eggers said.

David White, a state insurance department financial auditor, said he found that nearly $22 million was deposited into SDS and ATA bank accounts from consumers' premium collections from Jan. 1, 2008, until the state took over last month, and that only about $7 million of that had been paid out in health-care claims.

Couple miss hearing

Attorneys for the Poseys asked the court to dismiss the couple as personal defendants in the state's case against the insurance operation. If that happens, such a decision could exempt their personal assets from being seized to help pay medical claims and other business expenses.

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