Refunds in Smart Data, ATA fraud case may be months away

Review of claims and continued legal wrangling in the case of a pair of Springfield businesses shut down by the state for selling what authorities labeled as bogus health insurance may delay payment of the victims until at least February, the state Department of Commerce and Insurance says.
Although the more than 12,400 policyholders — from all 50 states — had an Aug. 31 deadline to file claims, it will take at least until the end of January for all the claims to be processed and a final liquidation plan to be submitted to the Davidson County Chancery Court, said Christopher Garrett, a spokesman for the state insurance department.

That timetable is based on a plan the state proposed in a motion with the Chancery Court last month, and which is scheduled for a hearing on Friday before Chancellor Ellen Hobbs Lyle. She authorized the state's seizure of the American Trade Association and Smart Data Solutions in March, and ordered the companies to be liquidated after a hearing in May.

More than 56,531 notices of the liquidation plan and cancellation of the policies was sent out to the policyholders after the court's May 20 liquidation order, giving them until Aug. 31 to file claims for payment of medical bills or reimbursement of premiums.

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Garrett said the state doesn't yet have a final tally of how many claims were filed by the deadline, or a total dollar amount of claims.

Earlier, the state estimated that the claims would be $7 million, and said only about $2 million remained in the companies' bank accounts.

Attorneys for the two companies and their owner, Springfield businessman Bart S. Posey, have filed an appeal of Lyle's liquidation order, and are attempting to keep the process on hold until the appeal is heard.

Lyle, however, has denied the motion to delay the liquidation.

Barring a stay, Posey wants the state to allow him to appoint a third-party administrator to take over processing of the claims.

Posey claims a share

Nashville attorney Nader Baydoun, representing Posey and the two companies, said it is their contention that at least half of the $2 million the state is holding from the bank accounts of the two companies actually belongs to Posey, and should not be given to the policyholders.

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