RICHMOND -- As the cost of health insurance continues to rise, some unscrupulous individuals are taking advantage of unsuspecting consumers by selling them fraudulent health insurance products.

    One company - Employers Mutual, LLC (“Employers Mutual”) - defrauded thousands of policyholders out of millions of dollars nationwide. This unlicensed company sold unauthorized health insurance products in all 50 states, often through professional associations. It has been shut down by the federal government and is no longer providing insurance coverage. Its liquidation is being overseen by an independent fiduciary and receiver – Thomas Dillon – who was appointed by a federal court.

    The independent fiduciary hired Robert L. Brace and his law firm of Hollister & Brace to represent him in all litigation relating to his efforts to gather and liquidate Employers Mutual’s assets and to pay unpaid claims. A lawsuit was filed against approximately 400 insurance producers, alleging among other things, that they failed to provide health insurance as promised and they are therefore responsible for the unpaid health expenses of the participants.

    The State Corporation Commission’s (SCC) Bureau of Insurance advises Virginia residents who purchased health coverage through Employers Mutual and have claims for unpaid health expenses incurred between January 1, 2001, and February 1, 2002, that a proof of claim form is available for victims who wish to seek payment of their respective claims. The Proof of Claim form must be filed with the independent fiduciary on or before July 15, 2004, in order to participate in any distribution.

    Consumers may get a proof of claim form by calling the law firm of Hollister & Brace at (805) 963-6711, logging onto the firm’s website at www.hbsb.com, or calling the Bureau of Insurance at (804) 371-9999. They may also download and print the form from the Bureau’s website at www.state.va.us/scc/division/boi. The form must be sent by U.S. Mail to “Dillon Claims,” Hollister & Brace, Post Office Box 630, Santa Barbara, CA 93102.

    Information is also available on the Bureau’s website regarding court actions against Employers Mutual, payment of unpaid health claims, class action information, future notices, and proposed settlements.

    The federal court has issued a preliminary injunction that prohibits health care providers and their agents from filing suit in state or federal courts against participants to collect monies. They are also barred from filing adverse credit reports against participants related to unpaid health expenses that otherwise would have been paid by Employers Mutual.

    The Bureau of Insurance reminds Virginians to use caution when purchasing health care coverage. Consumers and employers alike should verify that the health coverage they are purchasing is fully insured by licensed insurers. They can do this by visiting the Bureau’s website or calling the Bureau in Richmond at (804) 371-9741, toll-free at 1-877-310-6560 or TDD at (804) 371-9206.

    Consumers should be wary of “union plans” and other health insurance offerings that claim to be exempt from state law. Legitimate ERISA plans (plans governed by the federal Employee Retirement Income Security Act of 1974) and union plans are established by unions for their own members or by an employer for its own employees. They are not sold by insurance agents. Other red flags include health coverage that seems unusually cheap, health coverage that is issued with few questions about the applicant’s health condition, or plan material that refers only to a stop-loss insurer.