Medova: Insurance Carrier Or Not?

Medova Healthcare Financial Group, LLC (Medova) is a Wichita, Kansas-based company that sold unauthorized health insurance plans called Lifestyle Health Plans to approximately 140 small businesses and their 1,487 employees through Washington chambers of commerce. Medova was ordered to stop selling these illegal plans in Washington state and agreed to a $310,000 suspended fine. The company's president and CEO, Daniel Whitney, also surrendered their insurance producer licenses and agreed to stop doing insurance business in the state. Medova's actions left thousands of plan participants and beneficiaries without the health benefits they were promised, causing significant harm.

Medova Healthcare Financial Group, LLC

Medova sold Lifestyle Health Plans, unauthorized health insurance plans, to around 140 small businesses and their 1,487 employees through Washington chambers of commerce. The company misrepresented the nature of the coverage and the financial responsibility for paying claims. Medova committed similar actions in 37 other states and, in March, agreed to a federal consent order appointing a federal independent fiduciary to administer the company and manage its claims.

A federal court appointed Receivership Management Inc., an independent fiduciary based in Madison, Tennessee, as claims administrator. The fiduciary will negotiate and pay outstanding health claims for participants of the arrangement, ensuring that plan participants receive their due benefits. This arrangement will remain in place until the litigation against Medova is resolved or the fiduciary's services are no longer required.

Medova's Lifestyle Health Plans created a critical funding deficiency due to the alleged misuse of funds by Medova's defendants. As of November 6, 2020, the plans provided benefits and held assets for at least 2,600 participating health plans, serving over 35,000 employees in 38 states.

Medova Lifestyle Health Plan

Medova Healthcare Financial Group, LLC (Medova) of Wichita, Kansas, is an insurance carrier that sold unauthorized health insurance plans called Lifestyle Health Plans. These plans were marketed to small businesses as comprehensive health benefits packages, similar to traditional insurance plans for their employees. However, in reality, these plans were self-funded ERISA (Employee Retirement Income Security Act) health benefit plans. This means that the employer is responsible for paying for their employees' claims, and the insurer only administers the plan.

Medova's Lifestyle Health Plans were sold to approximately 140 small businesses and their 1,487 employees through Washington chambers of commerce. The company misrepresented the nature of the coverage and who was financially responsible for paying claims. Medova engaged in similar practices in at least 38 other states and has agreed to a federal consent order. As a result, a federal independent fiduciary has been appointed to administer the company and manage its claims.

The U.S. Department of Labor filed a complaint against Medova, its president and CEO Daniel L. Whitney, chief operating officer Michelle Willson, and Midlands Casualty Insurance Co. Inc. The complaint alleges that Medova defendants, acting as fiduciaries for ERISA-covered plans, violated several provisions of ERISA. Specifically, they commingled funds, diverted funds to corporate accounts, and used funds from one plan to pay the claims of another. The Department also alleges that Medova made material omissions to employers about the MEWA's failure to pay claims and its financially hazardous condition.

As of November 6, 2020, the Medova MEWA provided benefits and held assets for at least 2,600 participating health plans, serving more than 35,000 employees in 38 states. The critical funding deficiency caused by the defendants' misuse of funds left thousands of participants without the health benefits they were promised. The complaint seeks to have the Medova defendants removed as fiduciaries and to appoint an independent fiduciary to oversee the MEWA's operations, control assets, and negotiate and pay outstanding health claims.

Medova's illegal health insurance in Washington

Medova Healthcare Financial Group, LLC (Medova) of Wichita, Kansas, has been ordered to stop selling illegal health insurance in Washington state. Medova and its president and CEO, Daniel Whitney, agreed to a $310,000 suspended fine and surrendered their insurance producer licenses, committing to cease all insurance business in Washington.

Medova sold unauthorized health insurance plans, called Lifestyle Health Plans, to approximately 140 small businesses and their 1,487 employees through Washington chambers of commerce. The company misrepresented the nature of the coverage and who was financially responsible for paying claims. This was achieved by marketing the plans as comprehensive health benefits packages, similar to traditional insurance plans, when, in fact, they were self-funded ERISA (Employee Retirement Income Security Act) health benefit plans. ERISA plans are regulated by the federal Department of Labor, not Washington state, and place financial liability for claims on the employer, not the insurer.

Medova also improperly handled and accounted for the employers' premium funds. Rather than keeping each employer's premium separate and paying their claims individually, Medova pooled the money and doled out claim payments for each employer group from that source of money. This resulted in some claim payments being delayed and others remaining pending.

Medova's actions in Washington were part of a broader pattern of misconduct. The company committed similar actions in at least 38 other states and, in March 2024, agreed to a federal consent order that appointed a federal independent fiduciary to administer the company and manage its claims. Nationwide, Medova provided health benefits to more than 35,000 employees.

The sale of unauthorized insurance plans by Medova has had significant repercussions for both employers and employees. Employers who purchased Medova's plans now face unexpected expenses, and employees risk having their medical claims delayed or left unpaid. To address these concerns, Kreidler's office sent letters to the 140 affected employers in Washington, explaining the role of the federal independent fiduciary and encouraging them to seek assistance from insurance agents and ERISA attorneys.

Medova's misuse of funds

Medova Healthcare Financial Group LLC, a Wichita-based company, has been accused of misusing funds and creating a critical funding deficiency for some health plans, leaving beneficiaries without benefits. As of November 6, 2020, the company provided benefits for at least 2,600 health plans covering more than 35,000 employees in 38 states. The U.S. Department of Labor's investigation revealed that Medova's misuse of funds resulted in a funding deficit of over $18 million for their Lifestyle Health Plans.

The investigation by the Department's Employee Benefits Security Administration (EBSA) alleged that Medova defendants, acting as fiduciaries for the underlying ERISA-covered plans, violated several provisions of ERISA. Specifically, it was alleged that Medova commingled funds, diverted funds to corporate accounts and companies they controlled, and used funds from one plan to pay the claims of another. Furthermore, Medova made material omissions to current and prospective employers about the MEWA's failure to pay claims and its financially hazardous condition. Medova also failed to file the Form M-1, which is required under ERISA and provides financial and compliance information.

As a result of these allegations, the U.S. Department of Labor filed a complaint in the U.S. District Court against Medova Healthcare, its president and CEO Daniel L. Whitney, chief operating officer Michelle Willson, and Midlands Casualty Insurance Co. Inc. The complaint sought to have the Medova defendants removed and barred from serving as fiduciaries to the individual employer plans that participated in the Medova Multiple Employer Welfare Arrangement (MEWA). It also sought the appointment of an independent fiduciary to oversee MEWA's operations, control the assets of the plans, and negotiate and pay outstanding health claims.

In March 2024, Medova was ordered to stop selling unauthorized health insurance in Washington state and agreed to a $310,000 suspended fine. They surrendered their insurance producer licenses and agreed to cease insurance business in Washington. Medova had sold unauthorized health insurance plans called Lifestyle Health Plans to approximately 140 small businesses and their 1,487 employees through Washington chambers of commerce. The company misrepresented the nature of the coverage and who was financially responsible for paying claims. Medova's actions in Washington state mirrored similar practices in at least 38 other states, leading to a federal consent order that placed the company under the administration of a federal independent fiduciary.

Medova's commingling of funds

Medova Healthcare Financial Group LLC (Medova) of Wichita, Kansas, has been accused of misusing funds and creating a critical funding deficiency for Lifestyle Health Plans, affecting more than 35,000 employees in 38 states. The U.S. Department of Labor filed a complaint against Medova, its president and CEO Daniel L. Whitney, chief operating officer Michelle Willson, and Midlands Casualty Insurance Co. Inc. The complaint alleges that Medova violated several provisions of the Employee Retirement Income Security Act (ERISA).

One of the specific violations mentioned is the commingling of funds. Medova allegedly pooled premium funds collected from small businesses instead of keeping each employer's premium separate. They then paid claims for each employer group from this pooled source of money, resulting in delayed payments and pending claims. This practice of commingling funds is not in line with the ERISA plan structure, where the employer is financially liable for claims made by their employees.

The investigation by the Department's Employee Benefits Security Administration (EBSA) revealed that Medova's misuse of funds created a funding deficiency of over $18 million for Lifestyle Health Plans. This left thousands of participants and beneficiaries without the health benefits they were promised. The complaint seeks to hold Medova accountable for their violations and to ensure that plan participants receive their rightful benefits.

As a result of the complaint, a federal court appointed an independent fiduciary, Receivership Management Inc., to oversee the employee benefit plans and assets previously administered by Medova. This fiduciary will work to negotiate and pay outstanding health claims, ensuring that plan participants in the 38 affected states receive the benefits owed to them. The court order is a step towards resolving the issues caused by Medova's commingling of funds and other financial misconduct.

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