• Increase Text Icon
  • Decrease Text Icon
  • Email Icon
  • Print this page
You are here: Home . orders . co-01-0273

Consent Order CO-01-0273 with SAI Entered

OFFICIAL ORDER
of the
COMMISSIONER OF INSURANCE
of the
STATE OF TEXAS
AUSTIN, TEXAS

Date: March 29, 2001

Subject Considered:

SAI PLUS, L.L.C.
SAI PLUS HEALTH PLAN, L.L.C.
15200 Shady Grove Road, Suite 204
Rockville, Maryland

MARUTHI S. MANNEY, M.D. and LAKSHMI
MANNEY, 3 Sawgrass Court, Gaithersburg, Maryland

CONSENT ORDER
DOCKET NO. 454-01-1145.D

General remarks and official action taken:

On this date came on for consideration by the Commissioner of Insurance the Texas Department of Insurance's ("TDI") complaint against SAI PLUS, L.L.C., its affiliates, subsidiaries and successors in interest, its officers, directors, and employees, SAI PLUS HEALTH PLAN, L.L.C., its affiliates, subsidiaries and successors in interest, its officers, directors and employees, Dr. Maruthi S. Manney, individually, and Dr. Lakshmi Manney, individually, (collectively referred to as "SAI"). TDI alleges that SAI has violated the insurance laws of the State of Texas and that such conduct constitutes grounds for disciplinary action pursuant to Tex. Ins. Code. Ann. §§ 83.051(a)(1)(A)(i), and (a)(1)(B)(i), 84.021-84.050, 101.102-101.105, and 101.051. SAI voluntarily joins in this order to account for and to rectify the violations of law recited herein.

TDI, by and through its counsel, and SAI, by and through their duly authorized representatives, by their respective signatures hereto, have announced that they have compromised and settled all claims raised by TDI pursuant to Tex. Gov't Code Ann. § 2001.056 and have agreed, pursuant to Tex. Ins. Code Ann. § 82.055 to the entry of this Consent Order. TDI and SAI further request the Commissioner of Insurance to informally dispose of this case pursuant to the provisions of Tex. Gov't Code Ann. § 2001.056 and Tex. Ins. Code Ann. § 82.055 and 28 Tex. Admin. Code § 1.47. SAI has waived certain rights and has agreed not to contest findings of fact and conclusions of law as indicated by the signatures of their duly authorized representatives on this Consent Order.

JURISDICTION

For purposes of this Consent Order, SAI specifically consents to the Commissioner´s jurisdiction over this matter pursuant to Tex. Ins. Code Ann. §§ 84.021-84.022, 101.001, 101.002, 101.051, 101.053, 101.101-101.105, 101.203, Tex. Ins. Code Ann. arts. 21.07-6, 21.58A §§ 9-13, Tex. Gov´t Code Ann. §§ 2001.051-2001.178, 28 Tex. Admin. Code Ann. § 7.1611 and 28 Tex. Admin. Code § 7.1601, et seq.

WAIVER

SAI acknowledges the existence of their respective rights to the issuance and service of notice of hearing, a public hearing, a proposal for decision, rehearing by the Commissioner of Insurance, and judicial review of the Order as provided for in Tex. Gov't Code Ann. § 2001.051 et seq. and hereby expressly waives each and every one of said rights and acknowledges the jurisdiction of the Commissioner of Insurance over them.

AGREED FINDINGS OF FACT

The Commissioner makes the following findings of fact:

  1. SAI at no time held a certificate of authority in the State of Texas and was never authorized by the State of Texas to act as a third party administrator, to conduct utilization reviews, or to engage in the business of insurance pursuant to the insurance laws of this state, including Tex. Ins. Code Ann. arts. 1.14, 3.95-2, 21.58A, and 21.07-6.
  2. SAI PLUS, L.L.C., also formerly known as SAI PLUS HEALTH PLAN, L.L.C., is a limited liability company organized under the general corporation laws of the State of Maryland having its principal place of business in Rockville, Maryland.
  3. Dr. Maruthi S. Manney is the chief executive officer of SAI PLUS HEALTH PLAN, L.L.C.
  4. Dr. Lakshmi Manney is the secretary of SAI PLUS HEALTH PLAN, L.L.C.
  5. Alethea C. Kimmel was, at all relevant times, the Director of Operations for SAI PLUS HEALTH PLAN, L.L.C.
  6. Ashok Rattahalli is an organizer and former officer of, and consultant for SAI PLUS HEALTH PLAN, L.L.C.
  7. SAI voluntarily submits to the jurisdiction of TDI and the Commissioner of Insurance over them for the purpose of coming into compliance with all applicable Texas statutes, rules and regulations.

TDI´S ALLEGATIONS

  1. SAI has been and is now performing the acts of a third party administrator ("TPA") in the State of Texas in violation of Tex. Ins. Code Ann. art. 21.07-6.
  2. SAI has been and is now performing the acts of a utilization review agent in the State of Texas in violation of Tex. Ins. Code Ann. art. 21.58A.
  3. The entity known as SAI PLUS HEALTH PLAN, L.L.C. submitted an application for a certificate of authority as a third party administrator to TDI in July of 1999. Maruthi S. Manney, as CEO, signed the application. The application also lists the following: vice presidents Dr. Lakshmi Manney (also shown as Secretary), wife of Maruthi, and Dr. Ashok Rattahalli. Alethea C. Kimmel is shown as the Director of Operations. David L. Marcontell is shown as manager of the Dallas, Texas sales office. To date the application is not complete or approved and SAI holds no certificate of authority from TDI to operate as a third party administrator in Texas.
  4. Since on or about May of 1999, SAI knowingly violated Tex. Ins. Code Ann. arts 1.14, 3.95-2, 21.07-6, 21.21-1, 21.58A and Tex. Ins. Code Ann. §§ 101.051-101.106 by engaging in the unauthorized business of insurance in Texas, including but not limited to bearing risk, paying commissions to agents, and receiving funds as premiums, all under the guise of an insurance company.
  5. SAI marketed and sold self-funded and fully insured group health plans to employers in the State of Texas. For those employers who elected to purchase fully insured plans, SAI either failed to place the insurance for these plans with the carrier identified in the solicitation, or with any other licensed carrier. In some instances, SAI placed the insurance in spite of the fact that SAI was never licensed to do so by TDI. All of these acts constitute fraud and violations of Tex. Ins. Code Ann. art. 1.14 and Tex. Ins. Code Ann. §§ 101.051-101.106.
  6. On or about January 1, 2000, SAI attempted to transfer some of the plans it had marketed and sold as "fully insured" to Dallas General Life Insurance Company. However, Dallas General Life Insurance Company refused and/or returned certain group plans to SAI. SAI then retained the returned group plans and assumed the risk on these plans. SAI acknowledged that it accepted premiums, bore the risk and acted as the (unauthorized) insurer for these group plans.
  7. In an apparent effort to continue in the business of insurance in Texas without benefit of licensure, Dr. Maruthi S. Manney, CEO of SAI PLUS, arranged for the purchase of a surplus subordinated debenture in the amount of $500,000 from Dallas General Life Insurance Company. Effective September 30, 1999, Dallas General Life Insurance Company issued its $500,000 surplus debenture to SAI PLUS, upon receipt from SAI PLUS of $400,000 in cash and its promise to pay the remaining $100,000 before October 15, 1999. Dr. Manney obtained and signed one or more bogus Dallas General Life Insurance policies as President of Dallas General Life Insurance Company, without the knowledge or permission of Dallas General Life Insurance Company.
  8. TDI received numerous claims payment complaints against SAI PLUS regarding its third party administration business, before SAI PLUS submitted an application for a certificate of authority to operate in the state of Texas as a third party administrator, as required by Tex. Ins. Code Ann. art. 21.07-6.
  9. In violation of Tex. Ins. Code Ann. arts. 21.07-6, 21.21 and 21.55, SAI, in their administration of claims, ignored claims, failed to pay claims in a timely manner, applied incorrect co-payment deductions, applied incorrect deductibles, improperly denied claims which were covered, and used a non-existent contract as the basis and justification for these acts.
  10. Dr. Maruthi S. Manney paid certain overdue claims of the employees of Gladewater I.S.D. from his personal funds, in violation of Tex. Ins. Code Ann. art. 21.07-6 § 18.
  11. Dr. Maruthi S. Many commingled all plan contributions received from Texas plan sponsors, in violation of Tex. Ins. Code Ann. art 3.95-2 and created a bogus Multiple Employer Welfare Association as defined by Tex. Ins. Code Ann. art 3.95-1(9).
  12. SAI collected premiums from employers that SAI purported to pay to insurers and for stop loss policies. These premiums were in fact never remitted to the respective insurer(s), reinsurer(s), or stop loss carrier(s), but were converted by SAI in violation of Tex. Ins. Code Ann. art. 21.07-6 § 17.
  13. At all relevant times, SAI violated Tex. Ins. Code Ann. art. 21.21-1 by making and publishing or causing to be made and published Internet publications which misrepresented contracts issued or to be issued. The violation occurred on the HTML Internet: http://www.saiplus.com/healthcare/fact.html.

SAI´S REPLY

  1. SAI denies the allegations of the department.
  2. SAI does not admit any violation of the Texas Insurance Code, the Texas Administrative Code, or any other rule or regulation of TDI.

CONCLUSIONS OF LAW

Based upon the findings of fact, the Commissioner of Insurance makes the following conclusions of law:

  1. TDI has jurisdiction over this matter pursuant to Tex. Ins. Code Ann. §§ 84.021-84.022, 101.001, 101.002, 101.051, 101.053, 101.101-101.105, 101.203, Tex. Ins. Code Ann. arts. 21.07-6, 21.58A §§ 9-13, Tex. Gov´t Code Ann. §§ 2001.051-2001.178, 28 Tex. Admin. Code Ann. § 7.1611 and 28 Tex. Admin. Code § 7.1601, et seq.
  2. The Commissioner of Insurance has authority to informally dispose of this matter as set forth herein under Tex. Ins. Code Ann. §§ 82.055 and 101.103 and 101.105, Tex. Gov't Code Ann. § 2001.056 and 28 Tex. Admin. Code § 1.47.
  3. SAI has knowingly and voluntarily waived or hereby waives all procedural requirements for the entry of this Order, including but not limited to issuance and service of a notice of intention to institute disciplinary action, notice of hearing, a public hearing, a proposal for decision, rehearing by the Commissioner of Insurance, and judicial review of this administrative action.

ORDER

IT IS, THEREFORE, ORDERED by the Commissioner of Insurance that:

  1. By their signatures to this Consent Order, SAI voluntarily submits to the jurisdiction of TDI and the Texas Commissioner of Insurance over them, for the purpose of coming into compliance with and enforcing all applicable Texas laws, statutes, rules and regulations.
  2. SAI shall immediately cease and desist from engaging in the business of insurance, acting as a third party administrator, conducting utilization reviews and from any and all violations of the Texas Insurance Code and related rules, including but not limited to, Tex. Ins. Code Ann. § 101.051 et seq., arts. 1.41, 21.07-6, 21.58A, 3.95-1 and 28 Tex. Admin. Code § 7.1601, et seq.
  3. SAI shall immediately cease and desist from seeking, pursuing and obtaining any insurance business in the State of Texas and from participating, directly or indirectly, in any act of an insurance agent or insurance company.
  4. SAI shall work diligently with staff of TDI to ensure that its withdrawal from the State of Texas is in full compliance with this Consent Order.
  5. SAI agrees to immediately withdraw all applications it now has pending with TDI regardless of the nature or purpose of the application.
  6. On or before thirty (30) days from the date of this Order, SAI shall notify each Texas employer and/or affected employer in writing ("notification letter"), by certified mail, return receipt requested, of its intent to abide by the specific requirements of this Consent Order. Said notification letter shall request a reply within ten days from receipt of said notification letter, in the form of a summary, and supporting documents, of each and every SAI-related debt or obligation incurred by an employer, employee, patient or other obligor (collectively, "obligor") which is currently disputed, unpaid, under-paid or denied. Prior to mailing the notification letter, SAI shall submit it to TDI for approval and said letter must include a specific, detailed description and request for the items, statements and forms necessary to process the payments contemplated in this Consent Order. All copies of said SAI notification letters and green cards shall be received in the offices of TDI no later than forty days from the date of this Order. Within fourteen days of receipt by SAI of each reply to this notification letter or follow up notification letter referenced in Ordering Paragraph Number seven, SAI shall provide to TDI at its offices: identification of each obligation by obligor´s name, the name of the person on whose behalf the reply was sent, that person´s mailing address and telephone number, and amount for all disputed, unpaid, underpaid or denied SAI-related debts or obligations.
  7. If, under Ordering Paragraph Number six hereof, no reply is received by SAI after the ten day period, SAI shall notify TDI of this and SAI shall send a TDI-approved follow-up letter to each non-replying Texas employer, certified mail, return receipt requested, with a concurrent facsimile copy to TDI within five business days. If SAI receives a reply which is insufficient to make the required payment, SAI shall, within five business days, seek in writing the necessary information from the applicable providers and shall make copies of all such letters available to TDI upon request. All of the above payments shall be made pursuant to the applicable healthcare benefit plan purchased by the respective employer.
  8. Upon the receipt of the HCFA-1500 for Physicians Billing and/or the UB-92, for Hospital Billings, or of the items requested in Ordering Paragraph Number six hereof, SAI shall be jointly and severally liable to pay, agrees to pay and shall pay as restitution, within sixty (60) days of said receipt, the total amount outstanding debt for every obligation, whether disputed on not, incurred by every obligor each affected employer, plan and employee as the result of SAI´s unauthorized insurance and/or Third Party Administrator activities and/or utilization review in the State of Texas and/or its failure or mishandling of affected Texas group health plans marketed, sold, reviewed, denied or handled in any way by or for SAI.
  9. For each Texas employer that was solicited and which purchased stop-loss coverage, SAI shall, within sixty (60) days from the date of this Order provide, by certified mail, return receipt requested, each Texas employer, their agent who produced the business, and TDI with a copy of the stop-loss policy acquired by SAI along with documentation which validates the period for which coverage was in force. In the event that SAI either failed to procure stop-loss coverage, or procured or maintained less coverage than that solicited by the agent and purchased by the employer, SAI shall refund to the Texas employer all monies due within ninety (90) days from the date of this Order.
  10. SAI shall provide by certified mail, return receipt requested, a written report to TDI´s staff attorney, Paula R. Robertson, or her successor, at the address below, every thirty (30) days, from the date of this Order, confirming that the debt or premium has been paid or reimbursed in full, showing a copy of the explanation of benefits or other supporting documents regarding the amount owed, reporting the date the payment was mailed, enclosing a true and correct copy of the signed check, and stating the address to which the check was mailed. At such time as full and final payment is made and reported and there are no further disputes regarding the amount paid, the duty to report will terminate as to each paid obligation or debt. Failure to provide a written report containing the required information to TDI as directed every thirty (30) days from the date of this Order shall result in, and SAI PLUS, L.L.C., its affiliates, subsidiaries and successors in interest, its officers, directors, and employees, SAI PLUS HEALTH PLAN, L.L.C., its affiliates, subsidiaries and successors in interest, its officers, directors and employees, individually, Dr. Maruthi S. Manney, individually and Dr. Lakshmi Manney, individually, hereby agree to pay, an administrative penalty of $10,000.00 a day, each, for every day that receipt by TDI of the information is delayed past the thirty (30) day period.
  11. SAI shall act affirmatively to avoid and prevent confusion in the use of their names or any other name intended to conceal the true identity of the ownership of any entity which is operated by any one of the current officers and/or directors of SAI PLUS HEALTH PLAN, L.L.C., and shall immediately provide to TDI the names of all successor corporations and provide the name and addresses, ownership interests and positions of all of the officers and directors of said successor corporations.
  12. SAI shall identify those contracts with Texas employers that contain provisions stating that SAI is entitled to retain as compensation any contributions, funds or monies in excess of those that are used in the providing of benefits, and shall forward to TDI a complete reconciliation of the monies received, paid out and retained no later than one hundred fifty (150) days from the date of this Order. Full reimbursement of these identified retained amounts shall be made by SAI, on or before one hundred eighty days (180) days from the date of this Order and SAI shall send a written report to TDI´s staff attorney, Paula R. Robertson, or her successor, at the address below within ninety (90) days from the date of this Order, confirming that the amount of contribution is reimbursed in full, showing a copy of the explanation of benefits or other supporting documents regarding the amount owed, reporting the date the payment was mailed, showing the check number, date and payee, and stating the address to which the check was mailed.
  13. SAI and any and all successor corporations shall cease to engage in unauthorized business of insurance in Texas, specifically including but not limited to purporting to bear risk or provide insurance, conducting utilization reviews, or the receiving, transmitting or handling of premium in connection with stop loss coverage. SAI shall immediately cease and remove all misrepresentations in advertisements or Internet web sites and shall add "Not licensed to do business in the State of Texas" to the bottom of every page or screen of every advertisement and all of its web sites.
  14. Nothing provided in this Order shall in any way limit the duties and responsibilities of SAI to comply with and adhere to all Texas laws, statutes, rules and regulations, and TDI retains the right and the power to enforce and administer all of said laws, statutes, rules and regulations by way of other or additional Orders, Consent Orders or other actions or proceedings involving SAI. Any action taken by SAI in furtherance of the Consent Order shall not be deemed to constitute, nor shall it constitute, engaging in the business of insurance, acting as a third party administrator, or conducting utilization review.
  15. Notwithstanding Ordering Paragraphs one through fourteen, if unpaid obligations or premium refund requests are submitted to SAI after the time frame described in this Order, SAI shall, within thirty (30) days of receipt, pay any and all SAI-related obligations incurred by an employer or employee and refund all premiums requested which are submitted within forty-eight months of the date this order is signed by the Commissioner, if the treatment dates related to said obligations occurred before the termination of the plan and/or the employee or enrollee. Copies of all "late submitted debts" shall be forwarded to TDI within ten days of receipt. Evidence of payment of said "late submitted debts", as specified in Ordering Paragraph twelve, shall be received in the offices of TDI within fourteen (14) days of payment.

IT IS FURTHER ORDERED that:

Upon failure to comply with any of the foregoing Ordering Paragraphs, SAI shall pay, and is hereby directed to pay to the Texas Department of Insurance, within ninety (90) days of said violation of any part of this Consent Order the total sum of ONE MILLION DOLLARS AND NO CENTS ($1,000,000.00) as an administrative penalty which shall be paid by check or money order and tendered to the Texas Department of Insurance, Accounting Department, 333 Guadalupe, MC 999-9, P.O. Box 149104, Austin, Texas 78714-9104.

Signed, JOSE MONTEMAYOR
COMMISSIONER OF INSURANCE



For more information, contact:

Last updated: 09/06/2014

Contact Information and Other Helpful Links