Private Health Insurance: Unauthorized or Bogus Entities Have Exploited Employers and Individuals Seeking Affordable Coverage
Published: 2004-03-03T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: As health insurance premiums have risen at double-digit rates in recent years, employers and individuals who have sought to purchase more affordable coverage have fallen prey to certain entities that may offer attractively priced premiums but do not fulfill the expectations of those buying health insurance. These unauthorized entities--also known as bogus entities or scams--may not meet the financial and benefit requirements typically associated with health insurance products or other arrangements that are authorized, licensed, and regulated by the states. This testimony is based on GAO's recent report Private Health Insurance: Employers and Individuals Are Vulnerable to Unauthorized or Bogus Entities Selling Coverage, GAO-04-312 (Feb. 27, 2004). In this testimony, GAO was asked to identify the number of entities that operated from 2000 through 2002 and the number of employers and policyholders affected, approaches and characteristics of these entities' operations, and the actions federal and state governments took against these entities. GAO analyzed information obtained from the Department of Labor (DOL) and from a survey of insurance departments in the states; interviewed officials at DOL and at insurance departments in Colorado, Florida, Georgia, and Texas; and examined the operations of one of the largest entities--Employers Mutual, LLC.
section_title: What GAO Found
paragraphs: DOL and the states identified 144 unique entities not authorized to sell health benefits coverage from 2000 through 2002. Although every state was affected by at least 5 of these entities, these entities were most often identified in southern states. These unauthorized entities covered at least 15,000 employers and more than 200,000 policyholders. The entities also left at least $252 million in unpaid medical claims, only about 21 percent of which had been recovered at the time of GAO's 2003 survey. In most cases, the operators characterized their entities as one of several types to give the appearance of being exempt from state regulation, but states found that they actually were subject to state regulation. Other characteristics that were common among at least some of these entities included (1) adopting names that were familiar to consumers or similar to legitimate firms, (2) marketing their products through licensed agents and with other health care or administrative service companies, (3) setting premiums below market rates, (4) marketing to employers or individuals that were particularly likely to be seeking affordable insurance alternatives, and (5) paying initial claims while collecting additional premiums before ceasing claims payments. Employers Mutual adopted many of these characteristics as it collected approximately $16 million in premiums from over 22,000 people in 2001, leaving more than $24 million in medical claims unpaid. Both federal and state governments--individually and collaboratively--took action against these entities and sought to increase public awareness. For example, state insurance departments issued cease and desist orders against 41 of the 144 entities, and DOL obtained court orders against three large entities from 2000 through 2002. States also took other actions against some entities' operators and agents that received commissions for marketing these entities. Further state or federal actions remain possible as many investigations remain ongoing. States and DOL primarily focused their prevention efforts on improving public awareness, including the need for consumers, employers, and insurance agents to verify an entity's legitimacy with insurance departments.

section_title: Letter
paragraphs: We are pleased to be here today as you address how employers and  individuals have been exploited by unauthorized or bogus entities selling  health benefits. As private health insurance premiums have risen at  double-digit rates in recent years, employers and individuals who have  sought to purchase more affordable coverage have fallen prey to certain  entities that may offer attractively priced premiums but do not fulfill the  expectations of those buying health insurance coverage. These  unauthorized entities—also sometimes referred to as bogus entities or  scams—may price their products below market rates to attract purchasers  but may not meet the financial and benefit requirements typically  associated with health insurance products or other arrangements that are  authorized, licensed, and regulated by the states. When these entities do  not pay legitimate claims for the costs of care that policyholders incur, the  harm can affect several parties: individuals may be held responsible for  their own medical bills, which can mean owing thousands of dollars;  employers may find that they have paid premiums for nonexistent  coverage for their employees; and health care providers may be at  increased risk of not being paid for services already rendered. In addition,  federal and state governments may need to invest significant public  resources to investigate and shut down these unauthorized entities.
Our testimony will summarize findings of a report that we are releasing  today that examines the prevalence of these entities and their impact on  employers, especially small employers, and policyholders. At your  request, Mr. Chairman, together with Senator Snowe, Chair of the Senate  Committee on Small Business and Entrepreneurship, and Senator Bond,  we examined (1) the number of unauthorized entities selling health  benefits that federal and state governments identified from 2000 through  2002, the number of employers and policyholders affected, and the amount  of unpaid claims involved, (2) approaches and characteristics of these  entities’ operations, and (3) the methods federal and state governments  have employed to identify such entities and to stop or prevent them from  continuing to operate. We surveyed each state’s insurance department in  2003, including that of the District of Columbia, and also obtained data  from the Department of Labor’s (DOL) Employee Benefits Security  Administration (EBSA), which conducts civil and criminal investigations  of employer-based health plans. We consolidated information from DOL  and the states to determine the unduplicated number of entities identified  from 2000 through 2002 and the numbers of affected employers and  policyholders. We also asked states to provide information on a related  type of problematic arrangement—discount arrangements that may be  misrepresented as insurance. We interviewed officials with EBSA,  including those in three of its regional offices (Atlanta, Dallas, and San  Francisco); the National Association of Insurance Commissioners (NAIC);  insurance departments in four states that were identified as being affected  by a relatively large number of these entities (Colorado, Florida, Georgia,  and Texas); and other experts and associations, including those  representing insurance agents and administrators of employers’ health  benefits. Because many of the federal and state investigations regarding  these entities were ongoing at the time we did our work, we generally do  not name specific entities except in situations in which publicly disclosed  actions have been taken against an entity. We also examined in detail the  operations of one of the largest entities identified during this period,  Employers Mutual, LLC, and the actions federal and state governments  took to stop it from operating.
In summary, DOL and the states identified 144 unique entities not  authorized to sell health benefits coverage from 2000 through 2002.  Although every state was affected, with at least five entities marketed in  each state, these entities were most often identified in southern states.  Specifically, of the seven states with at least 25 entities, five were located  in the South. These 144 unauthorized entities covered at least 15,000  employers and more than 200,000 policyholders from 2000 through 2002.  At the time of our 2003 survey, DOL and the states reported that the  identified entities did not pay at least $252 million in medical claims and  only about $52 million—about 21 percent of the total unpaid claims—had  been recovered on behalf of policyholders and those covered by the  policies.
Most unauthorized entities characterized themselves as one of several  types of arrangements and some had other approaches in common. For  example, the operators of these entities often characterized the entities in  one of several ways that gave an appearance of being exempt from state  insurance regulation when they should have been subject to regulation.  Some entities selected names that resembled legitimate insurers or  employee benefit firms and recruited insurance agents, administrative  services companies, and health care provider networks to enhance their  appearance of legitimacy to consumers and employers. The entities  typically set their prices below market rates to be attractive especially to  employers or individuals seeking more affordable health insurance  alternatives. One of the largest entities, Employers Mutual, used a name  similar to the long-established, Iowa-based Employers Mutual Casualty  Company; established associations to sell its products; marketed its  products through licensed insurance agents and contracted with other  companies for administrative services; and, according to court documents,  set premiums by underpricing the average of sample rates posted on the  Internet. According to court documents and DOL, during a 10-month  period in 2001, Employers Mutual collected approximately $16 million in  premiums from over 22,000 people and did not pay more than $24 million  in medical claims for which they were liable.
Both federal and state governments—individually and collaboratively— took action against these entities and sought to increase public awareness.  For example, state insurance departments issued cease and desist orders  against 41 of the 144 unique entities identified from 2000 through 2002.  Such an order, however, only applies to the activity in the issuing state.  States reported also taking other actions, such as filing cases against the  entities’ operators in civil or criminal courts or fining agents or revoking  their licenses for selling unauthorized coverage. DOL obtained court  orders against three large entities from 2000 through 2002 that prevented  their operations nationwide. Further actions remain possible as many  investigations remain ongoing. States and DOL primarily focused their  prevention efforts on improving public awareness, including the need for  consumers, employers, and insurance agents to verify an entity’s  legitimacy with insurance departments.
subsections: section_title: Background
paragraphs: States regulate the insurance products that many employers and  individuals purchase. Each state’s insurance department enforces the  state’s insurance statutes and rules. Among the functions state insurance  departments typically perform are licensing insurance companies,  managed care plans, and the agents who sell their products; regulating  insurers’ financial operations to ensure that funds are adequate to pay  policyholders’ claims; reviewing premium rates; reviewing and approving  policies and marketing materials to ensure that they are not vague and  misleading; and implementing various consumer protections, such as  assisting people who do not receive health benefits that are covered  through insurance products or by providing an appeals process for denied  claims.
The federal government regulates most private employer-sponsored  pension and welfare benefit plans (including health benefit plans) as  required by the Employee Retirement Income Security Act of 1974  (ERISA). These plans include those provided by an employer, an  employee organization (such as a union), or multiple employers through a  multiple employer welfare arrangement (MEWA). DOL is primarily  responsible for administering Title I of ERISA. Among other requirements,  ERISA establishes plan reporting and disclosure requirements and sets  fiduciary standards for the persons who manage and administer the plans.  These requirements generally apply to all ERISA-covered employer  sponsored health plans, but certain requirements vary depending on the  size of the employer or whether the coverage provided is through an  insurance policy or a self-funded plan where the employer assumes the  risk associated with paying directly for at least some of their employees’  health care costs. In addition, ERISA generally preempts states from  directly regulating employer-sponsored health plans (although maintaining  states’ authority to regulate insurers and insurance policies). Therefore,  under ERISA, self-funded employer group health plans generally are not  subject to the state oversight that applies to insurance companies and  health insurance policies. The federal and state governments coordinate  their regulation of MEWAs, with states having the primary responsibility to  regulate the fiscal soundness of MEWAs and to license their operators, and  DOL enforcing ERISA’s requirements.
section_title: DOL and States Identified 144 Unique Unauthorized Entities Operating from 2000 through 2002 That Left More Than $250 Million in Unpaid Claims
paragraphs: DOL and the states identified 144 unauthorized entities from 2000 through  2002. This likely represents the minimum number of unauthorized entities  operating during this period because some states did not report on entities  that they were still investigating. The number of unauthorized entities  newly identified by DOL and the states each year almost doubled from  2000, when 31 were newly identified, through 2002, when 60 were newly  identified.
DOL and the states found that every state had at least 5 entities operating  in it. Specifically, the number of entities per state ranged from 5 in  Delaware and Vermont to 31 in Texas. (See fig. 1.) Many entities marketed  their products in more than one state, and some operated under more than  one name or with more than one affiliated entity. These entities were  concentrated in certain states and regions. Seven states had 25 or more  entities that operated during this period; 5 of these states were located in  the South. In addition to the 31 entities in Texas, 30 were in Florida, 29  each in Illinois and North Carolina, 28 in New Jersey, 27 in Alabama, and  25 in Georgia.
At least 15,000 employers purchased coverage from unauthorized entities,  affecting more than 200,000 policyholders from 2000 through 2002. The  number of individuals covered by unauthorized entities was even greater  than the more than 200,000 policyholders covered because the  policyholder could be an employer that purchased coverage on behalf of  its employees or the policyholder could be an individual with dependents.  Therefore, any one policyholder could represent more than one individual.  The states reported that more than half of the entities they identified  frequently targeted their health benefits to small employers.
At the time of our 2003 survey, DOL and states reported that the 144  entities had not paid at least $252 million in medical claims. This  represents the minimum amount of unpaid claims associated with these  entities identified from 2000 through 2002 because in some cases DOL and  the states did not have complete information on unpaid claims for the  entities they reported to us. Federal and state governments reported that  about 21 percent of unpaid claims had been recovered from entities  identified from 2000 through 2002—$52 million of $252 million. These  recoveries could include assets seized from unauthorized entities that  have been shut down or frozen from other uses. Licensed insurance agents  who have marketed products offered by these entities have also  reimbursed unpaid claims either voluntarily or through state or court  action. Additional assets may be recovered from the entities identified  from 2000 through 2002 because investigations and federal and state  actions remain ongoing. However, it is likely that many of the assets will  remain unrecovered because federal and state investigators report that the  entities often are nearing bankruptcy when detected or otherwise have  few remaining assets with which to pay claims.
A few entities were responsible for a large share of the affected employers  and policyholders and the resulting unpaid claims. Of the 144 unique  entities, 10 alone covered about 64 percent of the employers and about 56  percent of the policyholders. They also accounted for 46 percent of the  unpaid claims.
In addition to the unauthorized entities selling health benefits, 14 states  reported that discount plans were inappropriately marketed as health  insurance products in some manner. Unlike legitimate insurance, discount  plans do not assume any financial risk nor do they pay any health care  claims. Instead, for a fee they provide a list of health care providers that  have agreed to provide their services at a discounted rate to participants.  In response to our survey, 40 states reported that they were aware that  discount plans were marketed in their state. While discount plans are not  problematic as long as purchasers clearly understand them, 14 of these  states reported that some discount plans were misrepresented as health  insurance. For example, some discount plans were marketed with terms or  phrases such as “medical plan,” “health benefits,” or “pre-existing  conditions immediately accepted.” However, state insurance departments  do not regulate discount plans because they are not considered to be  health insurance. Thus, while state insurance departments might be aware  that discount plans operated within their borders, they would not  necessarily be able to quantify the extent to which they exist.
section_title: Most Unauthorized Entities Characterized Themselves as One of Several Types of Arrangements and Some Had Other Approaches in Common
paragraphs: The 144 entities that federal and state governments identified from 2000  through 2002 varied in size and specific characteristics, but most were  variations of one of four types of arrangements and some had other  approaches in common that enhanced their appearance of legitimacy and  attractiveness to prospective purchasers. For example, about 80 percent of  the entities characterized themselves as one of four arrangements— associations, professional employer organizations, unions, or single- employer ERISA plans—or some combination of these arrangements.  According to DOL and the states, specifically:    27 percent of the entities characterized themselves as association  arrangements through which employers or individuals bought health  benefits through existing legitimate associations or through newly created  associations established by the unauthorized entities. Although some of  these entities claimed that this structure would shield them from oversight  by federal or state governments, these associations would be subject to  federal and state oversight if they were determined to be MEWAs.   26 percent of the entities were identified as professional employer  organizations, also known as employee leasing firms, which contracted  with employers to administer employee benefits and perform other  administrative services for contract employees. However, professional  employee organizations could be subject to federal and state requirements  if, in addition to providing administrative services, they managed assets or  controlled benefits for multiple employers.   9 percent of the entities identified claimed to be union arrangements that  would be exempt from state regulation. However, they lacked legitimate  collective bargaining agreements and were therefore subject to state  oversight.   8 percent of the entities identified characterized themselves as single- employer ERISA plans and claimed to be administering a self-funded plan  for a single employer. Such plans, when administered with funds from one  employer for the benefit of one employer’s workers, are exempt from state  insurance regulation under ERISA. However, assets for several employers  were commingled in these entities, making them MEWAs subject to state  regulation.   10 percent of the entities were reported as a combination of one of these  or other types of arrangements.
The operators of these entities often characterized the entities as one of  these common types to give the appearance of being exempt from state  regulation, but often states found that they actually were subject to state  regulation as insurance arrangements or MEWAs.
These entities sometimes took other steps to enhance their appearance of  legitimacy and make their products attractive to prospective purchasers.  For example, some entities    adopted names that were familiar to consumers or similar to those of    marketed their products through licensed agents;    established relationships with networks of health care providers and with  companies that provide administrative services for employers offering  health benefits;   set premiums below market rates;    marketed to employers or individuals that were particularly likely to be  seeking affordable insurance alternatives, such as small employers,  workers in industries such as construction or transportation who are  disproportionately more likely to be uninsured, and self-employed  individuals; and   paid initial claims while collecting additional premiums before ceasing  claims payments.
One of the most widespread entities during the period we examined that  illustrates some of these approaches was Employers Mutual, incorporated  in Nevada in July 2000. According to court documents and DOL, four  individuals (“the principals”) operated Employers Mutual and, during a   10-month period from January through October 2001, collected a total of  approximately $16 million in premiums in every state from over 22,000  people. Today, more than $24 million in medical claims against Employers  Mutual remain unpaid.
The name Employers Mutual is similar to the name of a long-established  Iowa-based insurance company marketed throughout the United States,  Employers Mutual Casualty Company, which had no affiliation with  Employers Mutual. Notably, both in 1998 and in 2000, one of the  Employers Mutual principals was found to have engaged in the health care  insurance business in California without a license and was barred from  engaging in any insurance business in that state.
Two of the principals formed 16 associations having names relating to  workers in a wide array of industries and professions, such as farmers,  construction workers, mechanics, and food service employees. Principals  were named as the “managing members” of all 16 associations and created  an employee health benefit plan for each association. The principals  contracted with legitimate firms to process claims and to market the plans  to employers nationwide. Employers Mutual claimed that it was exempt  from DOL regulation.
One of the principals, who was not a licensed actuary and had no formal  training, set the premiums for the 16 plans after he calculated the average  of sample rates posted by insurance companies on the Internet and  reduced them to ensure that Employers Mutual offered low prices. The  principals also formed two companies, Columbia Health Network and  Western Health Network, that purported to provide networks of health  care providers for people insured by Employers Mutual. Additionally, the  principals formed two other companies, Graf Investments and WRK  Investments, which purported to provide investment services. However,  these companies were found to be vehicles for the illegal diversion of over  $1.3 million of plan assets.
When Nevada insurance regulators became aware of Employers Mutual,  they found that it was transacting insurance business without a certificate  of authority as required by Nevada law and issued a cease and desist  order against Employers Mutual in June 2001. Subsequently, other states  also issued cease and desist orders against Employers Mutual. In  December 2001, based on a petition from DOL, the U.S. District Court for  the District of Nevada granted a temporary restraining order against  Employers Mutual and its four principals. The restraining order  temporarily froze the assets of all the principals and prohibited them from  conducting further activities related to the business.  It also appointed an  independent fiduciary to administer Employers Mutual and associated  entities and, if necessary, implement their orderly termination.  On  September 10, 2003, the district court issued a default judgment granting a  permanent injunction against the principals and ordered them to pay $7.3  million in losses suffered as a result of their breach of fiduciary obligations  to beneficiaries. The fiduciary has also sued and sought settlements from  insurance agents who marketed or sold Employers Mutual’s plan for  damages and relief from unpaid or unreimbursed claims. Employers  Mutual is also under investigation by law enforcement authorities.  Appendix I includes a chronology of events from Employers Mutual’s  establishment to state and federal actions to shut it down.
section_title: States and DOL Share Responsibility for Identifying, Stopping, and Preventing the Establishment of Unauthorized Entities
paragraphs: Both federal and state governments have responsibility for identifying  unauthorized entities and stopping and preventing them from exploiting  businesses and individuals. DOL’s EBSA conducts civil and criminal  investigations of employer-based health benefits plans that are alleged to  violate federal law as part of its responsibilities for enforcing ERISA. For  example, EBSA may identify entities whose operators have breached their  ERISA fiduciary responsibilities, which generally require managing benefit  plans and assets in the interest of participants. State insurance  departments investigate entities and individuals that violate state  insurance or MEWA requirements, such as selling insurance without a  license. Because some entities may violate both federal ERISA  requirements and state insurance requirements, both EBSA and states may  investigate the same entities or coordinate investigations. Of the 144  unique entities DOL and states identified, the states identified 77 entities  that DOL did not, DOL identified 40 that the states did not, and both the  states and DOL identified another 27.
States and DOL often relied on the same method to learn of the entities’  operations—through consumer complaints. States also received  complaints about these entities from several other sources, such as agents,  employers, and providers. In addition, NAIC played an important role in  the identification process by helping to coordinate and distribute state and  federal information on these entities, and states and DOL also reported  that they coordinated directly. For example, DOL submitted quarterly  reports to NAIC that identified all open civil investigations, the individuals  being investigated, and the EBSA office conducting the investigations.  NAIC shared this and other information from EBSA regional offices with  state investigators throughout the country.
After identifying the unauthorized entities, the primary mechanism states  used to stop them from continuing to operate was the issuance of a cease  and desist order. Generally, a state cease and desist order tells the  operator of the entity, and affiliated parties, to stop marketing and selling  health insurance in that state and in some cases explicitly establishes their  continuing responsibility for the payment of claims and other obligations  previously incurred. Such an order, however, only applies to the activity in  the issuing state. Thirty states reported that they issued a total of 108  cease and desist orders that affected 41 of the 144 unique entities. About  58 percent of policyholders and nearly half of the total unpaid claims were  associated with these 41 entities. States also took other actions against  some entities, sometimes in conjunction with issuing cease and desist  orders. For example, in 48 instances, states responding to our survey  reported that they took actions against or sought relief from the agents  who sold the entities’ products, including fining them, revoking their  licenses, or ordering them to pay outstanding claims. States also reported  that they took actions against the entity operators in 25 instances and filed  cases in court in 14 instances to pursue civil or criminal penalties.
DOL often relied on states to stop unauthorized entities through cease and  desist orders while it conducted investigations, usually in multiple states,  to obtain the evidence needed to stop these entities’ activities nationwide  through the federal courts—that is, by seeking injunctive relief and, in  some cases, pursuing civil and criminal penalties. DOL’s enforcement  actions apply to all states. To obtain a temporary restraining order or  injunction, DOL must offer sufficient evidence to support its claim that an  ERISA violation has occurred and that the government will likely prevail  on the merits of the case. As of December 2003, DOL had obtained  temporary restraining orders against three entities for which investigations  were opened from 2000 through 2002. In two of these cases, DOL also  obtained preliminary injunctions and in one case ultimately issued a  permanent injunction. Each of these actions affected people in at least 41  states. (See table 1.) These three entities combined affected an estimated  25,000 policyholders and accounted for about $39 million in unpaid claims.  Documenting that a fiduciary breach took place can be difficult, time- consuming, and labor-intensive because DOL investigators often must  work with poor or nonexistent records, uncooperative parties, and  multiple trusts and third-party administrators. As of August 2003, EBSA  was continuing to investigate 51 of the 69 entities it had investigated from  2000 through 2002. As a result, further federal actions remain possible.
To help prevent unauthorized entities from continuing to operate, the four  states we reviewed—Colorado, Florida, Georgia, and Texas—and DOL  alerted the public and used other methods. These states, which were  among the states with a moderate or high number of entities, and DOL  emphasized the need for consumers and employers to check the  legitimacy of health insurers before purchasing coverage, thus helping to  prevent unauthorized entities from continuing to operate. To help states  increase public awareness, NAIC developed a model consumer alert in the  fall of 2001, which it distributed to all the states and has available on its  Web site. Insurance departments in the four states took various actions to  prevent unauthorized entities from continuing to operate. Each of these  states issued news releases to alert the public about these entities in  general and to publicize the enforcement actions they took against specific  entities. The four states’ insurance departments also maintained Web sites  that allow the public to search for those companies authorized to conduct  insurance business within their borders, and some states also released  public service announcements via radio, television, or billboards. In  addition to increasing public awareness, the four state insurance  departments warned insurance agents through bulletins, newsletters, and  other methods about these entities, the implications associated with  selling their products, and the need to verify the legitimacy of all entities.  DOL primarily targeted its prevention efforts to employer groups and small  employers. For example, to help increase public awareness about these  entities, on August 6, 2002, the Secretary of Labor notified over 70  business leaders and associations, including the U.S. Chamber of  Commerce and the National Federation of Independent Business, about  insurance tips that the department had developed and asked them to  distribute the tips to small employers. Also, the EBSA regional offices  initiated various activities within the states in their regions. For example,  EBSA’s Atlanta regional office sponsored conferences that representatives  from 10 states and NAIC attended.
section_title: Concluding Observations
paragraphs: Recent double-digit premium increases for health coverage have  encouraged employers, particularly small employers, and individuals to  search for affordable coverage. At the same time, however, these premium  increases have created an environment that makes them vulnerable to  being exploited by unauthorized or bogus entities. This has been reflected  by the increasing number of these entities identified by federal and state  governments in recent years. As a result, tens of thousands of employers  and hundreds of thousands of individuals have paid premiums for  essentially nonexistent coverage. As many employers and individuals  continue to seek affordable health coverage alternatives in this  environment of rising premiums, it is especially important that federal and  state governments remain vigilant in identifying, stopping, and preventing  the establishment of these entities and continue to caution individuals,  employers, and their agents to verify the legitimacy of entities offering  coverage.
Mr. Chairman, this completes our prepared statement. We would be happy  to respond to any questions you or other Members of the Committee may  have at this time.
section_title: Contacts and Acknowledgments
paragraphs: For future contacts regarding this testimony, please call Kathryn G. Allen  at (202) 512-7118 or Robert J. Cramer at (202) 512-7455. Other individuals  who made key contributions include John Dicken, Joseph Petko, Matthew  Puglisi, Andrew O’Connell, and Paul Desaulniers.
section_title: Appendix I: Chronology of Key Events Regarding Employers Mutual, LLC
paragraphs: Figure 2 summarizes key events regarding Employers Mutual, one of the  most widespread unauthorized entities operating in recent years.  Employers Mutual collected approximately $16 million in premiums from  over 22,000 people in 2001, and left more than $24 million in unpaid  medical claims.
January - October 2001 Employers Mutual collects  approximately $16 million in  premiums from over 22,000  policyholders.
January 2002  U.S. District Court holds  hearing.
February 1, 2002 U.S. District Court issues  preliminary injunction.
March 3, 2003  Independent fiduciary files  civil complaint against  Employers Mutual's  principals and insurance  agents and brokers that  marketed the 16 plans.
January - October 2001 Employers Mutual pays  principals' investment firms.
April 30, 2002 U.S. District Court issues  quasi-bankruptcy order.
May 2001 Principals establish two  provider networks.
September 10, 2003  U.S. District Court issues a  default judgment granting a  permanent injuction against  Employers Mutual. Principals  ordered to pay $7.3 million.
June 14, 2001 Nevada issues cease   and desist order against   Employers Mutual.
October 20, 2003  U.S. District Court orders the  civil suit to mediation in  February 2004.
August - November 2001 Alabama, Colorado, Florida,  Oklahoma, Texas, and  Washington take action  against Employers Mutual.
October 3, 2001 Claims processing firm  terminates contract with  Employers Mutual.
November 21, 2001 Nevada seizes Employers  Mutual's assets held in  Nevada banks.
December 13, 2001 U.S. District Court for the  District of Nevada grants a  temporary restraining order  against Employers Mutual  and appoints an  independent fiduciary.
December 20, 2001 Nevada surrenders to  independent fiduciary the  Employers Mutual assets   it seized.
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