The future of troubled Medicare insurer Universal Health Care Group — whether it's sold or liquidated — is quickly coming to a head.
Florida regulators are seeking an immediate order to liquidate the St. Petersburg-based insurer in an emergency hearing before a judge in Tallahassee this morning. A liquidation hearing had been scheduled for March 21, but the Florida Department of Financial Services sought to move up the date after Universal missed a court deadline to object to the state being appointed receiver.
Regulators want to move quickly, with an order to liquidate Universal in place by April 1.
Staying in operation any longer without state oversight could harm policyholders, creditors, stockholders and the public, the state alleges.
On Feb. 4, Florida regulators deemed the company nearly insolvent and accused executives of a broad pattern of financial mismanagement — including fraud and diversion of funds — under founder and chief executive officer A.K. Desai. Universal filed for bankruptcy reorganization Feb. 6.
In requesting the expedited hearing, regulators said they were concerned about a continued reduction in the quality of services at Universal "as many employees have resigned or transferred to other health care companies due to the financial turmoil."
Moreover, regulators said, many health care providers have terminated their agreements to provide coverage for Universal members, some without providing the required 60-day notice. The disgruntled providers have alleged that they're not being paid in a timely way and that Universal has failed to comply with its contracts.
On a separate track, federal bankruptcy Judge Rodney May on Monday preliminarily approved the sale of Universal Health Care for $33.25 million in cash to Citrus Universal Healthcare Inc., a unit of New Jersey-based CarePoint Insurance Co. Citrus was chosen as prevailing bidder in an auction over Dr. Kiran Patel, founder of WellCare Health Plans and a well-known local entrepreneur. Patel had offered $36.5 million for the company, but his bid was to be paid over time.
Universal attorneys previously said that a sale would take liquidation off the table.
Judge May's decision, however, still needs regulatory approval. Amy Bogner of the Florida Office of Insurance Regulation said as of Tuesday afternoon the agency had still not received an acquisition application.
Citrus Universal said it is working with crisis-management experts at Alvarez & Marsal, which already deployed "a large team of seasoned industry experts" to Universal's headquarters in downtown St. Petersburg.
"We have incredible confidence in our ability to turn around Universal, if given the opportunity, with the expertise of Alvarez & Marsal and look forward to improving the company to position it to provide long-term quality and service for all members," Citrus spokesman Spencer Baretz said.
Members of Universal health plans were supposed to continue to receive coverage throughout the ordeal. Because of the company's situation, however, members have the option of contacting their agent to consider alternatives outside of the regular open-enrollment period.
Universal provides coverage for about 140,000 members, and as of early this year had nearly 1,000 employees, the vast majority of them at its St. Petersburg offices. Desai could not be reached for comment Tuesday.
Jeff Harrington can be reached at email@example.com or (727) 893-8242.