Hundreds of Universal Health Care Group employees could lose their jobs now that a judge has placed the insolvent St. Petersburg Medicare insurer into receivership.
Thursday's decision turns control of Universal over to state regulators, who have said they want to liquidate the company by April 1.
As of earlier this year, Universal had nearly 1,000 workers, the bulk of whom work out of its downtown St. Petersburg headquarters. It has not provided a recent employee count.
Universal employees were briefed about the receivership Thursday afternoon by the company's chief restructuring officer, Alec Mahmood, who indicated a team from the Florida Department of Financial Services would return Monday to begin liquidation.
Florida insurance regulators on Feb. 4 said the company's finances were in disarray and accused executives of a broad pattern of financial mismanagement, including fraud and diversion of funds. Universal's parent company filed for bankruptcy two days later.
Universal founder and CEO A.K. Desai has continued to run the company throughout the turmoil. But Thursday's ruling changed that.
Judge Charles Francis of the 2nd Circuit Court in Tallahassee appointed the Department of Financial Services as receiver. A spokeswoman for the department said the receivership would not be effective until it receives signed copies of the judge's order.
The company had recently received approval in bankruptcy court to sell its primary businesses for $33.25 million in cash to Citrus Universal Healthcare Inc., a company tied to New Jersey-based CarePoint Insurance Co.
The sale, however, was contingent on regulatory approval, and state officials pushed to continue the liquidation process even after a bankruptcy judge okayed the Citrus deal as the best option for investors. It was not clear Thursday how the state would handle switching Universal's 100,000-plus members to other insurers.
In a brief statement, Universal Health Care said it is "fully cooperating with the Florida Department of Financial Services in the transition of our members. Any questions regarding the receivership should be directed to the Florida Department of Financial Services."
Universal said the receivership will not impact either Universal HMO of Texas Inc. or Universal Health Care of Nevada Inc., which were sold through a bankruptcy auction last month.
In urging Judge Francis to rule quickly, 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, many health care providers have terminated their agreements to provide coverage for Universal members, some bypassing the required 60-day notice. Providers have alleged that they're not being paid in a timely way and that Universal has failed to comply with its contracts.
Jeff Harrington can be reached at [email protected] or (727) 893-8242.