Our coronavirus coverage is free for the first 24 hours. Find the latest information at Please consider subscribing or donating.

  1. Archive

Troubled HMO gets order to liquidate

SunStar Health Plan officials say they were close to a saving deal with an investor. The state says it's too late.

More than 25,000 Tampa Bay area residents will have to find new insurance after a judge ordered the liquidation of SunStar Health Plan, because the HMO doesn't have enough money to ensure payment of its claims.

The decision comes less than a week after the state suspended new enrollment in the HMO for Pinellas and Hillsborough counties, saying the lack of network hospitals there posed an "immediate danger to the health and safety of the public."

In some cases, Tampa residents were sent as far as Plant City or New Port Richey for treatment.

Second Circuit Judge Terry P. Lewis' order on Tuesday places SunStar in the hands of the state Department of Insurance, which at a December hearing had asked that the HMO be liquidated. That's when an audit showed the company was more than $12-million short of what state law requires it to have in reserves.

"The subscribers will be getting letters in the next few days," said Nina Bottcher, a spokeswoman with the state Department of Insurance.

"But we're not saying it might not be rough for a few days."

SunStar customers are guaranteed coverage for up to six months under the state HMO Consumer Assistance Plan, as long as they continue paying their premiums, Bottcher said. From there, the state will help subscribers move into other health plans. Those health plans cannot reject customers because of pre-existing medical conditions, but do not have to offer the same coverage or premiums, Bottcher said.

And that's why SunStar officials say the liquidation is a mistake.

"Who won? No one won here. The members didn't win. We didn't win. The state didn't win," said SunStar assistant vice president Mike Seaman.

"We've done a pretty good job of covering people no one else would cover," Seaman said. SunStar specialized in offering low-cost individual and small-business plans, which Seaman said are hard to come by. The company was formed in 1997 with several thousand members and soon mushroomed, picking up more than 80,000 members by late 1999.

Along with that growth came a flood of complaints from consumers, who have accused the HMO of delaying or denying claims or of canceling policies without cause. The Times has chronicled several of those complaints, including that of a New Port Richey man who waited nearly a year to have a brain tumor removed and a New Port Richey toddler whose insurance was canceled because of a pre-existing condition: recurrent ear infection, a common childhood ailment.

Company officials said they never intended to thwart anyone's treatment and blamed the complaints on their growth rate and self-referral policy. That means patients can go to any network specialist without prior approval, but also means they don't have a primary care physician explaining the rules every step of the way, company officials have said.

Added Seaman: "We're not the bad guys."

Seaman said the company had an investor lined up to shore up its reserves, but it needed two week's time to finish the deal. Although the judge left open the chance that SunStar could work with the state to close its deal, Department of Insurance lawyer Timothy Gray argued there wasn't time for the company to find investors because providers were quickly leaving the plan.

"We can't let a plan exist out there that has a provider network collapsing, where health care issues are being raised," Gray said. The company, a wholly owned subsidiary of Heathrow-based SunStar Healthcare, lost more than $8-million in the first nine months of last year.

SunStar members can call the Department of Insurance at 1-800-342-2762 for more information.

_ Information from Times files and the Associated Press was used in this report.

Local enrollment

Here are the SunStar Health Plan enrollment figures for the Tampa Bay area as of June 30

Pinellas: 12,179

Hillsborough: 10,073

Pasco: 2,609

Hernando: 565

Citrus: 384

Florida: 82,679

Source: Department of Insurance