AHCP's chief executive officer, Asif Sayeed, "employed unconscionable commercial practices, deception, fraud, false pretenses, false promises and/or misrepresentations, and knowingly concealed, suppressed, or omitted material facts with the intent . . . to unjustly enrich himself and [his wife] Shaheen Sayeed at the expense of AHCP's policyholders, subscribers, enrollees, and creditors," the lawsuit charges.

The lawsuit was filed on Sept. 18 in Cook County Circuit Court by Nathaniel S. Shapo, director of insurance for the state of Illinois. Shapo would not discuss details about how investigators uncovered the alleged fraud. The lawsuit does describe various attempts by Sayeed to disguise the HMO's precarious financial position, including filing allegedly false financial statements with the Illinois Department of Insurance.

Asif Sayeed could not be reached to comment on the lawsuit.

Illinois regulators filed a petition in February 2000 to liquidate the HMO, saying they had discovered it had a $25 million deficit despite Sayeed's efforts to conceal the problems. Sayeed initially contested the petition, but backed down, and AHCP was placed in liquidation on May 11, 2000. Prior to the start of its financial troubles in the late 1990s, AHCP was the fifth-largest HMO in Illinois, with nearly 200,000 enrollees. But the number of customers dropped to 90,000 by Jan. 1, 2000.

Doctors could face losses, but patients safe

The lawsuit was filed to recover as much of the misappropriated money as possible, says Shapo, who also is acting as the HMO's liquidator. "It's hard to know how much money we're going to get back," he says. "I have to try to marshal the assets as best as I can and pay off creditors to the best of my ability."

If the full amount cannot be recovered, doctors and hospitals will be stuck absorbing the losses, Shapo says. Patients, however, will not be stuck with unpaid claims. Under the state's "hold harmless" provision, it's against the law for doctors and other health care providers to try to recoup unpaid claims from patients if the claims should have been paid by the HMO — which is the case in this situation.

"Sometimes when these things happen, providers will pursue patients," Shapo says. "It can lead to disruptions to the patient."

Some claims submitted by the HMO's customers are being paid by the Illinois HMO Guaranty Association, which is supported by mandatory contributions from HMOs operating in the state.

AHCP's customers began enrolling in other health plans when the first signs of trouble were revealed, and nearly all have found new coverage, Shapo says. The HMO offered coverage through Medicaid, Medicare, and employer-sponsored group health plans.