Owners of defunct Illinois HMO settle fraud allegations for $3 million
"It's an excellent settlement
under the circumstances."
Owners of American Health Care Providers Inc. (AHCP), a defunct Illinois HMO, have agreed to pay creditors $3 million to settle allegations they lied about company finances and funneled $5 million from the health plan to buy themselves luxury cars and a private jet.
The Illinois Department of Insurance filed the lawsuit against HMO owners Asif and Shaheen Sayeed — and companies the husband and wife jointly owned — in Cook County Circuit Court on Sept. 18, 2000. The lawsuit accused them of siphoning cash from the HMO to support a lavish lifestyle at the expense of the plan's policyholders and health care providers. See "Unconscionable" execs looted HMO to buy luxury cars, Illinois regulators contend.
The Sayeeds have denied any wrongdoing. Neither Asif Sayeed nor his attorney Mickey Gaynor could be reached to comment on the settlement.
State insurance regulators filed a petition in February 2000 to liquidate the HMO, saying they had discovered it had a $25 million deficit despite Asif Sayeed's efforts to conceal the problems. Sayeed initially contested the petition but later backed down, and AHCP was placed in liquidation on May 11, 2000.
Illinois Insurance Commissioner Nat Shapo says he's pleased with the settlement. "It's an excellent settlement under the circumstances," Shapo says. "We basically got all his assets that would not have been protected in a bankruptcy court case."
The settlement will be evenly divided between the state and Old Kent Bank, a major creditor of the Sayeeds' businesses. The state's share will help pay the more than $20 million owed to Illinois health care providers, Shapo says.
According to Shapo, most former ACHP plan members will not be stuck with unpaid claims due to the state's "hold harmless" provision that says it's against the law for doctors and other health care providers to try to recoup unpaid claims from patients if those claims should have been paid by the HMO.
Shapo says nearly all of ACHP's former members have found alternative insurance, except for approximately 1,000 who are still being covered by the Illinois HMO Guaranty Association, which is supported by funding from HMOs operating in the state.
Prior to the start of financial troubles in the late 1990s, AHCP was the fifth-largest HMO in Illinois, with nearly 200,000 enrollees. However, the number of customers had dropped to 90,000 by Jan. 1, 2000.