TDI Orders Unauthorized Health Plans to Cease and Desist in Texas

On March 2, 2005, Texas Insurance Commissioner Jose Montemayor signed an order to stop the sale of unauthorized health insurance products to Texas consumers, the Texas Department of Insurance announced.

Montemayor signed a cease and desist order regarding two separate purported “union plans” that had wrongly alleged that they were exempt from state insurance regulation. According to the department, the International Union of Public and Industrial Workers (also known as the International Union of Petroleum and Industrial Workers, or IUPIW) and the Manufacturing and Industrial Workers Union (MIWU) have used insurance agents to enroll hundreds of Texas residents in their “union plans” without requiring participants to become truly unionized and without requiring employers to engage in real collective bargaining with their employees.

The department said it has received complaints of unpaid claims regarding the IUPIW plan. The MIWU only began operations in October of 2004. Both plans have accepted many enrollees from other illegal “union plans” which have been shut down by regulators.

A number of other related entities and individuals were also ordered to cease their involvement in the unauthorized union plans. These include two Texas insurance agents, Terrence LaFave and John Kudra. The other respondents named in the order are: International Union of Public/Petroleum Industrial Workers-Canadian Benefit Fund, Manufacturing and Industrial Workers Union Benefit Trust Fund, Contractors and Merchants Association, Oak Tree Administrators, First Class Administrators Inc., South by Southwest Employers Association, George Beltz, Mitchel Coneley, Cherille Shelp, William Hope, Tim Gue, Robbie Larkin, Gary Couch, Kent Traynor, and Raymond Palombo.

“It’s bad enough that these operators are taking people’s money in the form of premiums every month,” Montemayor said. “But the impact of the fraud is magnified by the fact that it’s not until the victim is facing a health problem that they find they have no insurance.”

Texas consumers are encouraged to check the licensure status of insurance agents and agencies on the TDI Web site (www.tdi.state.tx.us) or call the TDI Consumer Help Line at (800) 252-3439 for assistance.