Tuesday, July 10, 2001

State investigates
isle dental
health plan

A court hearing is scheduled
today to stop the firm from
doing business here

By Helen Altonn

The Hawaii Dental Health Plan is under investigation by the state Insurance Division because of complaints about unpaid claims, Insurance Commissioner Wayne Metcalf announced today.

The insurance division petitioned the court to stop the prepaid plan from doing any more business in Hawaii and a hearing was scheduled today.

The division had received 37 complaints from dentists, patients or HDHP policyholders as of May 31. "As a practical matter, the complaints we receive generally represent the tip of the iceberg," Metcalf said.

"A lot of times, either the unpaid claim is just forgotten about or, oftentimes, people don't know who to complain to."

As soon as Gov. Ben Cayetano signed a law giving the division authority to examine dental plans like HDHP, Metcalf said it issued a cease and desist order requiring the plan to cooperate with a team of examiners being sent to review their records.

"They failed to respond and completely ignored the division's directive to respond," Metcalf said. Substantial fines are being imposed against the dental plan for its lack of response, he said.

Metcalf said the company is "simply a mail drop in Hawaii. It has no employees in the state that can be located." Premiums or claims are sent to a local address but the plan appears to be based in Newport Beach, Calif., he said.

The plan was incorporated in Hawaii in 1986 and in 1988 was registered as a dental service organization with the Department of Commerce and Consumer Affairs, Metcalf said. He said the division was not sure how many policyholders there are in Hawaii.

There was only a recorded message at the phone number for the plan's office in Hawaii this morning. The division began getting complaints last October about nonpayment of services, but couldn't do anything about it until Act 132 was signed, Metcalf said.

He said the legislation was passed at the division's request "so we would have authority to deal with this situation and other situations of similar nature as they should arise."

Metcalf said the division has asked the court to stop Hawaii Dental Health Plan from violating state insurance laws, offering or selling prepaid dental plans in Hawaii, collecting any more premiums from Hawaii residents and engaging in any further business in the state.

The plan also was ordered to take immediate action to respond to each unpaid claim complaint.

"Unpaid claims are a 'red flag' that often indicates that an insurer is experiencing financial difficulties," Metcalf said. "It's very disturbing. It's easy for consumers to be victimized by operations that lack the capacity to meet their obligations simply because there was no jurisdiction over these plans at all until the Legislature passed into law and the governor signed Act 132.

"I think the staff at the Insurance Division ought to be commended for how quickly they've been able to move since given legal authority to do so.

"Increasingly, we're seeing these kinds of situations develop, not only in Hawaii but across the country," he added, "and it is important that states have the tools to protect consumers who have paid good money and not received the services they've been promised."

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