State files suit against
shuttered insurer

Hawaii HealthCare Alliance
and sister firm owe for claims
not paid, filing says

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By Lyn Danninger
ldanninger@starbulletin.com

State Insurance Commissioner Wayne Metcalf yesterday filed suit in state Circuit Court against the former president of Hawaii HealthCare Alliance and other directors and officers associated with its sister company, Design Benefit Services.

Design Benefit Services marketed and sold Hawaii HealthCare Alliance health plans to consumers.

Former president of HHA and Design Benefit Services Darren Larson had already agreed to pay $50,000 in fines to the state Insurance Division last month to settle outstanding insurance law violations. His insurance license was also revoked.

But Larson and his associates are still liable for the company's remaining unpaid medical claims.

As liquidator for HHA, Metcalf is pursuing claims against Design Benefits and those who were associated with the company on a number of different grounds.

He is also asking that members of the plan be awarded a minimum of $1,000 or triple damages, whichever is greater. For senior citizens who signed up for HHA, the suit asks for a minimum of $5,000 per plan member.

It is unclear how many former plan members are owed money for claims that were never paid.

Problems for HHA and Design Benefit Services began last year. When HHA was first organized, Larson maintained that it was exempt from state oversight and regulation.

In October 2000, the Insurance Division gave Larson 30 days to bring the company into compliance with state licensing and financial reserve requirements.

With the company unable to meet those rules, the state assumed control of HHA in November.

In January, a state circuit court judge ordered the liquidation of HHA.