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For those readers just joining us, in the MCWG Summer 2016 Newsletter, pp. 22-29, we addressed how Health Republic Insurance of New York (Health Republic), New York’s only not-for-profit health insurer formed under the Affordable Care Act (ACA), opened in January 2014 and was shut down in the Fall of 2015. We also explained why Health Republic’s liquidation cries out for committees of policyholders and service providers to participate in Health Republic’s liquidation proceedings.

Parts 3 through 6 were published in the MCWG Winter 2016/17 Newsletter, pp. 17-38.  Part 3 reported on a July 2016 status conference requested by outside counsel representing Department of Financial Services (DFS) Superintendent Maria T. Vullo, in her capacity as Health Republic’s liquidator.  Counsel asked for the conference to advise the Court overseeing the liquidation, Justice Carol Edmead sitting in Supreme Court, New York County, Part 35, about a proposed claims procedure for Health Republic’s 206,000 former policyholders. Part 4 sets out reasons why committees of policyholders and service providers are desperately needed to weigh in during Health Republic’s liquidation. Part 5 focused on the third-party vendor contracts themselves, as well as the summary of the estate’s expenses posted on the Health Republic website. Part 6 concerned an October 11th appearance in the Liquidation Court that began with counsel’s description of the Liquidator’s claim adjudication procedures, but resulted in the Court’s directing the Liquidator to post on the Health Republic website a balance sheet and requests for proposals from an outside firm to review the claims in order to complete the first step in the adjudication process, in this case, the preparation of explanations of benefits (EOBs) for what was then 650,000 unresolved claims.  A transcript of those proceedings and the previous proceedings, may also be found on the Health Republic website (http://www.healthrepublicny.org).

Parts 7 and 8 report on my application for leave to appear in the Health Republic liquidation proceedings; the arrival of another Deputy Superintendent to oversee the New York Liquidation Bureau; the Fall Meeting of the National Association of Insurance Commissioners (NAIC) in Miami; a contract entered into by the Liquidator to hire an auditor to review claims “adjudicated” by a third-party claims administrator; and a Health Republic balance sheet.

First: the Bigger Picture

Part 7 should be read in context and includes where things stand in the country and the tristate region with respect to the ACA Consumer Operated and Oriented Plan Program (CO-OP).  Of the original twenty-three CO-OPs formed under the ACA, only five remain.[1]  The New Jersey Commissioner of Banking and Insurance moved to liquidate that state’s CO-OP, Health Republic of New Jersey.[2]  Connecticut’s CO-OP, Healthy CT, ceased underwriting in July 2017[3] and is in liquidation.[4]

The Connecticut and New Jersey CO-OPs landed more softly than did Health Republic, as they were first shut down and then began run-offs that allowed policyholders to find new coverage.  By contrast, New York’s Health Republic collapsed before its 2015 policies terminated.  This forced New York’s Department of Health and DFS to scramble to find coverage for the final month of 2015.

New York delayed placing Health Republic in liquidation.  On October 27, 2015 Health Republic’s Board consented to the entry of an order of liquidation, but the then-Acting Superintendent of the DFS did not obtain an order of liquidation until May 11, 2016.  Policyholder claims in the Connecticut and New Jersey liquidation proceedings will be paid by life and health guaranty associations.[5]  New York has no guaranty association to pay Health Republic’s unpaid policyholder claims.  As a result, Health Republic’s 206,000 policyholders can look only to the estate’s assets for any recovery on their claims, and only after those claims are approved by the Liquidator and the court overseeing Health Republic’s liquidation, Supreme Court Justice Carol Edmead (Part 35).

It was in this context that I initially proposed that the Superintendent allow for committees of policyholders and health providers to participate in the liquidation proceedings.  This would allow committees to monitor the estate’s expenses and push to expedite the payment of claims, an important role played by creditor committees in bankruptcy proceedings.  When that proposal went nowhere, I moved to appear as a friend of the Court overseeing the liquidation.

A “Friend of the Court,” a “Fly in the Ointment”

An amicus curiae or “friend of the court” is a non-party to a proceeding that “call[s] to the court’s attention law or facts or circumstances in a matter . . . that might otherwise escape its consideration.”[6]  Amicus curiae often appear in appellate proceedings that address  matters of public interest.  Every year, for example, the U.S. Supreme Court receives hundreds of applications for leave to submit amicus briefs on behalf of associations, groups, companies, or individuals who want to bring to the Justices’ attention arguments or law that might otherwise not be raised.[7]

Less often, non-parties move for leave to appear in trial court proceedings, particularly in cases involving matters that may affect many persons who are not parties to the case,[8] such as when the court has been asked to construe statutes or regulations that will affect the general public.  In some cases, trial courts have even allowed non-party friends of the court to cross-examine witnesses.[9]

In Part 6, I wrote that given the absence of any creditor committees in the Health Republic liquidation — and the absence of almost any counsel speaking only for Health Republic’s policyholders — I would move for leave to appear as a friend of the court.  I moved by order to show cause returnable on November 21, 2016 and my brief and affirmation appear on the Health Republic website under the heading “Court Docket.”[10]

In my papers and during argument, I stressed that I did not seek to intervene or appear as a party in the proceeding.[11]  Counsel for the Liquidator, however, “strenuously argue[d]” that it would be a  “mistake” and “wholly unprecedented” to allow a friend of the court in a New York State insurance company liquidation proceeding.[12]  Counsel maintained that conferring amicus status would require, among other things, that the Liquidator share information regarding, for example, a possible suit by the Liquidator against the federal government, and that my having access to this information might infringe on attorney client and work-product privileges.[13]

The Court ultimately denied my application rather than “writ[e] a case of first impression . . . that . . . the Appellate Division will probably reverse immediately because…[t]hey don’t want to open a flood gate.”[14] The Court, however, did enter an order that allowed me to continue to write and bring to the Court’s attention “discrete issues” concerning Health Republic’s liquidation.[15]  As the Court put it during argument:  “…I don’t have to give you any official title for you to continue to be the fly in the ointment, in a good way, ointment.  All you have to do is just keep doing what you are doing.  If you write to the Court and say . . . [for example] I think you should really speak to them and get them to consider [bringing] Federal cases. I will follow up on it.”[16]

Although disappointed, I’m in either good (or bad) company when it comes to applications to appear as an amicus in proceedings involving troubled ACA CO-OPs.  The Federal Court of Claims recently denied an amicus application filed by the U.S. House of Representatives in an action brought against the federal government by Health Republic Insurance (Oregon).[17]  In another case, another Federal Court of Claims denied an application by insurance company plaintiffs in other cases against the federal government to participate as friends of the court.[18]

Although I was not seeking to advance any particular party’s or person’s position in the Health Republic liquidation, much less amend any pleadings, I take comfort in the Court’s kind words about my “dedicated work and thorough submissions”[19] and appreciate the Court allowing me to continue in my role as a fly in whatever ointment remains in Health Republic.

A New Deputy Superintendent; Auditing the “Adjudicator”

A few days before the November 21, 2016 return date on my order to show cause, counsel for the Liquidator asked me to adjourn the motion so that a new Deputy Superintendent could familiarize himself with the motion.  I declined[20] because every day’s delay in the liquidation proceeding adds to the estate’s expenses and ultimately reduces the funds available to pay policyholder claims.  Counsel for the Liquidator withdrew his request to adjourn the motion.

On the return date, the new Deputy Superintendent at the Bureau, David Axinn, stopped by Part 35 to listen to the argument on my friend of the court motion, even though Mr. Axinn was not officially appointed until November 28th.[21]  Mr. Axinn, a Columbia Law School graduate, served as an Assistant Solicitor General under New York Attorney General Eliot Spitzer.  Mr. Axinn then served as Special Counsel to the New York Liquidation Bureau and worked on a request for bids for Midland Insurance Company, in Liquidation, at a time when Eric Dinallo headed up the then-Department of Insurance (and also served as Midland’s Liquidator).[22]

After his tenure as Special Counsel, Mr. Axinn joined Millennium Partners/Millennium Management, a global investment firm that, according to its website, manages more than $30 billion in assets and operates from offices in the U.S., Europe, and Asia. Mr. Axinn was Millennium’s Chief Compliance Counsel until he returned to the Bureau in November 2016.

As one of his first official acts at the Bureau, Mr. Axinn wrote to the Court on December 12, 2016 to advise that the Bureau had hired a claims auditor to “review all unpaid [Health Republic] Policy Claims for the period January 1, 2014 through November 30, 2015, that were previously examined and recommended for allowance or disallowance by Health Republic’s claims administrator.”[23]

To put this in context, in Part 6 we reported that the Court had rejected an earlier attempt by the Bureau/Liquidator to hire an audit firm to review 650,000 unpaid Health Republic claims, weed out all duplicate claims, and confirm that the claims were covered by Health Republic policies.[24]  When first told of the Liquidator’s plans to hire this unidentified auditor, the Court immediately directed the Liquidator’s outside counsel to prepare a request for proposal (RFP), post the RFP on the Bureau’s website for at least 20 days, and then tell the Court what firm the Liquidator proposed to hire.[25]

Mr. Axinn’s December 12th letter, which appears on the Health Republic website,[26] announced that only one firm, Truven Health Analytics (Truven), had submitted a proposal to review Health Republic’s unpaid claims, which Mr. Axinn described as now approaching 700,000, an increase of 50,000 unpaid claims.  Truven is a big data health specialist that IBM purchased in February 2016 for $2.6 billion.[27] In an IBM announcement issued at the time of the purchase, IBM describes Truven as “a leading provider of cloud-based healthcare data, analytics and insights…”[28]

According to Mr. Axinn’s letter, Truven would review all 700,000 claims for $102,000, a contract with Truven was being drafted, and data would be “migrated” to Truven before the end of the year in order for Truven’s audit to begin in January 2017.  This would allow the Bureau to issue Explanations of Benefits (EOBs), which would serve as proofs of claim in the Health Republic liquidation.

I wrote to the Court the following day[29] and pointed out that in his letter Deputy Superintendent Axinn gave no explanation for the dramatic increase in unpaid claims.  I asked whether these additional 50,000 claims may have come from policyholders who, having not heard from the Liquidator, had re-submitted their claims.

I also pointed out that Truven’s proposed role might duplicate services being provided by POMCO, Inc. (POMCO).  The POMCO contract, also posted on the Health Republic website, stated that the Superintendent hired POMCO to receive, capture, review, adjudicate, finalize, re-open (if necessary), and adjust Health Republic claims.[30] The POMCO contract also specifically  provided for POMCO to review up to 12,000 transactions for claims received after March 2016.

The POMCO agreement had been entered into in March 2016, before the Superintendent moved to liquidate Health Republic, and called for a payment of $4 million for services that POMCO performed from December 1, 2015 through and including January 31, 2016 as further “consideration” for POMCO’s entering into the March 2016 contract.[31]  In addition, the 2016 contract provided for POMCO to be paid a flat fee of $181,818 per month starting in March 2016.[32]  The 2016 POMCO contract terminated on December 31, 2016.

The Health Republic Claims Expense Summary posted on the Health Republic website showed that the Liquidator paid POMCO $181,818 in each of the months of May, June, July, August, September, October, and November 2016.  Notably, the Alvarez and Marsal (A&M) contract, also available on the Health Republic website, calls for A&M to “oversee []the vendors who handle claims and distributions . . . ”[33]  The proposed contract with Truven raised the question of what Truven would be doing if the Liquidator was already paying POMCO to “adjudicate” all Health Republic unpaid claims and was also paying A&M to oversee POMCO.

In addition, the Truven contract,[34] under the sub-heading “Volume,” referred to Health Republic’s “[u]p to 130,000 members,” even though Health Republic had 206,000 policyholders.  The data sources to be reviewed by Truven included POMCO’s “Adjudicated But Unpaid Medical Claims.”  The Truven contract also stated, under the heading “Truven Health Responsibilities,” that Truven would “electronically re-adjudicate 100% of claims to identify potential adjudication errors.”

Mr. Axinn executed the Truven contract on December 20, 2016, without the Court’s approval.  This begged many questions, some of which were addressed during a January 11, 2017 status conference convened on short notice by Justice Edmead, which is discussed in Part 11.

A Balance Sheet, of Sorts

Part 6 reported on a request during an October 11, 2016 conference that the Liquidator post a balance sheet for Health Republic.[35]  Shortly before the November 21st return date on my friend of the court application, a balance sheet appeared on the Health Republic website.[36]  The balance sheet, which is unaudited and as of September 30, 2016, shows Health Republic with “total assets” of $99 million and “total liabilities” of $466 million.  This gave policyholders at least an inkling of the possible value of their approved claims.  The balance sheet, however, is sprinkled with footnotes that raise many questions.

For example, the balance sheet shows $52 million in amounts recoverable from federal reinsurance.  Is this true reinsurance that the federal government acknowledges?  Has any of this reinsurance money been collected? Is the federal government offsetting these amounts against risk corridor or other funds arguably due Health Republic?  The balance sheet also shows an “accrued retrospective receivable” of $432 million that is then backed out of the asset calculation.  Does this represent potential payments due from the federal government?

With respect to liabilities, the balance sheet shows $216 million in policyholder claims and loss adjustment expenses, but another $191 million entry is denominated as a “risk adjustment payable.”  Does this refer to risk adjustment payments that Health Republic arguably owes other health insurers?  An accompanying footnote 4 states that the “risk adjustment payable” is “subordinate to policyholder claims and related expenses,” but footnote 4 is also assigned to the $23 million start-up loan from the federal government.  And the $271 million dollar solvency loan from the federal government is denominated, in footnote 6, as a surplus note that may only be paid with the Superintendent’s permission.  Does the U.S. Department of Health and Human Services agree with these characterizations?

Outside counsel for the Liquidator told the Court that the Liquidator had been focused “like a laser beam”  on “bringing in money from the Federal Government.”[37]  The balance sheet showed what was at stake, but what the Superintendent intended to do about moneys owed by the federal government remained a mystery. The Bureau’s representative at a January 2017 status conference would not share anything with the Court other than to confirm that discussions with the federal government were underway.

The NAIC Fall 2016 Meeting

The National Association of Insurance Commissioners (NAIC)[38] holds three national meetings each year. For the past several years, the NAIC held its Fall national meeting in Washington, D.C.  Although all eyes were on Washington, in 2016 the NAIC met in Miami, Florida for its third annual meeting. Approximately 1,600 regulators, agents/producers, vendors, lawyers, and lobbyists attended.

The NAIC is a large organization with a lot of territory to cover.  As result, the NAIC assigns its work to dozens of committees, sub-groups, working groups, and task forces.  During the year, these committees and groups confer at regional meetings and via conference calls.   When the committees, sub-groups, and task forces convene at annual meetings, the meetings are open to anyone who pays the price of admission, about $700. A few of the meetings and conference calls at the national meeting  are designated as regulator-to-regulator sessions and are closed to the public, including those who paid to attend the national meeting.

I attended the Fall 2016 meeting in Miami to learn what meetings the NAIC and those insurance commissioners with failed CO-OPs in their states had planned to address the almost two dozen CO-OPs in run-off or receivership. I began by inquiring before the meeting about the NAIC CO-OP Solvency and Receivership (B) Subgroup (of the Health Insurance and Managed Care (B) Committee) (CO-OP Sub-Group).  The CO-OP Sub-Group includes all of the commissioners or directors in states with CO-OPs.  I saw, however, that the CO-OP Sub-Group’s meeting in Miami had been designated as “Regulator Only.”  I called the CO-OP Sub-Group support liaison person (every NAIC committee, group, task force, or sub-group has an NAIC staff person assigned to it) to ask why the meeting was closed, only to learn that the meeting had been canceled.

I wrote to the CO-OP Sub-Group Chairs, Commissioner Nick Gerhart (Iowa)[39] and Katherine Wade (Connecticut), to point out that closing the meeting appeared to violate the NAIC’s Policy Statement on Open Meetings.  I also pointed out that anyone interested in the CO-OPs could easily find out a lot about them, including where they were located, how much business they had written, the size of the federal government’s solvency and start up loans, and other information that had emerged as a result of lawsuits against the federal government commenced by state insurance superintendents in their roles as liquidators.

I noted that since the failed CO-OPs were capitalized only with taxpayer moneys and, given the number of CO-OP policyholders with unpaid claims, the CO-OPs’ fate was a matter of considerable public interest. I also pointed out that the failed CO-OPs did not appear on the agenda for a meeting of the Receivership and Insolvency [E] Task Force (Receivership Task Force), which did meet at the  Miami NAIC conference.  I received no response to my letter, but learned that the CO-OP Sub-Group might meet via conference call in lieu of convening at the Fall meeting.  That conference call, however, would also be confidential and regulator-to-regulator only.

At the Fall meeting I spoke about Health Republic to the International Association of Insurance Receivers (IAIR).  I also attended the Receivership Task Force meeting where I discovered that the CO-OPs were not only omitted from the Task Force’s agenda (and were not discussed at the Receivership Task Force meeting), but were also not included in the Receivership Task Force’s proposed 2017 charges.[40]  I asked at the Receivership Task Force meeting that the CO-OPs be added to the 2017 charges.  I subsequently wrote to the Receivership Task Force urging that the CO-OPs be added to the 2017 charges so that the NAIC would provide the public some access to information on the CO-OPs’ fates, but I never received a response to my letter.

The subject of CO-OPs did come up in an informal Receivers Guaranty Fund Liaison Committee  (Liaison Committee) meeting sponsored by IAIR.  The Liaison Committee is not an officially-recognized NAIC committee, but includes several current and former insurance regulators and persons employed by or working with various state guaranty associations. Among other things, the Liaison Committee discussed the CO-OPs in the context of how guaranty associations in those states that have health insurer guaranty associations would soon be dealing with both the failed CO-OPs and the recent failure of long-term care provider Penn Treaty Insurance Company.[41]  Those attending the Liaison Committee meeting also discussed lawsuits that have been brought against the federal government to recover loss corridor, loss adjustment, and other moneys.  The majority of those attending the Liaison Committee meeting believed that even if the CO-OPs prevailed in their suits against the federal government, none of the failed CO-OPs would be revived for several reasons, including insufficient recoveries in the suits underway and the dispersal of the CO-OPs’ staffs.

This is not to say that the NAIC has turned its back on the CO-OPs.  The CO-OPs were probably discussed in meetings of the Financial Analysis [E] Working Group (FAWG), which consists of regulators who focus on troubled insurance companies.  FAWG’s meetings are confidential for obvious reasons but FAWG ordinarily stops discussing failing insurers after the companies enter formal rehabilitation or liquidation proceedings.

For whatever reason, the NAIC has chosen not to take the lead with respect to the CO-OPs.  Whether this is a missed opportunity to demonstrate that state regulators can work together to address a shared problem or just another example of red state v. blue state warfare over health care, those looking for a coordinated response to the CO-OPs failures should not waste their time with the NAIC.

Back to New York

I returned to New York to find Mr. Axinn’s December 12th letter, discussed above, waiting for me.  The Claims Expense Summary on the Health Republic website had been updated.  Since May 11, 2016, Health Republic’s Liquidator had spent $5,415,622, all without Court approval.  Meanwhile, Health Republic had 700,000 in unpaid claims, not one of which had been identified as post-audit-“adjudicated,” much less paid.

Health Republic’s Liquidator is not saying where the federal government stands with respect to Health Republic’s reinsurance and its start-up and reserve loans.  Two New York State senators, Senator James Seward, Chair of the Senate Insurance Committee, and Senator Kemp Hannon, Chair of the Senate Health Committee, have written to the Superintendent asking about Health Republic’s liquidation proceedings and expenses incurred.[42]  The Court has directed that the Liquidator not sign any more contracts with third-party administrators or vendors without the Court’s approval and the Court may be holding hearings on the estate’s expenses.  We’ll turn to this, and more, in Parts 10, 11 and 12.

 

  • [1] See, e.g., CO-OP Catastrophe: Total Losses Near $1.9 Billion (Jan. 10, 2017) https://energycommerce.house.gov/news-center/blog-posts/ CO-OP-catastrophe.  Note: this blog takes a highly partisan view of the CO-OPs and promises that “House Republicans have a Better Way . . . .”
  • [2] L. Washburn, Nonprofit health insurer won’t be coming back to N.J., http://www.northjersey.com/story/news/health.2017/01/06/nonprofit-health-insurer-wont-coming back-nj/96243482/.
  • [3]Financially unstable’ Connecticut Obamacare co-op now under state supervision, https://www.cnbc.com/2016/07/05/financially-unstable-connecticticut-obamacare-co-op-now-under-state-supervision.html.
  • [4] Affordable Care Act Insurer Ordered Into Liquidation, Mealey’s Litigation Report: Insurance Insolvency, Vol. 28, # 8 (December 2016), p. 9.
  • [5] A. Becker, Insurance Department will seek to liquidate HealthyCT, (December 2, 2016), http://ctmirror.org/2016/12/02; L. Washburn, Nonprofit health insurer won’t be coming back to N.J.; http://www.northjersey.com/story/news/health/2017/01/06/nonprofit-health-insurer-wont-coming back-nj/96243482/.
  • [6] Kruger v. Bloomberg, 1 Misc. 3d 192, 195, 768 N.Y.S. 2d 76, 80 (Sup. Ct., New York Co. 2003), quoting Kemp v. Rubin, 187 Misc. 707, 708, 64 N.Y.S.2d 510 (Sup. Ct., Queens Co. 1946).
  • [7] These additional briefs may or may not be read; during the 2015-2016 term, amicus briefs were filed in 98% of the U.S. Supreme Court’s cases. (That translates into almost 800 amicus briefs.)  Franze and Anderson, Record Breaking Terms for Amicus Curiae in Supreme Court Reflects New Norm, National Law Journal, August 19, 2015.
  • [8] Empire State Ass’n of Assisted Living, Inc. v. Daines, 26 Misc.3d 340, 342-3, 887 N.Y.S.2d 452, 455-6 (N.Y. Sup. Ct., Albany County 2009) (challenge to proposed regulations for nursing homes).
  • [9] Dawe v. Silberman, 185 Misc. 335, 337,  56 N.Y.S.2d 902, 904 (Municipal Court, Queens Co. 1944).  And “[w]here a person is uniquely qualified to give relevant testimony, the court, in the exercise of its discretion, may call the amicus curiae to give testimony.” Kruger, 1 Misc. 3d at 196, citing Matter of George “Joey” S., 194 A.D.2d 328, 329, 598 N.Y.S.2d 229, 230 (lst Dep’t 1993).
  • [10]  Health Republic Docket, Items 55, 56 and 57.
  • [11] Memorandum in Support of Motion, p. 8, Affirmation in Support of Motion, ¶ 5, p. 2.
  • [12] Nov. 21, 2016 Trans., pp. 24-25.  The transcript appears on the Health Republic Docket, Item 64.
  • [13] Nov. 21, 2016 Trans., p. 39.
  • [14] Nov. 21, 2016 Trans., p. 34.
  • [15] Order entered on November 21, 2016, Health Republic Docket, Item 63.
  • [16] Nov. 21, 2016 Trans., p. 34.
  • [17] Health Republic Insurance Company v. United States, 129 Fed. Cl. 115 (2016) (U.S. House of Representatives denied leave to file a brief arguing that the United States should move to dismiss suits filed against the Health and Human Services Centers for Medicare and Medicaid Services for risk corridor payments).
  • [18] Land of Lincoln Mutual Health Insurance Company v. United States, 2016 WL 5900196 (Fed. Cl., Oct. 7, 2016) (Court rejected applications by Health Republic Insurance Company and Moda Health Plan, Inc. to appear as amicus in support of Land of Lincoln’s risk corridor suit).
  • [19] Order, Health Republic Docket, Item 63.
  • [20] November 18, 2016 letter to Justice Edmead, Health Republic Docket, Item 62.
  • [21] Health Republic Docket, Item 66.
  • [22] See NY Liquidation Bureau Seeking Private Buyer for Billion-Dollar Midland Insurance Company, NYLB Press Release, dated March 4, 2009.  Mr. Dinallo had served as an Assistant Attorney General under then-Attorney General Spitzer.  Scott Fischer, who headed up the NYLB when Health Republic first entered liquidation, now serves as the Executive Deputy Superintendent of the Department of Financial Services and previously served as an Assistant Attorney General at the New York State Attorney General’s Office.
  • [23] Letter from Deputy Superintendent Axinn to Justice Edmead, dated December 13, 2016, p. 1, Health Republic Docket, Item 67.
  • [24] Curious Liquidation: Part 6.
  • [25] October 11, 2016 Trans., pp. 23-26; Curious Liquidation: Part 6.
  • [26] Health Republic Docket, Item 67.
  • [27] IBM Watson Health Announces Plans to Acquire Truven Health Analytics for $2.6B, Extending Its Leadership in Value-Based Care Solutions, https://truvenhealth.com/media-room/pressreleases/detail/prid/185/ibm-watson-health-announces-plans-to-acquire-truven-health-analytics.
  • [28] Id.
  • [29]  Health Republic Docket, Item 68.
  • [30] POMCO Agreement, Attachment A – Fees and Run-Out Services. You may read the POMCO Contract online on the Health Republic website under the heading “Key Documents” and then “Vendors.” Don’t look under “Vendors” because that heading deals with those who sold products and services to Health Republic before it failed, i.e., estate creditors.  Of course, POMCO falls into a couple of slots as a party to a contract entered into after the Board stepped down, but before Health Republic’s liquidation order was entered.
  • [31] POMCO Agreement, Section Five – Compensation of POMCO.
  • [32] POMCO Agreement, Attachment A, pp. 11-12.
  • [33] Alvarez & Marsal Engagement Agreement dated November 24, 2015, Section 1, p. 3.
  • [34] Exhibit 1, Audit Services.
  • [35] Curious Liquidation: Part 6.
  • [36] The balance sheet may be found on the Health Republic website under Key Documents: Balance Sheets.
  • [37] Nov. 21, 2016 Trans., p. 39.
  • [38] For those not familiar with this organization, the NAIC is an association comprised of all the state insurance superintendents, commissioners, and directors in the United States (and Puerto Rico, Guam, the U.S. Virgin Islands, and the District of Columbia).  For more on the NAIC, its history and how it functions, see http://www.naic.org.
  • [39] Commissioner Gerhart, who had taken the lead on issues relating to the CO-OPs, resigned days before the NAIC Fall meeting.  T. Leys, Insurance Commissioner Gerhart stepping down, December 5, 2016,  http://www.desmoinesregister.com/story/news/health/2016/12/05/insurance-commissioner-gerhart-stepping-down/95016750/.
  • [40] The NAIC adopts annual “charges” that serve as mission statements for the NAIC’s many committees, sub-committees,  task forces, and councils.   Every year in August or earlier, these groups begin to prepare their proposed charges for the following year.  The proposed charges are then submitted to and ultimately adopted  by the NAIC’s Executive Committee at the NAIC Fall meeting.   The charges may also be amended at the other two national meetings.  The CO-OP Solvency and Receivership (B) Subgroup, which operates within the Health Insurance and Managed Cared (B) Committee, has as its sole charge for 2017 the following: “Provide a forum for state insurance regulators to discuss and share information through conference calls and meetings on the status of the Consumer Operated and Oriented Plans (CO-OPs) created under the [Affordable Care Act].”    These “conference calls and meetings.” however, are all regulator-to-regulator calls and meetings that the public cannot listen in on or attend.
  • [41] J. Distefano, Pa. braces for largest health insurance failure in U.S. history, http://www.philly.com/philly/business/columnists/20161016_Insurer_Takeover.html.
  • [42] Health Republic Docket, Item 70.

Updated and reprinted with permission from Law360, New York. February 16, 2017.