Friday Health Plans has been in the crosshairs of the Colorado Division of Insurance since June 2022, and now the department has petitioned the Denver District Court for an order for rehabilitation of the troubled health insurer.
The DOI, part of the Department of Regulatory Agencies, has had Friday Health Plans of Colorado under supervision since June 2022. In recent months, the parent company, Friday Health Plans, has been unable to raise the capital needed in order to continue. At the end of May, the parent company informed the DOI that it would wind down its business activities throughout the country, and would work with state insurance regulators on that process. On June 6, the DOI petitioned the court to seize the company and the court granted the petition on June 7.
Now, that inability to raise capital means that the parent company has become insolvent, which puts Friday Health Plans of Colorado into jeopardy, the DOI said in a news release. It is because of what the DOI called “the hazardous condition of the company” that the division is requesting to put Friday Health Plans of Colorado into rehabilitation. The parent company, through its board of directors, has consented to the rehabilitation order.
Under such an order, the Colorado Insurance Commissioner will be appointed as receiver, with the authority to administer the company’s assets. As the receiver, the commissioner is granted authority to take any necessary actions to protect policyholders, creditors, claimants and the public.
The division now awaits an order from the court granting the petition or setting a hearing date on the matter.
Impact to Friday Health policyholders
The DOI said a key reason in seeking the rehabilitation order is to protect the coverage of those who currently have a Friday Health Plan policy. The order will allow the DOI to evaluate Friday Health’s ability to continue through the end of the plan year. The DOI will continue to provide updates as the situation evolves.
As part of Friday Health’s management of its various state entities, Friday used vendors for the core of its operations. To help maintain continuity for members, the DOI is working to continue those operations after Friday stops working with those vendors.
However, policyholders must continue to pay their premiums to continue coverage, the DOI said.
Earlier this month, Friday Health announced it would cease operations by the end of the year in the seven states in which it does business. Friday covers between 300,000 and 400,000 in the states of Colorado, Georgia, Texas, Nevada, New Mexico, North Carolina and Oklahoma and employs between 300 and 400 employees, the Alamosa (Colo.) Daily Courier reported. Friday is based in Alamosa.
“Friday Health Plans has grown incredibly quickly, which is a testament to the strength of our mission of delivering affordability, simplicity and outstanding customer service,” the company said on its website. “Unfortunately, Friday has been unable to scale our financial infrastructure to match the pace of our growth and secure the additional capital required to run our business. While we are deeply disappointed, we agree with the decision of our state regulators that it is necessary to wind down Friday’s business operations over time in accordance with the regulations in the states where we are operating.”
Friday stopped offering coverage in Texas and New Mexico in November amid concerns about the increasing costs of enrolling more members.
Colorado regulators began prohibiting Friday from enrolling new members in the state last month. If Friday Health Plans cannot make it until the end of the year, the Colorado Life and Health Protection Association would step in to help members cover medical costs up to $500,000 each.
In late May, Nevada Insurance Commissioner Scott Kipper filed legal action with the Nevada District Court to place Friday Health Plans of Nevada under receivership due to growing concerns about the “reliability of Fridays. financial reporting to the Division.”
Also in May, regulators in Georgia forced Friday Health into receivership due to “reported insolvency and inability to raise additional funds from outside investors.”
Last week, Friday Health Plans of Oklahoma was placed into receivership after it was placed under the supervision of the Oklahoma Insurance Department, insurance commissioner Glen Mulready announced. In April, the North Carolina Department of Insurance placed the company in a state of “suspended suppression,” effectively barring the company from selling any more insurance. Last week, North Carolina became the latest state to put Friday Health Plans in receivership, with Insurance Commissioner Mike Causey announcing his department will file a petition for receivership.
On March 23, the Texas Department of Insurance placed Friday Health Insurance Company Inc. (Texas) into liquidation in that state. Texas Insurance Commissioner Cassie Brown was appointed to liquidate and take possession of the company.
And in November, health insurance agents who told InsuranceNewsNet that the carrier had not paid them commissions since the end of August received those payments for the months of September and October.
Friday Health was founded in 2015 when Sal Gentile and David Pinkert bought the Alamosa-based insurance company Colorado Health Plans Inc. They soon renamed the company Friday Health Plans.
The post Colorado seeks rehabilitation order for Friday Health Plans appeared first on Insurance News | InsuranceNewsNet.