An Irvine insurance agency was accused by the state Insurance Department Thursday of leaving 10,000 customers in the lurch by failing to buy them health and life policies that they had paid for and allowing at least $4.3 million of their claims to go unpaid.
Insurance Commissioner Roxani Gillespie said she is seeking to revoke the license of Rubell Helm Insurance Services Inc. and its principals, James B. Helm and Michael A. Rubell, for mishandling the policies of certain customers who are members of several large employer groups that had contracted to buy the policies.
‘Lacking in Integrity’
Gillespie alleged in a 13-page complaint that Helm and Rubell had been conducting themselves in a “fraudulent” and “dishonest” manner and “are lacking in integrity.”
Helm and Rubell were given 15 days to respond, after which the Insurance Department will call a public hearing before taking further action.
Helm, president of the agency which employs about 60 people, criticized Gillespie and Insurance Department investigators Thursday, accusing them of lying about the facts and not understanding the situation.
“I’m not going to claim that we never had complaints or that we are perfect. No one operates perfectly, nor is every claimant always happy,” Helm said. “But we have been acting responsibly and the claims continued to be paid.”
Helms said he resented learning of the charges from a reporter, who read him the complaint, and not from the Insurance Department directly, although he said he knew that his agency was under investigation.
These are the principal charges in the complaint signed by Gillespie and Helm’s responses:
- The department said that the Rubell Helm firm had represented to several large employer groups--including the California Assn. Builders Exchanges, American Trust Insurance Plan and Good Health Trust--that it was buying insurance policies covering their members when in fact the agency itself was acting as the insurer, a role not authorized by its licenses.
Helm said that the groups were not misled. “We have not marketed these as fully insured plans,” he said. “They are self-financed trusts. Instead of buying coverage with the premiums we received, we established trust funds out of which claims are paid, up until a certain amount. Amounts in excess are paid by obtaining coverage from a re-insurer.”
- The department said that as of the end of November last year, two of the biggest employer groups alone “had at least $4.3 million in pending claims which had not been paid.” And that from September on, the Rubell Helm firm was not releasing any health claims over $100. At one point last August, the complaint said, Rubell Helm was holding $800,000 in claims checks that it had not released.
Helm said that late last year, the firm had been hit by “massive amounts of processing errors” in its claim checks, “but these were all processed and released. All claims were eventually paid.” He charged that the Insurance Department made up the figures it gave for unpaid claims.
- The department said that two employees of the Rubell Helm firm had falsely represented themselves as deputy California insurance commissioners, and had “further displayed official-looking metal shields which they claim show that they are deputy insurance commissioners.”
“That’s an absolute lie,” Helm said. However, he said the employees are members of the “state Senate insurance commission of Sen Alan Robbins” (D-Van Nuys) and have worn badges issued by that unofficial group.
- The department said that the Rubell Helm firm had paid fees in 1988 totaling $16,542 to David Erlandson, chairman of the California Assn. of Builders Exchanges’ health trust and that these constituted a rebate in violation of California law.
Helm said this also was untrue, although he said that he paid Erlandson certain commissions on a long-term basis and now has hired him as a full-time employee.
Dennis Ward, head of the Insurance Department’s investigation bureau, said that in cases where the department is convinced that a fraud has been committed, after responses and hearings, it can refer a matter to a county district attorney for prosecution in addition to revoking a license.
Hank Muir, president of the California Assn. of Builders Exchanges and president of Continental Electric Inc. in Santa Ana, said that a “tremendous amount of the claims have been paid but not all of them.”
Muir said they have been investigating the problem since August but have not pinpointed the problem.
“We are trying to find out what’s going on and Rubell Helm has not been providing information to our satisfaction,” Muir said. “We feel it’s very unusual.”
Times staff writer Michael Cicchese contributed to this story.