SIMI VALLEY : Firm Told to Stop Health Plan Sales

A Los Angeles Superior Court judge Wednesday agreed to shut down a Simi Valley firm that has been accused of selling health insurance without a state license.

Judge Robert H. O'Brien issued a preliminary injunction that orders Physicians Benefit Plan to stop selling health coverage plans to individuals, court officials said.

"It orders them not to continue that business," Deputy Atty. Gen. Susan Henrichsen said. "They cannot continue to sell that plan unless they obtain authorization from the commissioner of insurance's office and comply with all laws of the state of California."

Although the company was ordered to freeze its accounts, it can still pay customers' medical claims with permission from the court or state insurance regulators, Henrichsen said. "We have already authorized payment of legitimate claims," she said.

The state Department of Insurance has alleged that Physicians Benefit Plan has sold coverage without a license, engaged in misleading advertising and violated an earlier cease-and-desist order.

At the request of state officials, O'Brien issued a temporary restraining order May 7 that instructed the business to stop selling policies for 20 days.

The injunction issued Wednesday remains in effect until the case goes to trial or the company obtains approval from the state to resume selling health plans. The company can also appeal O'Brien's ruling.

Administrators at Physicians Benefit Plan and their attorneys have declined to comment on the state's allegations. According to court documents, the company has argued that it is affiliated with a labor union regulated by the federal government and therefore is exempt from state insurance rules.

The company's Simi Valley office remained open this week, but a receptionist said the business operating there now is called Unified Benefit Plan.

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