Conservator Appointed for Greater Pacific HMO

The California Department of Corporations took control of Irvine-based Greater Pacific HMO Inc. on Friday, after the company’s most recent financial statements showed its assets had sunk below state-mandated limits.

An Orange County Superior Court judge appointed a conservator to oversee the company’s assets.

Greater Pacific, which was founded in 1995, has 2,200 enrollees, most or all in Orange County, said Julie Stewart, spokeswoman for the Department of Corporations. The conservator will ensure enrollees do not suffer interruptions in care as the state works to transfer them to other providers, Stewart said.

The department’s action was triggered by a financial review that found that Greater Pacific had lost $50,000 in May and had fallen behind on its bills and on payments to health-care providers and patients.

During the investigation, examiners also learned that James L. Graf, Greater Pacific’s vice president of operations, had been sanctioned in October 1998 by the California Department of Insurance.

Records show that a cease-and-desist order was issued against Graf, alleging he had operated another insurance company--Prime Care Health Network Inc.--from 1995 to 1997 without a license and had diverted about $380,000 in premium income.

Greater Pacific could be subject to fines for violating state laws governing health-care networks or may file for bankruptcy, Stewart said. Another hearing on the case is scheduled for July 8.