Judge closes health firms

Smart Data, ATA assets may be seized to pay medical claims By G. Chambers Williams III • THE TENNESSEAN • April 28, 2010 A judge's ruling late Tuesday could pave the way for state regulators to pay at least some of millions of dollars in medical bills left unpaid by a pair of Robertson County businesses with a national reputation for taking customers' monthly health insurance premiums and not delivering promised services. Davidson County Chancellor Ellen Hobbs Lyle ordered the permanent shutdown and liquidation of the Springfield, Tenn.-based American Trade Association and Smart Data Solutions LLC, two firms state insurance officials say collected almost $22 million from consumers nationwide and left many with unpaid bills for doctors' visits and surgeries. An appeal of the court order by Springfield resident Bart S. Posey, who owns the two companies, could postpone distribution of any money to customers in all 50 states. Posey said Tuesday night that he plans to appeal. "I'm glad justice has been served," said Karen Saltsman of Mt. Juliet, an ATA policyholder who says her medical bills were never paid. "This renews my faith in the system. Even though the appeal will probably take a long time, they have been exposed for what they are." Saltsman said she was left with unpaid bills totaling about $2,500 from doctor's appointments and visits to a pain clinic, along with $800 worth of prescription drugs. She was paying $370 a month for what she thought was an insurance policy to cover some of her bills. Barring a reversal on appeal, the Tennessee Department of Commerce and Insurance hopes to use what it says is $2.1 million in assets in company bank accounts to pay at least some of the nearly 24,000 claims that may total $5 million or more. Petition sought closure On Tuesday, Lyle ruled in favor of a petition filed March 23 by the insurance department seeking to seize and close Posey's two businesses, alleging that they were illegally selling and administering health insurance policies to dues-paying members of the American Trade Association. Neither company was licensed to sell or administer health-insurance policies in Tennessee or any other state, the regulators said. About 10 other states have issued cease-and-desist orders against the companies; national consumer advocates have warned consumers against buying ATA products. Posey, however, contends that the state has unfairly interfered with his business operations and that if left alone he would have been able to place the ATA members' health policies with a licensed insurer and licensed benefits administrator to provide services and handle claims. He says he did nothing wrong and contends that he was victimized by a Bermuda-based insurer that didn't live up to a contract to underwrite ATA's health plans. Headquarters raided The case came to a head on March 24 when state regulators raided Posey's Springfield headquarters, seized business records and froze company and some personal bank accounts. In his defense, Posey's attorneys argued that he was not acting as an insurer and that he had no obligation to pay any insurance claims out of ATA or SDS bank accounts. State officials say Posey bought the previously dormant American Trade Association from an Indiana businessman about three years ago for the purpose of selling health insurance policies to members solicited by marketing companies under contract to him. Marketers used fax blasts and other methods of advertising to seek out customers, some with pre-existing medical conditions and no other access to insurance. Consumers who signed up were paying from $200 to $700 a month, depending on which ATA membership package they selected. But consumers began to complain that most of their medical claims were never paid and that the ATA marketers had misled them by promising that their policies would cover pre-existing conditions. Posey said the policies mailed to members clearly stated that no pre-existing conditions would be covered. He acknowledged that some of the marketers may have misled people but contended that he wasn't responsible for their actions. Judge delayed ruling Lyle had ruled after an April 6 hearing that the two companies would be liquidated, but she postponed the effective date until hearing more evidence from both sides on whether the companies were truly insolvent financially. On Monday, she took testimony on the financial condition of the companies, hearing from the state regulators who raided the businesses last month. The state officials said they found boxes full of thousands of unpaid medical claims on the floor in the companies' offices in Springfield. In her Tuesday ruling, Lyle said the two businesses clearly were insolvent, which allows the state to liquidate them. She also denied a request to remove Posey and his wife, Angie, as defendants in the case, and said that any of their personal assets that were obtained by improper use of ATA and SDS funds could be confiscated and sold by the state to help pay claims. One asset in question is the ATA and Smart Data headquarters building at 4676 N. Highway 41 in Springfield. Posey wrote a check from an SDS bank account in December to pay off a $588,000 mortgage on the building, half of which he leases to the state Highway Patrol. The building is in the Poseys' names. Owner says he is broke Posey said Tuesday that he is "broke" and that his other real-estate holdings are heavily mortgaged, including his home in Springfield, a farm in Robertson County, and a weekend retreat on the banks of Lake Malone, near Lewisburg, Ky., about an hour north of Springfield. The state also has suggested that it would try to recover about $140,000 in sports contributions that Posey donated to the University of Alabama Crimson Tide boosters club from Smart Data bank accounts since last November.