MD Medicare Choice, a struggling Florida-based physician-run Medicare Advantage HMO serving 16,000 senior citizens, has been placed into receivership.
A review of financial records showed MDMC, as the company is known, is financially insolvent, recording losses of $21 million since 2006. It has no cash flow.
The company, unrated by TheStreet.com because it did not submit risk-based capital figures, had been under administrative supervision with the Office of Insurance Regulation since August and fell into further financial hardship last week when its access to $27.6 million in reserves, invested in the Reserve Primary Fund of Reserve Management, was frozen by the Securities and Exchange Commission because of a $785 million loss incurred as a result of Lehman Brothers'
A Leon County Circuit Court judge late Monday ordered Tampa-based MDMC, a Medicare Advantage plan with members in 23 Florida counties, placed into receivership for the purpose of liquidation. The Department of Financial Services will work with the Centers for Medicare and Medicaid Services and Humana, which will provide replacement coverage.
Jason Weaver, an MDMC claims supervisor, said "everything is operating normally" but confirmed that CEO Antonio Marrero had departed. An undisclosed employee said on the phone that the insurance regulator will be forwarding paperwork to all claimants. There were no listings for Carlos Lugo Olivieri, a radiologist and president of MDMC, or Caribe Investment Group, the parent company. The Web site contained no information on the matter.The Reserve Primary Fund was closed and will be liquidated, creating a cash crisis that Congress has been warned about by Treasury Secretary Henry Paulson. MDMC is an unlikely victim of Wall Street's problems, an illustration of how far the crisis has spread across the country. MDMC's investments are not covered by the FDIC, and there is no guarantee it will receive more than $0.32 on the dollar, the amount indicated by the fund's owners.