Louisiana Insurance Commissioner Jim Donelon is taking control of a failed insurance cooperative created in response to the Affordable Care Act.
Louisiana Health Cooperative, a not-for-profit insurance company created with $56 million in federal loans made possible through the federal health care law, announced in July it would discontinue all policies in January 2016.
Donelon has secured an order from the 19th Judicial District Court that grants him the right to take full possession and control of the company.
In a statement sent to media Tuesday (Sept. 1), Donelon called the move “in the best interests of its policyholders and providers, as well as taxpayers.”
State law authorizes Louisiana’s insurance commissioner to petition the court to take control of an insurer when certain conditions are met, including “when an insurer is found to be in such condition that its further transaction of business would be hazardous to its policyholders, its creditors or the public.”
Under the court’s rehabilitation order, the commissioner is expected to appoint a “receiver” to take possession and control of all of the organization’s property and assets. Court filings show that role will be filled by Billy Bostick, a CPA and consultant who has led previous receiverships for the Department of Insurance.
Louisiana Health Cooperative had 17,000 customers when it announced it would be shutting down operations, according to figures from the Department of Insurance.
Donelon’s office said the state’s take-over of the company’s affairs should not affect policyholders, saying they should approach the matter as “business as usual.”
“They should continue to pay premiums in the same manner, schedule doctors appointments and be assured that their policies will be honored,” a media statement from Donelon’s office said. “No one’s health insurance policy will be canceled.”
Louisiana Health Cooperative was formed in 2011 by a core of people closely affiliated with Ochsner Health System. Its board at one point included four Ochsner executives, including CEO Warner Thomas.
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Contact Steven G. Cosby, MHSA, Group Health Insurance Broker and Agent with Cosby Insurance Group, with questions or to request more information and to schedule a healthcare plan evaluation, savings analysis or group plan solution for your company.