Office of the Attorney General News Release Archive
Wednesday, May 29, 2002
ATTORNEY GENERAL'S OFFICE WINS JUDGMENT AGAINST COMPANY ENGAGED IN FRAUDULENT INSURANCE SCHEME
State to Receive $4 Million in Civil Penalties
AUSTIN - Texas Attorney General John Cornyn announced that the State will receive $4 million in civil penalties from a Texas-based company that sold health insurance plans without a license or authorization under the Texas Insurance Code. American Benefit Plans, which also did business as United Employers Voluntary Employees Benefit Association, sold its fraudulent health plans to approximately 30,000 people in 41 states, including 8,000 Texans.
Private businesses were the primary purchasers of the insurance plans for their employees along with cities, school districts, and churches. The State alleged that individual defendants Robert David Neal, Robert Neal Pointer, Jose Michael Mangawang, and John Baptist Ramirez (a.k.a. Johnny Rhondo) designed and sold health plans they knew were fraudulent to unsuspecting consumers. The State also alleged that, as part of the scheme, monies paid as premiums were diverted for personal uses. The company stopped paying claims in late 2001.
"This is another unfortunate example of the levels some will sink to line their pockets," said Attorney General Cornyn. "Thousands paid their hard-earned money thinking they were buying protection and peace of mind. It upsets me that a company would resort to these tactics, and I'd like for this to serve as a warning to other businesses that may be doing the same thing."
The Texas Department of Insurance referred the case to the Office of the Attorney General (OAG) in February for handling. The OAG obtained a temporary restraining order and a temporary injunction against the company in March with a trial date set for May. The case was tried before Judge Scott H. Jenkins in Travis County District Court. Although other states have issued cease-and-desist orders, Texas is the first in the nation to take American Benefit Plans to court.
In addition to the $4 million fine and a ban on the sale of fraudulent plans, the North Richland Hills company has been placed in permanent receivership. The State will receive the civil penalties only after all medical claims have been processed. Affected consumers are encouraged to contact the Special Deputy Receiver for American Benefit Plans at 800-551-4650; information is also available at www.texasreceiver.com.
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