Illegal Plan Fined Millions:

Texas Insurance Commissioner José Montemayor levied fines totaling $12.5 million against the operators and chief marketer of a fraudulent health care plan that enrolled approximately 7,200 Texas residents. The unlicensed plan, called Employers Mutual LLC (EM), allegedly left patients, physicians and providers with up to $50 million in unpaid claims, nationwide. One unpaid Texas claim totaled $70,000. Montemayor’s order fined William R. Kokott and Nicholas E. Angelos, both of Carson City, Nev., $5 million each. It levied a $2.5 million fine against American Benefit Society (ABS), later renamed Association Benefit Society of Turnersville, N.J. Kokott and Angelos were EM’s sole managers and officers. Agents recruited by ABS received commissions in the range of 30 percent to 40 percent. To date, more than 30 agents who sold the EM plan have been fined and ordered to pay the unpaid health care claims of their victims. Many had their licenses revoked and additional agent cases are pending. The order found that Kokott, Angelos and ABS had illegally engaged in the business of insurance in Texas without the licenses required by state law and had misrepresented EM as a legitimate insurance plan. Montemayor ordered EM in October 2001 to stop selling insurance in Texas. EM and its principals also are under a Nevada federal court’s preliminary injunction halting its nationwide insurance activities and freezing its assets. Employers can verify whether a plan is licensed by calling TDI at (800) 252-3439. Some scams claim to be “ERISA” plans exempted by federal law from state licensing requirements. However, legitimate ERISA plans are created by employers and/or labor unions and, therefore, are not sold.