Department issues Cease and Desist Order to protect California employers from unauthorized “self-insured” health plans
News: 2019 Press Release
LOS ANGELES, Calif. — The California Department of Insurance (CDI) issued a Cease and Desist Order effective immediately upon NexGen Insurance Services, Inc., Riverstone Capital, LLC dba Riverstone Capital Insurance Services, LLC and its owner/operators Travis O. Bugli, James C. Kelly and Robert M. Clarke.
Parallel investigations by CDI and the U.S. Department of Labor (DOL) revealed that NexGen and Riverstone have been operating as an unauthorized MEWA (Multiple Employer Welfare Association), an arrangement that offers or provides health and welfare benefits to employers and their employees.
The Cease and Desist Order alleges that NexGen and Riverstone were marketing, soliciting, and selling purported “self-insured” health plan arrangements to employers, not health insurance, in violation of California law. NexGen and Riverstone failed to pay medical provider claims totaling approximately $24 million dollars, exposing employers and their employees to risks and significant financial liabilities. The investigation revealed NexGen’s and Riverstone’s business practice of pooling and commingling contributions received from its employer clientele into its own corporate accounts.
“This company and its owners misrepresented their ability to pay medical claims, putting employers and their employees in immediate danger,” said Insurance Commissioner Ricardo Lara. “We took action to stop these illegal practices and ensure the safety of California workers and employers.”
Under CDI’s Cease and Desist Order, NexGen and Riverstone are to immediately stop operating any MEWA directly or indirectly or acting as an insurance agent, producer, insurer, or any other capacity in the State of California for which they do not hold a valid license, permit, or Certificate of Authority to do so. The companies are to immediately cease and desist from receiving any money, commission, fee, rebate, payment, remuneration, or any other valuable consideration whatsoever, directly or indirectly, in connection with any MEWA transactions.
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- Cease and Desist Order
- Promoters of MEWAs have typically represented to employers and State regulators that the MEWA is an employee benefit plan covered by the federal Employee Retirement Income Security Act (ERISA) and, therefore, is exempt from State insurance regulation. Effective November 30, 1995, the state of California has prohibited the creation of any new self-funded MEWAs.
- The U.S. Department of Labor has obtained a temporary restraining order in the U.S. District Court for the Central District of California against Riverstone Capital LLC; NexGen Insurance Services Inc.; and NGI Brokerage Services Inc. (collectively, “Riverstone”) and the individuals that operate it. Full news release: https://www.dol.gov/newsroom/releases/ebsa/ebsa20190211
- On February 07, 2019, the U.S. District Court for the Central District of California issued a temporary restraining order freezing all assets of Riverstone and appointed Receivership Management, Inc. (RMI) as the temporary independent fiduciary, successor trustee, and plan administrator. RMI shall marshal assets, pay urgent claims, communicate with impacted entities and persons, and design and implement a fair process for paying out claims to the extent feasible. More information is available at RMI’s website at: https://www.receivermgmt.com/riverstone-nexgenhealthplan.
Led by Insurance Commissioner Ricardo Lara, the California Department of Insurance is the consumer protection agency for the nation's largest insurance marketplace and safeguards all of the state’s consumers by fairly regulating the insurance industry. Under the Commissioner’s direction, the Department uses its authority to protect Californians from insurance rates that are excessive, inadequate, or unfairly discriminatory, oversee insurer solvency to pay claims, set standards for agents and broker licensing, perform market conduct reviews of insurance companies, resolve consumer complaints, and investigate and prosecute insurance fraud. Consumers are urged to call 1-800-927-4357 with any questions or contact us at www.insurance.ca.gov via webform or online chat. Non-media inquiries should be directed to the Consumer Hotline at 800-927-4357. Teletypewriter (TTY), please dial 800-482-4833.