Earlier this week, the U.S. Department of Labor filed a complaint in the U.S. District Court against Medova Healthcare. The complaint alleges a significant misuse of plan assets across at least 2,600 participating health plans serving more than 35,000 employees in 38 states.
The DOL alleges Medova’s misuse of funds created a critical funding deficiency for their Lifestyle Health Plans in excess of $18 million.
Per the news release:
The complaint alleges that the Medova defendants – acting as fiduciaries for the underlying ERISA-covered plans – violated several provisions of ERISA. Specifically, the Medova defendants allegedly commingled funds, diverted funds to corporate accounts and other companies they controlled, and used funds belonging to one plan to pay the claims of another. The Department alleges the defendants made material omissions to current and prospective participating employers regarding the MEWA’s failure and its ability to pay claims, as well as the overall financially hazardous condition of the MEWA. Lastly, the complaint alleges that the Medova defendants failed to file the Form M-1 on an annual basis for the Medova MEWA, as required under ERISA. The Form M-1 provides custodial and financial information on MEWAs as well as information on ERISA compliance.
The complaint asks the court to require Medova to disgorge all profits and fees and other monies earned in connections with their violations.
Lifestyle Health Plans
Medova’s Lifestyle Health Plans is generally geared towards smaller employers looking for a more flexible and cost effective health insurance arrangement compared with a traditional fully-insured health plan with a major insurance carrier. Program features include a level-funded payment arrangement, member wellness incentives, and turn-key plan designs. Medova touts its value-based provider reimbursement methodology, transparency, and innovative pharmacy programs as part of their unique approach to controlling medical costs.
