$27M in unpaid claims tied to Guardian failure
A South Carolina insurance company has declared bankruptcy, stranding thousands of health providers statewide with an estimated $27 million in unpaid claims for services already provided, a contractor responsible for liquidating the firm's assets said Friday.
And consumers who still have policies with the company now must pay higher premiums or, in some cases, premiums for the first time.
The bankruptcy of Guardian Healthcare, which offered Medicare Advantage policies in every county through December, is among the biggest bankruptcy filings involving a South Carolina health insurance company in state history, said Andrea Bowers, the independent contractor responsible for liquidating Guardian's assets.
The company has an estimated $8 million in assets, Bowers said. Providers should expect to receive a small percentage of what they are owed, she said.
The single entity taking the biggest loss is the Medical University of South Carolina, which has about $1 million in unpaid claims, Bowers said.
MUSC spokeswoman Heather Woolwine called the loss an "unfortunate financial situation for the hospital."
Statewide, more than 2,300 health providers could be affected, Bowers said.
Providers, which include hospitals, doctors and medical equipment vendors, have until the end of 2011 to file proof of unpaid claims with the trust liquidating Guardian's assets, she said.
The trust then will review the claims and present them to a judge in the Richland County Court of Common Pleas, where South Carolina insurance bankruptcy hearings are held, Bowers said. The court will determine how much money the health providers ultimately will get.
The process is expected to take about two years, Bowers said. Health care providers cannot pursue consumers to collect the claims unpaid by Guardian, she said.
Greenville-based Guardian formed in 2007, when it began offering plans in Greenville and Spartanburg counties, said Nick Sarant, a West Ashley insurance agent who sold Guardian policies during 2009 and 2010.
Anyone eligible for Medicare was eligible for Guardian's Medicare Advantage plans, which offered low or no premiums, Sarant said. The plans generally have lower co-pays than traditional Medicare plans, he said
Guardian began a marketing blitz in the year after it began operations. Its plans quickly gained popularity statewide, Sarant said.
"What do you expect when you have zero-premium plans?" he said.
The company apparently grew too fast for its own good.
The Centers for Medicare & Medicaid Services, a division of the U.S. Department of Health & Human Services, authorized Guardian to write 2,000 policies in South Carolina. It wrote 23,000 policies, but lacked sufficient reserve funds to pay for claims, Bowers said.
A spokesman for the federal department was unable to provide information about Guardian Friday.
Guardian officials could not be reached for comment this week. On Wednesday, a man who answered the phone at a number listed for Guardian said he did not know who could answer questions before hanging up.
Guardian's financial troubles had become clear by last summer, when Sarant and other insurance agents were told to halt sales of the plans.
In the fall, Guardian mailed letters to policy holders in 27 counties instructing them that plans no longer would be offered beginning Jan. 1. Those policy holders could switch to a different Medicare Advantage plan or opt to enroll in traditional Medicare.
A separate firm, Sterling Life Insurance Co., would assume all Guardian policies in the 18 unaffected counties -- including Berkeley, Charleston and Dorchester -- beginning Jan. 1, according to Richland County court filings.
Sterling paid $4 million for the policies and for the right to use the "Guardian" name, Bowers said. It assumed none of Guardian's debt, she said.
Beginning Jan. 1, monthly premiums increased for almost all remaining Guardian policy holders -- in some cases from zero to $41 or from $49 to $111, according to a letter Guardian sent to insurance agents.
The Guardian liquidation is the fifth involving a South Carolina health or life insurance company since 2000 and is the biggest during that time, Bowers said.
Reach Renee Dudley at 937-5550.