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Fraudulent Health Plan Thwarted In Texas

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NU Online News Service, March 28, 2:56 p.m. – Texas Insurance Commissioner Jose Montemayor on Wednesday issued a cease-and-desist order to stop what he says is an unauthorized entity from selling health insurance policies to Texas consumers for the fourth time in one year.

Montemayor’s latest order is directed at Ajax Health Benefit Plan, Ajax Enterprises Inc. and Justin Michael Sciarra, the owner and president of both companies, which are located in Audubon, N.J., according to the Texas Insurance Department Web site.

Along with the cease-and-desist order, Montemayor ordered the companies and Sciarra each to pay $1 million in administrative penalties within 30 days.

While unlicensed and unauthorized to sell insurance in Texas, Ajax Health Benefit Plan, Ajax Enterprises Inc. and Sciarra began selling health care coverage in September 2000, and they claimed to be a health care plan established and operated in accordance with the Employee Retirement Income Security Act of 1974. About 250 Texas residents were enrolled in the plans that terminated Jan. 31, 2001, according to the insurance department.

Enrollees in the Ajax Health Benefit Plan were required to become “employees” of Ajax Enterprises Inc., a purported staff leasing company. However, the enrollees neither worked for Ajax Enterprise Inc., nor did Ajax pay them wages, according to the department.

A notice of hearing was sent by certified mail to both companies and Sciarra informing them of their right to defend the allegations against them. No response was received, according to the insurance department.

“It looks like they’ve taken the money and run,” says Texas department spokesman Mark Hanna.

Hanna says the number of fraudulent health insurance plans discovered so far this year is likely due to a combination of attractiveness to consumers trying to save money with low premiums and vigilant enforcement by the department.

The Texas department is considering disciplinary action against licensed insurance agents in Texas who sold or accepted commissions from the sale of these plans, Hanna says.

Montemayor recently issued a bulletin to agents warning them of the consequences of marketing or selling unauthorized insurance. Agents and consumers can verify if an insurance entity is licensed by calling the department’s Consumer Protection Help Line at 1-800-252-3439 or checking the agency’s Web site at