CoOportunity was one of the Consumer Operated and Oriented Plan (CO-OP) insurers created with Patient Protection and Affordable Care Act (PPACA) startup loans. Last fall, when news of the company’s financial problems surfaced, it was covering about 100,000 people in Iowa and Nebraska.
Arthur Gamble, a chief district judge, appointed Nick Gerhart, the Iowa commissioner, to liquidate the company. He appointed Dan Watkins to be the special deputy liquidator in charge of day-to-day liquidation operations.
For now, the guaranty associations in Iowa and Nebraska will take responsibility for the remaining CoOportunity insureds’ claims and pay the claims through the ordinary CoOportunity claim administration process.
The associations can terminate individual policyholders’ coverage after giving the policyholders’ 180 days’ notice.
The associations can cancel group coverage after giving employer plan sponsors at least 30 days’ notice.
“The liquidator shall provide brokers and agents of CoOportunity notice of the amount of any commission claim they may have against CoOportunity as reflected on the books and records of CoOportunity,” the judge says. “Brokers and agents at CoOportunity are not required to submit a proof of claim against CoOportunity unless they dispute the amount of their claim as reflected on the books and records of CoOportunity or they did not receive notice from the liquidator of any such claim.”
Also in the liquidation order, the judge says that:
Brokers and agents should submit any proofs of commission claims by Dec. 15, 2015.
All parties involved with CoOportunity, including agents and brokers, should keep any CoOportunity-related records they have.
Any party that has CoOportunity funds or other assets should transfer the assets to the liquidator immediately.
The liquidator should list CoOportunity’s assets within 120 days, then report on the status of the insurer’s estate on Oct. 1 and March every year.
The judge says CoOportunity failed because claim costs were outstripping its supply of cash, the U.S. Department of Health and Human Services (HHS) refused to provide more money, and the insurer was unable to count money it expected to receive from one of the three PPACA risk-management programs, the risk corridors program, as an asset for solvency calculation purposes.
Since regulators put the company under a supervision order, on Dec. 16, 2014, adverse claim experience has continued to reduce the company’s surplus, the judge says. The judge says the company lost $163 million in calendar year 2014 and ended the year with just $13.4 million in cash and invested assets.
The company’s liabilities exceeded assets by $48 million at the end of 2014. The company reported a $4.6 million operating loss for January 2015, and it ended January with liabilities exceeding assets by about $51 million.
“CoOportunity has been unable to obtain additional operating funds,” the judge says.
The judge does not say whether there is any chance of the CoOportunity estate paying commissions. Whether the company pays commissions may depend partly on how much cash, if any, CoOportunity gets from the PPACA risk-management programs.