Mo. men must pay $1.2M for insurance scheme

JEFFERSON CITY, Mo. -- The state insurance department has ordered two southwest Missouri men and the companies to which they're connected to pay a total of $1.2 million for a health insurance scheme.

The state accuses Kevin W. Louderback of Springfield and his employee, Justin R. Barnes of Battlefield, of fraudulently enrolling hundreds of Medicaid-eligible people with United Healthcare health insurance through the not-for-profit Citizens for AIDS Assistance and Prevention.

Louderback said Thursday that he had been targeted. He denied doing anything wrong.

"We were made to look like the bad guys when we were just trying to help people out," he said. "It's done nothing but continue to cause harm to us."

Louderback said he wrote insurance policies for the Springfield-based not-for-profit because disabled people with private insurance are generally seen more quickly by doctors than those who are covered under the state Medicaid program.

Louderback said he worked with United Healthcare in drafting the policies that Citizens for AIDS Assistance and Prevention provided to employees who were paid to help recruit more people to join.

A spokesman for United Healthcare said the insurance policies were designed to be used for full-time employees and their dependents.

"It was something that was set up where they were full-time employees, and he did not provide the information showing that they were full-time employees," said United Healthcare spokesman Greg Thompson.

The state insurance department also determined that Louderback and Barnes wrongly sought reimbursement for broker's fees and the entire premium instead of just the employees' share through the state Medicaid program.

For example, according to the department, United Healthcare was owed about $444,000 for April 2007 premiums. But the state reimbursed the not-for-profit roughly $538,000 through the Health Insurance Premium Payment Program. That health insurance premium program determines whether it is cheaper for the state to pay through Medicaid or purchase private insurance for the applicant.

Louderback said it would be impossible for a health insurer to stay in business if it were permitted to bill only for the literal cost of a product without also collecting for the administrative costs of producing it.

"It's like going to the store and buying a product," he said. "The price of that product is not just what's contained in the container."

Louderback, his company Premier Financial Services, Barnes and the not-for-profit each were fined $300,000.

But Louderback said Thursday that negative publicity about the insurance department's investigation into his business and the not-for-profit effectively killed both entities.

He said there's no way for the state to ever collect on the fine.

"Neither of the two business that they've named have any assets or income whatsoever because of their actions, and I have no assets or income and neither does Mr. Barnes," Louderback said. "So I have no clue what they're trying to obtain with that judgment."

The fines were handed down by the insurance department last month, but were not announced until Thursday by the governor's office. Gov. Matt Blunt in a written statement identified the case as an example of fraud and waste identified by his administration.

"Our state will not tolerate those who use underhanded tactics to cheat Missouri consumers or our state's health care delivery system for the vulnerable," Blunt said.