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MICHIGAN-BASED HEALTH INSURANCE COMPANY FILES SUIT AGAINST SELECTCARE

MICHIGAN-BASED HEALTH INSURANCE COMPANY FILES SUIT AGAINST SELECTCARE
 MADISON HEIGHTS, Mich., Sept. 24 /PRNewswire/ -- The following was released today by First Security Life and Health Assurance Company:
 A Michigan-based health insurance company today filed at $13 million lawsuit against Selectcare, Inc., charging the latter with deliberately misrepresenting the claims experience of Selectcare-operated Preferred Physician Organizations (PPOs).
 The suit contends the misrepresentations cost First Security Life and Health Assurance Company (formerly National Retirement Insurance Company) and its reinsurers millions of dollars and threatened the company's continued operations in the late 1980s.
 "We were able to survive due to the dedication of our employees, and a major cash infusion by our major stockholder, Richard F. Mazur, and members of his family," according to First Security Life President Daniel K. Timmons. "Our recovery was nothing short of remarkable given the massive hole created for us by Selectcare, Inc."
 According to the suit, Selectcare withheld claims and concealed its serious claims backlog when negotiating rates with First Security Life. As a result, the insurer established premium rates well below the actual costs of providing the coverage. By the time the true extent of the claims backlog was discovered, First Security Life had sustained millions of dollars in losses.
 Filing of the suit was delayed until now to allow company officials to focus their full energies to re-establishing the solvency of the company, said Timmons.
 "Our first priority was to assure that all policyholder claims were paid in full. Next we had to concentrate on financial performance, demonstrate our recovery and re-establish our good standing with the Michigan Insurance Bureau. We accomplished all of those goals late last year.
 "Now, the time has come for Selectcare, Inc. to answer in court for the role it played in damaging our company and its stockholders."
 -0- 9/24/92
 /CONTACT: Daniel K. Timmons of First Security Life and Health Assurance Company, 313-585-7900/ CO: First Security Life and Health Assurance Company; Selectcare, Inc. ST: Michigan IN: INS HEA SU:


SB -- DE028 -- 3234 09/24/92 15:40 EDT
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Publication:PR Newswire
Date:Sep 24, 1992
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