Universal Health Care still has a willing buyer with a fat wallet, but its future now lies in the hands of the Department of Financial Services and possibly the court system.
The St. Petersburg-based company, founded and run by Dr. A.K. Desai, has Medicare plans in 19 states, including Florida. Universal also has a Medicaid contract with the state of Florida. Desai said the company currently has about 145,000 members.
Wednesday afternoon, Florida's Office of Insurance Regulation said it had referred the company to DFS' Division of Rehabilitation and Liquidation. Such a move indicates that the financial reserves dropped to a level below that required by law.
The referral actually occurred Feb. 1, according to DFS' press office. The company did not consent to the receivership, said spokeswoman Alexis Lambert. She said a judge will decide; it usually takes several weeks to schedule a hearing.
The referral was for two sister companies: Universal Health Care Inc. (an HMO) and Universal Health Care Insurance Co. Inc., which markets other types of network-based insurance products. HMOs and other plans are governed under separate state laws.
The holding company for the sister firms, Universal Health Care Group Inc., filed for protection from creditors under Chapter 11 bankruptcy on Wednesday, according to a release from Dr. Desai. Chapter 11 protects the filer from its creditors while it reorganizes is finances.
Desai said in the release that the company intends to merge three of its HMOs in Florida, Texas and Nevada and part of the indemnity company and sell them to America's First Choice, owned by Dr. Kiran Patel of Tampa.
"We are working very diligently on multiple fronts to achieve a constructive solution," Desai wrote in an e-mail. "We are committed to take care of our members and their needs, which is our highest priority."
Patel, an HMO turnaround guru, told Health News Florida on Wednesday that he still wants to buy the Universal properties and hopes to continue negotiating with state officials to do so.
"If the sanctity of the patient-doctor relationship is a priority in the minds of regulators -- which it should be -- then the resolution I offer should be appealing," Patel said.
In the past, state officials have been eager to find a buyer for insolvent companies so that those who supply and receive health care can continue to do so seamlessly. Sometimes, when a buyer can't be found, regulators persuade a stable company to take the insolvent plan's members in.
Patel, who has a history of turning around ailing HMOs, described his plan to buy Universal in a Health News Florida article last week. Complicating his aim, as Tampa Bay Business Journal reported on Tuesday, Bank United stepped in to take control and hired an investment banker to find a buyer.
But Desai said Wednesday night in an e-mail, "Our attorneys believe that filing of Chapter 11 will prevent BankUnited from controlling Universal."
Several rounds of layoffs at Universal's headquarters in downtown St. Petersburg have already occurred, and hundreds more employees could be facing a similar fate.
--Health News Florida is a service of WUSF Public Media. Contact Carol Gentry at 813-974-8629 or firstname.lastname@example.org.