The Washington State Insurance Commissioner yesterday ordered an Idaho health insurer to stop doing business in the state, alleging the...

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The Washington State Insurance Commissioner yesterday ordered an Idaho health insurer to stop doing business in the state, alleging the company evaded rules meant to ensure that the company has enough money to pay customer claims.

The state issued a cease-and-desist order against Employer’s Resource Management of Boise, saying it is not authorized to provide health coverage in Washington.

The action appears to be a first by the Insurance Commissioner’s Office against a type of health plan gaining popularity nationwide called “multiple-employer welfare arrangements,” or MEWAs. The arrangements gather small businesses, self-employed people and others together to buy group coverage so members can get cheaper rates than by buying insurance individually.

But MEWAs generally aren’t subject to the same strict state licensing requirements as traditional insurers. That has led to concerns about solvency and potential for fraud. George Gersema, chief executive of Employer’s Resource, yesterday disputed that the company had violated state regulations. Because the company operates a benefit plan for “several” state businesses under a common tax-identification number, each is a single-employer plan subject to federal — not state — oversight, he said.

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Gersema said the company, which has done business in 50 states, will not seek new customers in Washington but will continue to cover the ones it has. He said he resented that the insurance commissioner would portray his 20-year-old company as illegal. “My plan is legitimate,” he said.

The investigation was triggered by a dispute over a hospital bill for an employee of Fidalgo Medical Associates of Anacortes, which was a customer of Employer’s Resource. The hospital charges were eventually paid. The Insurance Commissioner’s Office said Fidalgo’s 52 employees have “since been switched to legitimate health plans.”

Stephanie Marquis, an insurance commissioner’s spokeswoman, said the state acted because it needs direct oversight of insurers to make sure they have adequate reserves to pay claims.

The Insurance Commissioner’s Office said Idaho and Virginia have similarly cracked down on Employer’s Resource, and the company has appealed.

Kyung Song: 206-464-2423