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News Release: 99-14

GRAY DAVIS, Governor
Date: 12/23/99

WILLIAM KENEFICK, Acting Commissioner

Department of Corporations Revokes License of Greater Pacific HMO, Inc.

 

Irvine, September 23, 1999 — The Department of Corporations today announced that its Health Plan Enforcement Division served an Accusation to Revoke the Knox-Keene Act License of Greater Pacific HMO, Inc. of Orange County. The Department took this action upon the findings of a June 14, 1999 non-routine fiscal and administrative examination that concluded the plan:

  • Failed to maintain statutorily required Tangible Net Equity (TNE),
  • Failed to demonstrate that medical decisions are rendered by qualified medical providers,
  • Failed to file a Notice of Material Modification regarding changes to the plan and its operators, and
  • Failed to timely file financial statements.

In response to the Department’s findings, a conservator was appointed by the Orange County Superior Court on June 25, 1999 to oversee the administration of the plan. Once the Conservator, Russell T. Manns, had analyzed the overall status of Greater Pacific HMO, Inc., it was evident that the health plan had violated a number of provisions of the Knox-Keene Act. Mr. Manns confirmed that Greater Pacific HMO, Inc. was in serious financial condition with a reported TNE deficiency of ($774,489) and was operating without a medical director. Furthermore, the health plan lacked the administrative capacity necessary to conduct routine business operations or process claims and was delinquent in its accounts payable, including capitation payments to providers.

Greater Pacific HMO, Inc., a full-service health care plan with approximately 2,400 subscribers and enrollees, is located at 46 Corporate Park, Suite 100, Irvine, CA 92606. The action to revoke the health plan’s license is due to the Department’s concern that the continued operation of the health plan would constitute a substantial risk to its subscribers and enrollees. On August 12, 1999, the health plan notified its subscribers that it would terminate coverage of health benefits, effective September 12, 1999.

Editor's Note: As of July 1, 2000 the Health Plan Program and the administration of the Knox-Keene Health Care Service Plan Act of 1975, as amended by the 1999 HMO reform legislation, has transferred to the new Department of Managed Health Care (www.dmhc.ca.gov).

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