Health Insurance Innovations, Inc. Addresses Misleading Information in the Marketplace
12 Setembro 2017 - 10:06AM
Health Insurance Innovations, Inc. (NASDAQ:HIIQ), a leading
developer, distributor, and virtual administrator of affordable
health plans, held a conference call yesterday to give a management
update. As a follow-up to that call, the Company today
provided the following statement to address certain misleading
information in the marketplace, including information in a
third-party investor report issued yesterday:
Indiana Multistate Examination
The Indiana Multi-State examination is an open matter, where the
lead regulators have not yet provided any written findings, or a
framework for resolution. A third-party report published
yesterday referred to a potential estimated combined fine amount of
$100 million, which the author based on unstated or inapplicable
data points. This amount does not correspond to any
estimates, analyses, or communications undertaken or made by the
Company, and the Company does not believe that this number has any
basis in fact. The Company has cooperated fully and in a
transparent manner in all matters.
Closed Regulatory Matters
HIIQ’s regulatory matters are publicly disclosed in SEC filings,
after working diligently with counsel to provide appropriate detail
related to any active investigations. Closed matters, such as
those in Arkansas (released from its C&D Aug. 2016) and Ohio
(closed Aug. 2017), neither of which concluded with regulatory
action from the respective states.
Florida TPA license
As previously disclosed by the Company, in June 2017 the Florida
Office of Insurance Regulation (“OIR”) denied the Company’s
application for licensure as a TPA based on the OIR’s determination
that the Company had not provided all information required to
process the application. In June 2017, the Company appealed
the denial with the Florida Division of Administrative Hearings in
order to preserve its rights. A final hearing on the appeal was
originally scheduled for October 17-20, 2017, but the
proceeding is on hold, and the Company is currently engaged in a
dialogue with the OIR on a potential resolution that would enable
the Company to withdraw the appeal and either re-submit the
application or engage in discussions regarding whether the OIR will
require the Company to hold a TPA license at all.
In a report issued yesterday by a third party, the author of the
report mischaracterized certain disclosure questions that arose
during the application process regarding prior legal proceedings
involving Michael Hershberger, the Company’s Chief Financial
Officer. In connection with the licensing application
process, the Company received comments from OIR about the need to
disclose certain prior legal proceedings involving Mr.
Hershberger. Those legal proceedings involved Mr.
Hershberger’s prior business as a real estate developer in the Dane
County, Wisconsin area. One case involved a monetary claim
(and not a foreclosure) that was quickly settled, and another case
was one in which Mr. Hershberger was mistakenly named as a party
(and from which Mr. Hershberger was therefore dismissed). Mr.
Hershberger has provided all requested information, and no
information is outstanding in regard to these matters.
These matters are not significant, and there are no “undisclosed
legal actions against HIIQ insiders”. Similar misleading statements
were made in the third-party report regarding legal proceedings
involving Michael Kosloske, as those proceedings involved a car
accident and an employment agreement dispute with a prior employer,
both of which Mr. Kosloske initially believed were not responsive
to the requirements of the TPA application, but we subsequently
provided.
In addition to the above, a third party yesterday took out of
context a statement made by counsel to the Company in a letter to
OIR regarding a “domino effect”. The Company’s counsel was making a
reference to the fact that an application denial would likely be a
disclosure item on all future licensing in other states, which
would add significant work to future licensing efforts in those
states.
Since its inception, the Company has operated in the State of
Florida under an Agency License issued by the Florida Department of
Financial Services that allows the Company to sell insurance
products in the state. Many states, including Florida, have
statutes that require the licensure of TPAs, and the statutes and
applicable regulations vary from state-to-state with respect to the
nature of the business activities that may require licensure.
Because the Company’s business model does not fall into the
category of business activities ordinarily contemplated by state
TPA statutes, the need for the Company to become licensed as a TPA
in a particular state is not always clear and generally involves an
analysis and dialogue with applicable state regulators. As of
today, the Company applied for and obtained TPA licenses in
approximately 34 states, and applications in 8 states are pending,
and in other states the Company confirmed that licensure is not
required. The Company has operated in the State of Florida
since its inception, and based on discussions with the OIR, the
Company determined that its business activities likely require
licensure as a TPA even though the Company is not a traditional
TPA. Although the Company has pursued the licensure process
described above, the Company believes that further contemplated
dialogue with OIR could result in a conclusion that TPA licensure
is not necessary, and otherwise the Company intends to seek such
licensure and has since provided all information requested by the
OIR. The OIR has not to date informed the Company that it
intends to request that the Company modify its business activities
in Florida, and the Company is in regular communication with the
OIR on other compliance matters.
About Health Insurance Innovations,
Inc.
HIIQ is a market leader in developing innovative health
insurance products that are affordable and meet the needs of
millions of health insurance plan shoppers. HIIQ develops insurance
products through partnerships with best-in-class insurance
companies and markets them via its broad distribution network of
licensed insurance agents across the nation. HII's data-centric
paperless business model is facilitated by its Consumer Division
that provides real-time data used to identify opportunities and
underserved needs in the health insurance market. HIIQ's Consumer
Division includes AgileHealthInsurance.com, a
website for researching, comparing and purchasing Term
Health insurance products
and HealthPocket.com, an independently
managed free website that compares and ranks all health insurance
plans, and uses objective data to publish unbiased health insurance
market analyses and other consumer advocacy research. Additional
information about HIIQ can be found at
HiiQuote.com.
Investor Contacts
Mike Hershberger, Health Insurance Innovations, Inc.
1-877-376-5831 x282 John Evans, Investor Relations, PIR
Communications, 415-309-0230, ir@hiiquote.com
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