PRESS RELEASE

21 South Fruit St, Suite 14, Concord, NH 03301 – 603-271-2261 – www.nh.gov/insurance

For Immediate Release Media Contacts:

Leslie Ludtke
leslie.ludtke@ins.nh.gov
or
Richard McCaffrey
richard.mccaffrey@ins.nh.gov
603-271-2261
603-271-1406 - FAX

INSURANCE COMMISSIONER ISSUES SHOW CAUSE ORDERS

Concord, NH – April 15, 2009 NH Insurance Commissioner Roger Sevigny announced

today that the New Hampshire Insurance Department has issued an Order to Show Cause
against Health Management Advisors, LLC (HMA) and HM Life Insurance Company.
An individual show cause order has also been issued against HMA’s regional sales
manager, William O’Brien, for conducting unlicensed insurance consulting and
brokerage activities in New Hampshire. The show cause orders result from an extensive
investigation conducted by the insurance department over the past five months. This
investigation disclosed illegal activity that was harming New Hampshire small businesses
and their most vulnerable employees, and subverting the health insurance market in New
Hampshire.

HMA Direct claimed to employers that it had pioneered a new type of self-insured
arrangement that would significantly reduce the cost of health insurance to the employer.
Under this arrangement, HMA Direct told the employer that it required health
information for all of the employees in order to provide the employees with a life
insurance policy as a “bonus”. In fact, HMA Direct did not use the information for life
insurance, but instead used the information to “carve out” sick employees from the
employer’s health plan, and in some instances left those carved out employees with no
insurance whatsoever.

Due to the serious nature of the violations alleged, the Show Cause Order seeks to revoke
the third party administrator and producer licenses held by HMA Direct and to suspend
HM Life Insurance Company’s license to write insurance in New Hampshire for a period
of one year. The Show Cause Order also imposes the maximum administrative fine
allowed under New Hampshire.

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