Federal postal inspectors are conducting a criminal investigation into possible mail fraud violations by The Oath, a New Orleans-based health insurer that collapsed in financial ruin earlier this year.
The Postal Inspection Service last month inserted a notice of the probe into a civil lawsuit against Barry Scheur, the Boston healthcare consultant who launched The Oath's Louisiana HMO in 1999. The suit was filed by First Bank and Trust Co. of New Orleans against Scheur, his wife, Scheur Management Group and The Oath over millions of dollars in defaulted loans that Scheur personally guaranteed.
The criminal investigation is the latest setback for Scheur, whose 82,000-member HMO was abruptly declared insolvent and placed into receivership by the Louisiana Department of Insurance in April. The state agency is now preparing to liquidate the HMO to pay back creditors. Regulators contend Scheur and top Oath executives made negligent business decisions, but they have stopped short of alleging any criminal wrongdoing.
Postal inspectors have built mail fraud cases in the past against failed insurance companies, basing the charges on false financial reports filed with the state that made their businesses look healthier than they were. -- by Laura Benko