Blackwell's Insurance Department Intervention Raises Questions About Ties To Christian Health Care Company

House Speaker Pro Tempore Gus Blackwell, an examination of a transcript of House proceedings and other documents reveals, last week tried unsuccessfully to convince Insurance Commissioner Kim Holland and her staff to intervene on behalf of an organization in regulatory trouble that also provides health coverage to Blackwell and his family.

Circumstances of the request have some at the Capitol invoking the case of former Insurance Commissioner Carroll Fisher. In 2004, lawmakers (including Blackwell) voted to impeach Fisher for, among other things, intervening in an independent hearing by personally assuming the role of hearing examiner and approving the application of the Gene Phillips Group of Texas. The Phillips group later gave Fisher about $20,000 in furnishings.

Four years later, Blackwell last week urged Holland and her employees to essentially duplicate Fisher's actions by intervening on behalf of an organization, Medi-Share, that's in regulatory trouble and also provides health coverage to Blackwell and his family. Blackwell has said that he and his family are members of Medi-Share and have been for two years.

On the floor of the House on May 23, Blackwell declared, "All I'm asking, and I called this morning the chief legal counsel [of the Oklahoma Insurance Department], is just withdraw your argument against the stay. Allow the stay to be put into effect for them to continue to operate while a higher court looks at this. He refused."

The controversy was the subject of a lengthy article in Tuesday's Journal Record in Oklahoma City. Reporter Janice Francis-Smith wrote that, "Oklahoma Insurance Commissioner Kim Holland shut down a Christian health care organization and lied about it, state Rep. Gus Blackwell told his fellow lawmakers on Friday in the chamber of the state House of Representatives. Holland, in a later phone interview, said she did not lie, but she had to take action regarding an organization that calls itself a 'ministry' but which the courts have determined behaves in every way like an insurance company." (Read the entire story at http://www.journalrecord.com/article.cfm?recid=89221.)

Blackwell's request to Holland's staff came as the House considered Senate Bill 1189, which, with a proviso, would allow the Florida-based, not-for-profit Christian Care Ministry’s Medi-Share program to resume doing business in Oklahoma. The bill does not automatically allow Medi-Share to go back into business unless it conforms to the law, which requires members to share directly, member to member, not member to Medi-Share and with subsequent disbursement to a member. The bill passed and is now on Governor Henry's desk for his action on it.

Due to a lawsuit filed by Oklahoma pastor Andy Bowman after Medi-Share denied him coverage for more than $27,000 in medical bills related to heart complications, District Judge Joe Vassar ruled that Medi-Share was in fact an insurance company and not merely a "medical bill-sharing ministry" as company officials claimed.

As a result of the court ruling, Holland issued an "emergency cease and desist order" that would allow the company to continue paying its members' eligible health-care costs while banning it from taking new members.

Medi-Share appealed the order through a two-day administrative law hearing conducted in November 2007. Following that hearing, Judge Leamon Freeman agreed that Medi-Share was operating as an insurance company.

That decision is now being appealed and Blackwell acknowledged on the floor of the House that he had attempted to enact legislation this year that would prevent regulatory oversight of Medi-Share.

However, Blackwell's efforts were thwarted, a fact he acknowledged on the floor of the House on May 23.

Sources say this is the second time Blackwell has attempted to use his power as speaker pro tempore to benefit an insurance entity under scrutiny for alleged ethical or regulatory transgressions.

In 2006, Holland supported legislation allowing a company to make commercial real estate loans based on a cap of 2 percent of assets, patterned after a national model.

However, legislation offered in a House committee that year would have raised that amount to 20 percent. Only three insurance companies, all tied to the Phillips family of Texas, sought the higher 20-percent cap.

In addition to his ties to Fisher, Phillips had a long history of regulatory problems and had faced federal fraud, conspiracy and racketeering charges at one point; those charges, however, were dismissed.

During the Fisher impeachment process, House officials reviewed documents that indicated Phillips and his associates had been involved in nine financial, real estate or insurance companies that went bankrupt, into receivership, or were the subject of litigation.

According to documents that became public during the Fisher impeachment process, Phillips and his associates had been the target of regulators or lawsuits in at least four states by 1999 - California, Florida, Texas and Utah.

Phillips' long history of regulatory troubles had led insurance officials to oppose his efforts to enter the Oklahoma market and engage in real estate speculation.

Although not a member of the committee hearing the Phillips' legislation in 2006, Blackwell as speaker pro tem has the ability to attend any meeting and vote on any piece of legislation, a rarely used power he employed to provide the deciding vote needed to pass the controversial Phillips' language out of committee.

Earlier this year, it was revealed that Blackwell was among House Republican leaders who attended a fundraising event at Phillips' Dallas home for GOP presidential candidate Mike Huckabee.

Blackwell has become a controversial figure. He was a candidate for House speaker to replace Lance Cargill when The Oklahoman revealed he had been repeatedly late in paying his property taxes. He said he mistakenly thought he had until March 31 to pay property taxes on his home and three rental properties in Goodwell. He said except for one or two years he had met that deadline, usually paying around February. He withdrew from the speaker's race following the revelation.

Although Medi-Share touts itself as a medical bill-sharing ministry, state regulators believe it is acting as an insurance company and merely using different terms, such as referring to premiums as members "gifts."

During the November 2007 administrative hearing, Ronald Baldwin, president of Christian Care Ministry (parent company of Medi-Share), testified that approximately 300 Oklahoma households representing about 1,000 citizens make payments to Medi-Share. Those Oklahomans pay an estimated $1 million annually to Medi-Share. Nationally, the company generated about $60 million in revenue in 2006, according to Baldwin's testimony, and the company kept 25 percent for "expenses." Baldwin said the Group Major Medical Sharing Trust, where all Medi-Share revenue is deposited, is located in the Bahamas.

Baldwin testified that Medi-Share had leased software from Eldorado Computing, Inc. to process "needs" submitted by members. He acknowledged that Medi-Share officials asked Eldorado to modify the software program to refer to "explanation of benefits" as an "explanation of sharing," and to change "claim number" to "need number."

Evidence presented during the hearing also demonstrated that Medi-Share would require payment of an "extra blessing" from members late making a monthly payment in a manner very similar to a late payment penalty at an insurance company.

Baldwin also testified that eight "elders" served as independent contractors and "were paid on the basis of folks joining Medi-Share," with some earning "over hundred thousand dollars" gross income.

During the hearing, Baldwin acknowledged that one Medi-Share official, John Reinhold, chairman of the board of Christian Care Ministry, was previously involved with Christian Brotherhood, a similar organization that ran afoul of state regulators in Ohio.

According to The Washington Post, an Ohio jury found that Christian Brotherhood Newsletter founder Rev. Bruce Hawthorn and other former officials defrauded the ministry. They were ordered to repay nearly $15 million spent on luxury houses, cars and high salaries.

Baldwin also testified that he and other employees of Christian Care Ministry are able to use health coverage through Aetna and do not have to rely on Medi-Share, although Medi-Share clients cannot have duplicate coverage.

Because Medi-Share collected and pooled member funds and then distributed them, as well as charging late penalties, state regulators feel the company is in fact an insurance entity.

Oklahoma regulators have not sought similar oversight of legitimate medical sharing ministries, such as Ministries International of Peoria, Ill., which allow individual members to contribute to other members needs on a one-to-one basis.

In addition to Oklahoma, rulings have been issued in Wisconsin, Montana, South Dakota, Illinois and Kentucky declaring that Medi-Share is an insurance company.

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