The Colorado Division of Insurance took legal action this week to assume control of the assets of Friday Health Plans of Colorado, which enrolled about 30,000 Coloradans in individual HMO plans.
Colorado’s action follows that of Texas, where Friday’s Texas affiliate was placed into receivership in that state in March and its assets put up for liquidation.
Colorado’s action seeks rehabilitation, a form of receivership, that could allow the company to stay in business for the rest of 2023.
According to the National Association of Insurance Commissioners, in rehabilitation, a plan is devised to correct the difficulties that led to the insurer being placed in receivership and return it to the marketplace.
“Friday’s problems are national — the company’s aggressive growth in other states around the country got ahead of their financing,” a Colorado Division of Insurance announcement (DOI) said on June 1. “While Friday Health Plan of Colorado has maintained the capital required by Colorado law, the problems in other states and with the parent company are now impacting the company here.”
DOI halted enrollment in Friday plans in May. It is seeking a receivership order from Denver District Court, filed Wednesday, according to a DOI announcement. The agency asked that Colorado Insurance Commissioner Michael Conway be appointed as receiver with authority to administer the company’s assets.
The reason for the action is the company’s inability to raise capital in order to pay claims, which DOI said means the parent company has become insolvent. The insurance department earlier petitioned the court to seize the Colorado company, which was granted on June 7.
Friday’s board of directors has consented to the rehabilitation order, the agency said.
The Colorado entity still has funds, DOI Communications Director Vincent Plymell said in an email Thursday.
“If the petition is granted, receivership gives the Commissioner, as receiver, the authority to take possession of the assets of Friday Health Plans of Colorado, as well as the administration of those assets. As receiver, the Commissioner would also have the same authority as the company’s directors and officers to take any necessary actions for the company,” he wrote.
“We are thankful to the Board of Directors and the management of the parent company of Friday for their consent in this matter. We urge their continued cooperation to avoid policyholder disruption both in Colorado and in other states to the greatest extent possible,” Conway said in Wednesday’s announcement.
The insurance department indicated the reason for seeking rehabilitation rather than liquidation is to protect the coverage of Friday subscribers in Colorado who continue to pay their premiums through the end of the year.
Health care providers will still be paid for their services based on existing contracts with Friday’s Colorado affiliate. However, should the company be unable to do so, the Colorado Guaranty Association will cover claims up to a statutory cap of $500,000 per each insured.
The insurance department has set up a website to address any questions for those impacted by the company’s problems.
Friday Health Plans of Colorado is the fourth in the past year to announce it is leaving the Colorado market, following similar decisions by Bright Health, Humana and Oscar Health. Collectively, the four companies enrolled about 219,000 Coloradans.
