An Oklahoma Insurance Department investigation has resulted in charges of obtaining money by false pretense and engaging in the insurance business without authorization against a Tulsa area man who was unlawfully selling health insurance to Oklahoma customers.
Insurance Commissioner John Doak issued an emergency cease and desist order and a $10,000 fine on March 31 against Eagle Actuary Corp. of Tulsa and 64-year-old Terry L. McCrackin, alleging violations of the Oklahoma insurance code. Subsequent investigation by the Insurance Department has found that McCrackin, a former insurance agent, sold a number of customers alleged health insurance policies that had no underwriter backing them.
McCrackin claimed to “self-insure” those policyholders, unlawfully serving as the underwriter and the claims department without being licensed and without sufficient capital to ensure payment of customer medical claims. McCrackin’s customer base was small, with only five current policyholders at the time he was ordered to cease operations. But investigation showed that McCrackin at one time had up to 13 customers and that some of his customers had paid tens of thousands of dollars for coverage from a company that often was slow to pay claims or failed to pay them at all.
“To protect consumers, Oklahoma has firm regulations governing the insurance industry. An individual simply can’t just start his own company and make his own rules,” said Insurance Commissioner John Doak. “Mr. McCrackin’s Eagle Actuary Corp. has committed a major breach of Oklahoma insurance code and of the trust of Oklahoma consumers.”
McCrackin’s activities first came to the attention of the Insurance Department on Feb. 28, when a customer submitted a complaint that insurance he purchased through Eagle Actuary Corp. beginning in April 2008 had paid nothing toward significant medical bills the policyholder had incurred between May and October of 2010. A Life and Health Analyst at the Insurance Department searched state records and found that Eagle Actuary Corp. was never a licensed insurance company in the state. When the analyst called McCrackin, he claimed to be self-insuring the policyholder and said there was no other underwriting company for the policy.
Interviewed in March by two OID Anti-Fraud investigators, the victim said he paid McCrackin $17,267.40 for health insurance from 2008 to 2010 and had in effect received no coverage at all. An investigator searched OID licensing records and found that McCrackin had been licensed as a resident producer for accident, health and life insurance from Feb. 10, 2004, until Feb. 28, 2010, at which time his license was suspended and later terminated.
On March 21, the investigators questioned McCrackin, who said there were no other officers involved in his company, reported that he was solely determining the amount of premium to charge his customers and said he alone made the decisions on which claims to pay. On March 25 a search warrant was served on the office of Eagle Actuary Corp. Evidence was seized confirming that McCrackin had initiated health insurance coverage for individuals, collected premiums and made coverage and claims decisions.
Further investigation uncovered a number of other victims who told OID Anti-Fraud officers they paid premiums ranging from $300 to $700 per month – in some cases over a period of two or three years – to receive insurance through Eagle Actuary Corp. McCrackin was at best irregular and unreliable in his payment of claims, and though one customer said that Eagle Actuary Corp. eventually paid all of her family’s claims, others were left with outstanding medical bills and out-of-pocket costs of $5,000 to $6,000 when Eagle Actuary failed to pay benefits they expected.
According to Commissioner Doak, “This prosecution should serve as a warning not only to those who intend to defraud Oklahoma consumers that the Insurance Department is on-watch, but to those consumers, as well, who must be alert to the unfortunate fact that there are sometimes those in your own community who would exploit your trust to their financial advantage.”
Doak urged Oklahomans to call the OID Consumer Assistance Hotline at (800) 522-0071 to determine before buying whether a company or individual offering them insurance or insurance-like products is licensed to do business in Oklahoma.