PORTLAND — Oregon insurance regulators took Zoom Health Plan into receivership after they “became aware of a material difference between the company’s 2016 annual financial statement and its actual financial condition,” state officials said Monday.
The Oregon Insurance Division has been on site at the offices of the upstart Portland insurance company since April 5, after they took the company into supervision. At the time, Zoom had informed the state it was exiting the business after sustaining big losses in 2016.
In the ensuing weeks, state officials became aware of the discrepancy between Zoom Health’s financial numbers and reality, said Lisa Morawski, spokesman for the Oregon Insurance Division.
She declined to elaborate.
Len Bergstein, a spokesman for Zoom, said the company has been cooperating with state regulators. Zoom has $9 million in the bank, more than enough to handle its responsibilities to its customers, Bergstein added.
David Sanders and Albert DiPiero, both medical doctors and classmates at the University of Michigan, founded ZoomCare in 2006. Sanders, the brash visionary, hopes his company will help revolutionize the business of health care with a chain of clinics offering same-day care, online scheduling and transparent pricing.
The company currently boasts 35 clinics in the Portland metro area, Salem, Vancouver and Seattle. The clinics are not subject to the receivership.
ZoomCare diversified into insurance, which it called Zoom Health, earlier this decade. It was attempting to build an integrated health care model — like a mini-Kaiser Permanente — in which Zoom’s insurance customers were treated at Zoom clinics. Bergstein said about half of Zoom Health’s 2,700 customers get their health care from ZoomCare clinics.
In 2014, the Portland private equity firm Endeavour Capital bought a stake in the company. According to ZoomCare financial statements, Endeavour owns 20 percent of Zoom Health.
But the move into insurance was exquisitely ill-timed, coming just as the industry and the public struggled to adjust to the Affordable Care Act. Zoom Health lost $3.8 million in 2015 and another $4.7 million in 2016.
Last year’s loss slashed its capital in reserve by half and left the company perilously close to the minimum capital surplus required, according to state regulators.
Rather than attempt to recover and rebuild, Zoom Health told regulators they had opted to leave the business. It did so, Bergstein said, in large part due to the mounting uncertainty about whether President Donald Trump will succeed in reshaping federal health care policy.
State insurance regulators appointed a receiver Friday to take charge of the operation. The 2,000 customers with Zoom Health group policies will be moved to different carriers. The remaining 735 customers in the individual market will have to find new coverage on their own when their Zoom policies lapse at the end of the year.
Zoom is the third new insurance carrier in Oregon formed since passage of the Affordable Care Act to exit the business. Insurance companies are dealing with tremendous uncertainty as Trump and Congressional Republicans try to repeal and replace the Affordable Care Act.
