Clinic centers leave state control with $9 million in cash reserves

FOR IMMEDIATE RELEASE 
July 28, 2009
Contact: Jason Moon  517-335-1700

LANSING - The Office of Financial and Insurance Regulation (OFIR) is pleased today to announce that Ingham County Circuit Court Judge William Collette has approved OFIR's order to release The Wellness Plan (TWP), formerly a Detroit-based HMO, from rehabilitation. In 2003, the financially strapped TWPwas placed into court-ordered rehabilitation and the OFIR Commissioner was named rehabilitator. The rehabilitation process allowed OFIR to restore TWP to financial solvency, and to transform the company into a clinic network focused squarely on serving the community. TWPis now a vital alliance of three state-of-the-art Federally Qualified Health Centers (FQHC) serving the Greater Detroit area.  

"The Wellness Plan Medical Centers are positioned for success," OFIR Commissioner Ken Ross said. "I have every hope and expectation that the organization will flourish."

Highlights of OFIR's rehabilitation include:

• New Management Team:  Anthony King was hired as CEO and Executive Director of TWP.  He is a widely recognized leader with operational skills and deep experience in health care, which have earned him widespread recognition and a reputation for operational and financial turnaround expertise. Dr. Margaret Betts was appointed Chair of TWP's new Board of Trustees. As medical director of the Detroit-based Betts Medical Group, Betts is one of the country's foremost physicians in practicing internal and holistic medicines.

• Resolved Medical Malpractice Cases:   At the time of rehabilitation, there were over 50 pending malpractice cases; the rehabilitator negotiated and paid nearly $9 million to settle 28 cases. The remaining cases were settled with no liability to TWP.

• Assets and Investments:  By cutting costs, selling assets and obtaining FQHC-Look-Alike Status, TWP is being released from rehabilitation with over $9 million cash on hand and nearly $14 million in property and equipment.

• Tail Coverage:   OFIR facilitated the purchase of medical malpractice tail coverage providing coverage for past exposure in the amount of $1 million/claim and an aggregate of $10 million.

• Federally Qualified Health Center :  OFIR facilitated the application for Federally Qualified Look-Alike Health Center status, a federal designation that allows TWPto receive enhanced reimbursements for Medicare and Medicaid patients and enables it to serve underinsured and uninsured populations in Detroit.  TWPclinics, which were losing hundreds of thousands of dollars per month, are now profitable.

• TWP 's Creditors Paid:

Medical providers                                      $16,700,000

Malpractice claims                                       8,997,256

General creditor claims                                 2,656,993

Federal government                                         349,000

Late claims                                                    161,022

State and local government claims                     60,653

Total                                                        $28,924,924

• TWP 's Assets Marshaled:

Sale of membership                                  $22,693,471

Sale of real estate                                        6,190,000

Provider refunds                                           1,200.000

Commercial premiums                                    864,261

Drug suits                                                        75,000

Total                                                        $31,122,732

For more information on The Wellness Plan, visit: http://www.wellplan.com.

For more information on OFIR's rehabilitation of The Wellness Plan, visit: http://mich.gov/dleg/0,1607,7-154-10555_13251_25450---,00.html .