The U.S. Department of Justice has forwarded to the FBI a request for a criminal investigation into the demise of the federally backed health insurer Health Republic.
On Dec. 7, Rep. Lee Zeldin (R-Shirley) sent a letter to U.S. Attorney General Loretta Lynch calling for “a thorough criminal investigation” to “determine what, if any, illegal actions” led to Health Republic’s closing at the end of November.
Zeldin received a response from Assistant Attorney General Peter Kadzik on Feb. 17 stating that “as a courtesy” his letter had been forwarded to the FBI.
“The FBI will determine whether an investigation is warranted,” Kadzik said in the letter.
On Sept. 25, the state Department of Financial Services announced that Health Republic — the second most popular insurer on the exchange statewide last year — was going out of business by the end of the year because of financial woes. But on Oct. 30, the state agency said it was shutting it down at the end of November because its finances were “substantially worse than the company previously reported.”
As of June, it had reported about $130 million in losses, according to state regulatory filings.
The Department of Financial Services has said it was launching an investigation into “the inaccurate representations” Health Republic made to the state about its financial condition. An agency spokesman would not comment Tuesday on the investigation.
Health Republic’s demise left about 215,000 New Yorkers, including 16,000 Long Islanders, scrambling for new coverage, and doctors, hospitals and insurance brokers worried they wouldn’t be paid about $200 million they are owed. Taxpayers are also out about $265 million that Health Republic received in loans from the federal government.
Asked about the letter Tuesday, Zeldin said, “I think it’s a great sign.”
“Even today I had another constituent with a personal story about how the failure of Health Republic was devastating,” he said. “I have heard these stories going back to November. A lot of individuals and families and providers who are still waiting for payments were hurt.”
An FBI spokeswoman did not have an immediate comment Tuesday about how long it might take for the agency to determine whether it would start an investigation or how common such referrals are.