At the same time that Summerlin Life and Health Insurance Company, a small Nevada-based insurer, announced its 2004 entry into Hawaii’s tight insurance market, the company was struggling to provide acceptable levels of service in its home state, where it was contracted to offer an HMO plan for Medicaid recipients as well as selling coverage to private companies.

Five years later, the company has fallen far short of it’s goals to grow the business in Hawaii and, under pressure, has pulled out of Iowa and Nevada, states once pointed to as evidence of its business prowess.

But, in a controversial move, the plan administered by Summerlin and an affiliate, HMA Inc., was recently made the “default” PPO plan offered to state and county employees by the Hawaii Employer-Union Health Benefits Trust Fund for 2010.

Minutes of the Hawaii Employer-Union Health Benefits Trust Fund give no indication that trustees were aware of any of the company’s problems on the mainland at the time they voted to approve the new and expanded contract with Summerlin and an affiliated company, HMA Inc.

In Nevada, Summerlin’s parent, IMX Companies, operated as Nevadacare, the same business name used by the firm’s former insurance operations in Iowa and touted as an example of the company’s successful business when it set up shop in Hawaii.

However, a 2005-2006 external quality review done for the State of Nevada found NevadaCare’s services to be average, at best, and failing in some categories.

A summary of quality ratings shows Nevadacare (NVC) receiving a grade of “F” in areas measured by the Consumer Assessment of Healthcare Providers and Systems (CAHPS) survey, and an average performance grade of “D”, although year-to-year improvements lifted it to an overall “C” average.

According to the report, Nevadacare scored between the 10th and 25th percentile when compared to other firms nationally, meaning that between 75-90 percent performed better than Nevadacare.

In December 2006, the Las Vegas Sun reported Nevadacare owed the area’s public hospital $2.5-$2.8 million, described as the hospital’s “largest unpaid bill ever for an insurer”. The amounts overdue dated back to 2004 and 2005.

According to the story, University Medical Center had cut off Nevadacare in February 2006, citing the problems with payments. Nevadacare’s Medicaid contract was taken over by Anthem Blue Cross and Blue Shield on November 1, 2006.

Silver said NevadaCare owes UMC additional money from 2006, but she couldn’t estimate the amount. She said the volume of unpaid bills, and the hassles of trying to get them paid, are unprecedented.

“I don’t recall ever having to settle with anyone on these types of issues,” Silver said. “What’s different here is that either by design or by default they have had difficulty paying claims.”

NevadaCare is also being sued for unpaid bills by Nevada Cancer Center and Anesthesiology Consultants Inc. They say the insurer owes them more than $40,000 and $50,000, respectively. UMC officials say they hope to avoid arbitration with NevadaCare or filing a lawsuit.

In May 2007, KLAS-TV reported reported that amounts owed to the hospital by Nevadacare had grown to nearly $8 million.

The story referred to Nevadacare as “the worst offender” among area HMOs.

Nevadacare disputed this account, but by 2007 was no longer part of the Nevada Medicaid contract, and dropped its private insurance business in the state at the end of 2008.

The company agreed to withdraw from doing business in Iowa in order to settle charges brought by that state’s insurance commissioner.