A Leon County judge ruled today that financially troubled health insurer Universal Health Care be placed under state control to shut down the company by the end of the month.
Hundreds of employees at the company’s headquarters on Central Avenue will lose their jobs, and thousands of Florida policyholders will have to find new health coverage.
The state Department of Financial Services moved to place Universal into receivership last month, stating the St. Petersburg company had misled creditors, was deeply in debt and could not continue supporting its policyholders.
Several potential buyers stepped forward with plans to rehabilitate the company with capital investments, but Universal missed court deadlines to make its case, and a judge ruled it financially insolvent after numerous employees quit and health providers cancelled contracts after complaining they hadn’t been paid in recent weeks.
Hundreds of employees were called into an auditorium this afternoon and told the company was being shut down.
Hours later, employees were milling about outside, talking in small groups, making phone calls and smoking cigarettes.
Employees were devastated, upset and angry, several people said.
Company founder and president Dr. Akshay Desai was not at the meeting; an employee asked where he was but got no answer.
Federal agents were in the building all day.
Universal sent out a press release this afternoon confirming the company had been placed into receivership and stating that its subsidiaries in Texas and Nevada, which were recently sold in a bankruptcy auction, would not be impacted.
Employees were told they would have work until April 1, but several people said they hoped those subsidiaries would offer some Universal workers jobs.
The state Department of Financial Services has said that, in the event Universal was liquidated, it would use the company’s remaining assets to pay out existing claims and work with other insurers to help policyholders continue their coverage.
A looming question, though, is whether policyholders with serious medical issues will be able to find new coverage, and at what price.
Desai, who founded the company in 2002, could not be reached for comment today.
The company began laying off employees last year and filed for Chapter 11 bankruptcy in February.
Following an auction, a bankruptcy court in Tampa last week approved a $33.25 million cash sale of the company to Citrus Universal Healthcare, part of New Jersey-based CarePoint Insurance.
A group of Universal’s lenders, led by BankUnited, that is owed $36.5 million had asked the court to delay receivership proceedings so the sale could be completed.
The judge’s ruling today appeared to eliminate the possibility of the sale being completed.