IC stops Caritas Health sale amid fraud claims

MANILA, Philippines — The Insurance Commission (IC) has ordered Caritas Health Shield Inc. (CHSI), a health maintenance organization (HMO), to halt its business amid allegations of fraudulent activities.  

In a statement, the IC said Insurance Commissioner Dennis Funa has issued a cease and desist order against Caritas Health, directing the company to stop selling new HMO products, or transacting new HMO businesses in the country. 

The regulator said the issuance of the order was prompted by the numerous complaints received by the IC on the alleged fraudulent swiping of credit or debit cards and alleged misrepresentations of the company’s sales agents.

In response to the complaints, Funa as far back in 2017 issued a show cause order against Caritas Health to explain why it should not be ordered to stop selling new HMO products. 

Caritas Health then explained that the company had already implemented various actions to address said fraudulent instances.

“Unconvinced by the explanation given by Caritas Health and noting that the company acknowledged that there have been instances of unauthorized swiping and misrepresentations committed by its sales agents, Commissioner Funa proceeded with the issuance of the cease and desist order dated July 8, 2019,” the IC said.

Funa said the IC’s continued receipt of numerous complaints against Caritas Health from the public shows the prima facie inadequacy and unresponsiveness of the company’s action plans.

 “It should be stressed that the use of credit and/or debit cards as a mode for payment is not the main problem under the circumstances, but the unethical conduct of CHSI’s erring agents/sales associates as well as the apparent lack of timely and effective supervisory intervention by CHSI management,” the IC chief said.

Following the issuance of the cease and desist order, Funa also directed the company to continue servicing its existing HMO contracts and to provide uninterrupted conduct of servicing activities.

“In the interest of the protection of the general public, I directed Caritas Health to continue servicing its existing HMO contracts with its members,” he said.

To ensure Caritas Health’s compliance with this order, Funa will be appointing an overseer.

According to Funa, the IC is empowered under Executive Order 192, series of 2015, to issue orders to prevent fraud and injury to the HMO plan holders and industry stakeholders.

 “This commission is not precluded from enforcing prompt corrective regulatory action and addressing CHSI’s problem with unscrupulous agents or sales associates at this juncture before it progresses into an uncontrollable state. It will be utterly preposterous and a patent disservice to the general public and the HMO industry if this commission will sit idly by and wait until more complaints are reported before taking action,” he said.

Meanwhile, the IC also ordered Win Mortuary Plan to cease and desist from engaging in pre-need or insurance business due to the lack of the required license. The company currently operates in Mindanao.

In this regard, the regulator warned the public to refrain from transacting any business with Win Mortuary Plan, as it is not duly authorized by the IC to do insurance or pre-need business in the country.

“The public is likewise warned to refrain from transacting and doing business with any other company operated by the same person that do not possess a valid  license from this Commission and/or any other concerned government agencies,” the IC said.