The Palombos allegedly signed up as members of the Contractors and Merchants Association and then sold health insurance coverage to them through an affiliated labor union. According to the Department of Managed Health Care, the Palombos also conspired with a union to collect premiums from members but failed to pay the premiums in full to Kaiser Permanente, the contracted health plan for the union. Nearly 500 people were in danger of losing their healthcare coverage due to this scheme.
After an investigation into a 2007 consumer complaint, it was discovered that the Palombos had been barred from selling insurance in six states, according to the report.
Mr. Palombo denies the allegations and said that the premiums that union members paid were taken out for union dues and sales commission and were paid to Kaiser full and on time. Kaiser said in the report that “many payments were late at best.”
Mr. Palombo also disputes the number of members involved, stating that it was never more than 50, and that members only lost coverage because of the cease-and-desist order issued by the department.
Read the L.A. Times’ report on the alleged California health insurance scheme.
