Health Plan Collapse Drives Many to Bankruptcy
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Health Plan Collapse Drives Many to Bankruptcy

Janice WashingtonNovember 29, 2010

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The bankruptcy filing of the health insurer Rural Health Plans Initiative (RHPI) has left many Colorado residents with unpaid medical bills which have forced some to declare personal bankruptcy.

After RHPI went bankrupt, the consumers that used to be insured by the firm were left with claims that RHPI had not paid, and were told they were liable, according to the Denver Post. Because each plan was allegedly "self-funded," RHPI falls into legal loopholes, and regulators are not sure if victims have legal recourse.

A Colorado attorney has filed a lawsuit against RHPI founder Gerry Rising Jr, who allegedly miscalculated alleged claims and did not hold his clients' payments in trust, according to the news source.

Anna Zarlengo and the small home healthcare firm she worked for used RHPI for medical coverage. She currently owes $80,000 for a hip replacement surgery, and claims that many employees with similar medical bills are filing for bankruptcy.

"What am I going to do with a $17,000 bill? Good grief," another former client of RHPI said.

Medical bills are a common reason for personal bankruptcy. Among seniors who filed for bankruptcy, 39 percent give medical bills as the main reason for their choice, according to a recent University of Michigan Law School study.

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