State Could Be Close to Settlement with Zoom Management
A settlement could be imminent between the state of Oregon and Zoom Health Plan to recover $3 million after its affiliate Zoom Management Inc. failed to pay the money in late 2016 in exchange for a surplus note, but never did.
Independent sources have told The Lund Report that a settlement agreement will likely happen by late September. Beyond recovering the $3 million, other penalties could be imposed that affect Zoom’s co-founders and majority stakeholders, Drs. Dave Sanders and Albert DiPiero.
Len Bergstein, spokesman for Zoom, doesn’t anticipate anything happening quickly, but did tell The Lund Report paperwork is being exchanged between Zoom and the Oregon Justice Department. ”Discussions are going on.”
When asked about the lawsuit, Kristina Edmunson, spokeswoman for the Justice Department said, “We’re not in a position to comment.”
It’s unknown if Endeavour Capital will be impacted by the settlement, having ploughed millions of dollars into Zoom to become a minority investor starting in 2014. That was the same year Zoom began efforts to launch its insurance company.
Endeavour currently holds a 20 percent stake in Zoom, with a 38.2 percent equity, while Sanders and DiPiero together hold 54.2 percent, according to regulatory filings. Stephen Babson, managing director of Endeavour, could not be reached for comment at press time.
When the announcement was made, Babson said in a press release, “We are impressed with the innovative way ZoomCare has grown by aligning its novel healthcare system and business model. ZoomCare fits with our investment strategy of long-term equity commitments to what we view as some of the best firms in our region, so we are excited to join with them as a minority investor.”
On the Portland-based firm’s website, Endeavour acknowledged that its typical investment ranges between $25 million and $100 million, ”however it does have the ability to invest substantially more.”.
On April 21, the state filed a lawsuit to preserve the assets of Zoom Health Plan and make certain policyholders were protected, taking the health plan into receivership. On Dec. 31, its individual policies will be terminated.
At that time, Patrick Allen, director of DCBS, said, "This funding is critical for Zoom Health Plan to meet its obligations to policyholders. Our goal through the receivership is for those with Zoom Health Plan policies to be able to stay on those plans and access the health services they need through the end of the year.”
In its annual financial statement submitted to DCBS, Zoom Health Plan reported capital and surplus of $2,873,168 as of Dec. 31, 2016. But without the cash from the $3 million surplus note, its actual capital and surplus was negative $126,832 at the end of 2016, making it insolvent.
More Challenges Ahead
Beyond the health plan, Zoom faces other challenges, having laid off six staffers from its medical billing department last week. It runs 35 clinics in Oregon and Washington.
A few people have been let go, Bergstein said, “having to do with the changing nature of what we're doing, rather than having to do with the financial performance of how we're doing...by that I mean, we are exiting from the insurance market and that has an impact on certain jobs. We have successfully completed some tasks in 2017 and that means some of those positions are no longer needed.”
During the past year, Zoom+Care has grown steadily to the point where it now serves about 20,000 customers per month at its neighborhood clinics and online care services, he added.
Earlier, several insiders said that across the companies – especially Zoom Health and Zoom Management – finances have been tight for a number of months, with as many as 100 or more employees laid off, and some commissions or bonuses not paid.
Diane can be reached at [email protected].