Riverstone Capital — the insurance carrier that has failed to pay Modesto employees’ medical claims and is the subject of a U.S. Department of Labor complaint filed in federal court — is considering bankruptcy.
A Riverstone official laid out the company’s intentions in a nearly two-minute voice mail he left Wednesday morning on a Bee reporter’s cell phone.
The official thought he was leaving a message for Grace Kim, a senior trial attorney with the Labor Department. (The reporter’s voice mail does not have a personal greeting but an automated female voice that says the caller has reached a certain phone number.)
“This message is for Grace Kim. This is Travis Bugli, chief operating officer of Riverstone Capital. I have updates that I wanted to give to you over the phone,” the message states.
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▪ “Because the independent fiduciary (Receiver Management was appointed to oversee Riverstone’s operations) has determined that our staff is no longer necessary as far as the plan administration is concerned, he has already stated that he cannot release any funds to be used to pay them. So we had to let our staff go.”
▪ “We are now in the process, it looks like, where we are going to end up having for the company, Riverstone Capital, to file for bankruptcy.”
▪ “We want, we would like to settle regardless. We just want to determine at this point what we need to do so that we can determine what is, what we are responsible for, and what we are not so that we can go ahead and put this to an end.”
The Labor Department filed a Feb. 1 complaint against Riverstone as well as two associated companies. The complaint says Bugli is a founding partner and owns 47.5 percent of the companies. Another company official, James Kelly, is listed as a founding partner and 47.5 percent owner.
The complaint alleges Riverstone charged low premiums that were not sustainable in an effort to attract customers while charging exorbitant fees. The complaint alleges that in late December the medical plans Riverstone managed for about 112 employers with more than 16,000 participants had unpaid claims of about $24 million.
It still is not clear what the complaint means for Modesto. The complaint alleges violations of the Employee Retirement Security Act, which regulates private sector health plans. Besides the roughly 112 employers covered by ERISA, the complaint states Riverstone had about seven non-ERISA plans.
A Labor Department spokesman has said Modesto is not among the ERISA plans and said Tuesday that the department’s attorneys would not comment on whether Modesto’s unpaid claims are under the authority of the independent fiduciary.
When reached by phone Wednesday afternoon, Bugli said he could not say how a Riverstone bankruptcy would affect Modesto’s unpaid claims. “The independent fiduciary has all the assets,” he said. “They are in charge.”
He said his company is cooperating with the Department of Labor.
An official with the fiduciary could not be reached for comment. Modesto spokesman Thomas Reeves said Wednesday the city has been in contact with the fiduciary. But he said because Modesto learned about the complaint Monday, city officials still are determining what it means for Modesto.
About 700 of the city’s roughly 1,200 employees have insurance through Riverstone, which the city has used since January 2017. The city recently switched to new insurance effective March 1 after it grew concerned about unpaid claims and a request from Riverstone for an 87 percent increase in contributions. Modesto is determining the amount of unpaid claims and a plan to resolve them.