Article on captive insurance companies left out key piece of the story

The Sept. 10 article “Prominent NYC hospitals making millions through captive insurance companies” (p. 18), leaves out an important piece of the story: when the boards of Hospitals Insurance Co. (HIC) and FOJP discovered these decades-old issues in 2014, they acted as good corporate citizens should. They immediately hired new leadership to resolve the issues, authorized an investigation by an independent law firm, and voluntarily reported the findings to the New York Department of Financial Services. This led to a comprehensive remediation strategy which has been in place for more than a year.

To be clear: In the past 18 years, HIC has not engaged in reinsurance transactions or entered into any transactions with offshore captives on behalf of the hospital systems it serves. FOJP, HIC and the hospital systems involved are in full compliance with state insurance law.

The funds recently reported by the hospitals come from their ownership interest in HIC and legacy captive programs and are entirely driven by appropriate activity unrelated to the 1990s reinsurance transactions at issue. The funds are the result of a favorable investment return and successful quality assurance and claims management and give the hospitals much needed revenue they can put to good use in service of their charitable missions.

We agree that transparency in insurance transactions is paramount. The actions of FOJP and HIC in revising operating structures and procedures reflect our commitment to transparency.

Walter Harris CEO Hospitals Insurance Co. and FOJP Service Corp. White Plains, N.Y.