More than seven months after federal agents raided its offices, Chartered Health Plan Inc. has entered a receivership with the District government, but city officials say its 110,000 customers will not be affected.
In court papers filed late Friday, the D.C. government asked a judge to place the company under its control, and a Superior Court judge approved the plan within hours. The board of the company, which holds the city's single largest contract, one valued at $355 million last year, unanimously supported the approach. City officials said Chartered will pay for the costs of operating the receivership and that District taxpayers were not exposed to any risk.
William White, the commissioner of the D.C. Department of Insurance, Securities and Banking, said the city moved to avoid interrupting service.
"I acted to protect the Medicaid and D.C. Healthcare Alliance members covered by Chartered," White said. "We are working closely with the Department of Health Care Finance to ensure continued seamless service to Chartered's enrollees."
The District said residents whom Chartered covered will not experience any changes to their health benefits, and at-large Councilman David Catania, who chairs the council's health committee, described the strategy as "a necessary step" to ensuring that.
A. Scott Bolden, a lawyer for the company, was not immediately available for comment.
Chartered has drawn significant attention since March when the FBI and IRS searched the offices of Jeffrey Thompson, the company's owner and a key figure in the investigation of Mayor Vincent Gray's 2010 campaign.
Although Thompson has not been charged with any crime, officials familiar with the investigation have said that he helped to bankroll a $653,800 shadow campaign to help elect Gray. Those officials have demanded anonymity to speak about the ongoing probe.
A longtime Thompson associate whose home and office was searched the same night as Thompson's properties pleaded guilty in July to her role in the scheme.
Chartered has been on the ropes for months, with top District officials saying earlier this summer that the city would be unlikely to keep doing business with the company if Thompson, a prolific local power broker, remained in charge. Although the company has been on the market for months, no agreement has been reached.
White said he thought Chartered could still be sold, and he added that the receivership could ultimately push a sale along.
"It sort of gives them a fresh start as to what they look like to a potential buyer," White said on a conference call with reporters.
The public prospects for the demise of Chartered accelerated earlier this week after the Washington Business Journal reported that an internal audit of the company "found millions in both expected income and expenses that went unreported to insurance regulators."
White's agency also said he "anticipates certain negative adjustments to capital and surplus" when an audit of the company's 2011 books is completed. City officials said Friday they weren't sure when that audit would be issued.