Oath CEO found guilty

• By JOE GYAN JR.
• Advocate New Orleans bureau
• Published: May 13, 2008 - Page: 1D - UPDATED: 12:05 a.m.

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NEW ORLEANS — The owner and the chief financial officer of The Oath for Louisiana were convicted Monday on federal fraud charges relating to their operation of the now-defunct health insurance company, the state’s third-largest HMO at the time of its failure.

The Oath owner, president and chief executive officer, Barry Scheur, of Massachusetts, was found guilty on one count of conspiracy to commit mail and wire fraud, three counts of mail fraud and four counts of wire fraud.

The Oath chief financial officer, Robert McMillan, of Texas, was convicted on one count each of conspiracy, mail fraud and wire fraud.
Scheur Management comptroller Danette Bruno was acquitted.

Scheur, 51, and McMillan, 59, face up to five years in prison and a $250,000 fine on each charge.

U.S. District Judge Eldon Fallon, who presided over the jury trial, is scheduled to sentence the men Aug. 13.

Rodney Moyer, of Pennsylvania, the health maintenance organization’s vice president, recently pleaded guilty to conspiring to give insurance regulators financial reports that falsely said The Oath had enough money to pay the medical bills of its 82,000 members.

All four men were accused of using the mails and bank wire transfers over more than two years to mislead state insurance officials about The Oath’s financial health. The state shut The Oath down six years ago.

By the time The Oath was put into receivership in 2002, the HMO’s liabilities exceeded its assets by about $45 million — the amount of money The Oath owed medical service providers, according to court documents.

The Oath began in 1999 when a group of investors formed by Scheur, a Boston health-care consultant, bought and renamed a languishing New Orleans health plan. At the time, Scheur’s firm had been hired to resuscitate SMA Health Plan Inc., a hospital-owned HMO that had racked up millions of dollars in annual losses.

Scheur blamed The Oath’s failure on a string of factors, including lingering claims from the previous owners of SMA. He said The Oath’s ill-fated takeover in 2001 of Gulf South Health Plans — the insurance arm of Baton Rouge-based General Health System — played a role as well.