A HEALTH-INSURANCE firm owned by mayoral candidate Tom Knox was cited by Maryland authorities for violating the state's insurance laws in 2002 and 2004, resulting in $195,000 in fines.
The violations ranged from telling policyholders to get their doctors' authorization to visit an emergency room to operating without a license and hiring a convicted felon.
The firm involved was Fidelity Insurance Group (no relation to the failing Fidelity Mutual Life Insurance Co. that Gov. Bob Casey appointed Knox to rehabilitate in the early 1990s). Knox bought Fidelity Insurance Group in 1999 and headed it until it merged with United Healthcare in 2004.
Maryland officials declined to characterize the seriousness of Fidelity Insurance Group's infractions, but its $125,000 fine in 2004 tied for the largest among 19 fines imposed that year on health- and life-insurance firms.
Fidelity specialized in health insurance for small employers, and a 2001 review of its operations by the Maryland Insurance Administration found 30 violations of state insurance laws.
Some were technical errors, such as using forms that hadn't been submitted to the state for approval. But the review also found that the company had made misleading statements about speedy claims processing and had failed to provide required information about exceptions and limitations in its policies.
Regulators also found errors in the firm's communications with policyholders about denied claims, and cited a 2001 newsletter that told policyholders to get their physicians' authorization before visiting an emergency room.
Knox campaign spokesman Josh Morrow attributed that instruction to a mistake by a Fidelity employee.
"In no way was it Tom's policy," Morrow said.
The state imposed a $70,000 fine, but agreed to levy only half the penalty if the company cleaned up its act. Fidelity promised to correct the violations.
But two years later, another review raised more problems.
In April 2004, the state made Fidelity pay the remaining $35,000 from the earlier fine and imposed a $125,000 fine for new violations.
Regulators found that Fidelity had employed David Fishbone, a former lawyer with a 1995 embezzlement conviction, as a compliance officer in violation of state rules, and continued to do so after saying that the relationship had ended.
The state also found that a Fidelity-related firm, Fidelity Benefit Administrators, had operated for nearly four months with expired state licenses.