The Affordable Care Act allowed hundreds of thousands of new customers to sign up for health coverage with the help of federal subsidies, and created heated competition among Florida’s insurance agents.
Two Miami women saw the new market, particularly among working-class Hispanics, as an opportunity.
In 2013, Mercedes Cabrera and Odalys Arevalo started an agency catering to those consumers, hiring 150 agents and opening locations in Miami-Dade and Broward counties. Sunshine Life & Health Advisors signed up about 60,000 people for coverage during the last open-enrollment period, its founders say.
But now a lawsuit is threatening the firm’s plans just as consumers begin to sign up for 2015. The fight for premium dollars may even extend to some insurance agents who say the company shortchanged them for their work.
The dispute hinges on whether Cabrera and Arevalo knew they were selling a majority share of Sunshine for just $10 when they signed a deal with their business partners in February.
The partners, who own an insurance firm called Quantum Health Group that shares agents and office space with Sunshine, sued Cabrera and Arevalo in October in Miami-Dade civil court, accusing them of reneging on the deal and withdrawing $722,000 from a shared bank account.
Cabrera and Arevalo responded in court filings that the partners had misled them into the sale. The two women said they thought they were entering into a joint-venture agreement with Quantum to form a larger company, not signing away an ownership stake in Sunshine, and that they were intimidated into signing the documents before they had a chance to read them, according to the court documents.
Cabrera and Arevalo, who had little experience in the insurance industry, said they did not complain at the time because they were too embarrassed to tell their husbands, who had invested in the business.
In a court filing, Quantum’s attorney dismissed that notion, saying Cabrera and Arevalo made the deal willingly and were “strong willed ladies with blood cold enough to make demons shudder.”
Cabrera sold advertising and Arevalo was a stay-at-home mother before they started Sunshine.
Cabrera and Arevalo did not respond to requests for comment, nor did Salvador Gandara or Manuel Fernandez of Quantum Health.
For now, the feuding partners appear to have reached a cease-fire.
A special magistrate appointed to help get the company through this year’s open enrollment period, which began Nov. 15, ordered the sides to make financial decisions together. Each side must also have access to all Sunshine stores while refraining from direct contact “in order to avoid any unnecessary confrontations.”
Robert Fernandez, an attorney for Arevalo and Cabrera, said that “any respective business claims or issues will be resolved” soon after open enrollment ends on Feb. 15. Arnaldo Velez, an attorney for Quantum, did not return telephone calls seeking comment.
One Miami insurance agent who worked for the company during the previous enrollment period says he has been caught in the crossfire. Alvaro Sevilla, 55, joined Sunshine in February because it advertised extensively in Spanish and had “the best presence in the market,” he said.
Sevilla said he was paid $26,000 in commissions but is still owed $55,000 by Sunshine and Quantum — although Sunshine’s attorney said the company owes him nothing.
Sevilla said he didn’t get the $26,000 until after he was interviewed by Univision in June about the owed money.
When Sevilla asked Cabrera why he hadn’t been paid once enrollment ended, he said she told him that an insurer, Preferred Medical Plans, still owed Sunshine money.
“Sunshine will pay when it gets paid,” Cabrera wrote in a text message in Spanish to Sevilla on Nov. 13 that was confirmed by her attorney.
“I have other agents asking me the same questions,” she continued. “There is nothing I can do with respect to this.”
Preferred spokesman James Card said he “cannot speak to the details” of the relationship between Sunshine and Sevilla.
“Preferred Medical Plan has and will continue to meet its contractual obligations to Sunshine Life & Health Advisors,” Card wrote in an email to the Miami Herald.
Fernandez also said that when Cabrera sent the text messages to Sevilla three weeks ago, she had not yet had a chance to review Sunshine’s books, which showed no debt to Sevilla.
“Sunshine owes no commission to Mr. Sevilla,” he said.
Veronica Moreira, an agent from Kendall who also worked for Sunshine during the last enrollment period, said she was paid $40,000 in commissions but is owed several thousand dollars more.
“I’ve lost track of how much,” Moreira said. “If they pay me, it’s good. If they don’t, they don’t. I’m not going to be wasting time sending them bills anymore.”
Moreira added: “Insurance is a dirty world.”
Sevilla is still demanding his money.
“I come from Nicaragua and I lived in El Salvador 22 years,” he said. “I’m not backing down.”
Miami Herald staff writer Daniel Chang contributed reporting to this report. Follow @MHhealth on Twitter for health news from South Florida and around the nation.
This article was produced in collaboration with Kaiser Health News, an editorially independent program of the Kaiser Family Foundation.