Florida HMO Owners File $1.2 Billion Lawsuit Against BankUnited for Alleged Racketeering and Fraud Scheme

Monday, November 23, 2015
By George F. Indest III, J.D., M.P.A., LL.M., Board Certified by The Florida Bar in Health Law

Former owners of a health maintenance organization (HMO), Haider Ali Khan and Sabiha Haider Khan, recently filed suit in Florida federal court against BankUnited Inc. and its acquired New York-based Herald National Bank.  The Khans formerly operated the Tampa-based HMO, Quality Health Plans Inc. (QHP), prior to the alleged misrepresentations made by Herald Bank that according to the Khans essentially destroyed their professional success, personal reputations and livelihoods. 

The Catalyst Behind the Suit.  

The lawsuit seeks remedies under the Racketeer Influenced and Corrupt Organizations (RICO) Act, breach of contract, intentional infliction of emotional distress, tortious interference with existing contractual relationships and civil conspiracy.  The Khans named BankUnited Inc., BankUnited NA, and three former Herald Bank executives now with BankUnited, as defendants in the suit.  

The Khans' claims center on allegations of misrepresentation by Herald Bank to the U.S. Office of the Comptroller of the Currency (OCC) regarding a $5 million loan issued to QHP Group in 2009.  It is the alleged misrepresentations that reportedly initiated an investigation of QHP by the Florida Department of Financial Services.  

Following a criminal investigation and arrests for alleged racketeering and fraud charges as well as the subsequent liquidation of their company, all charges against the Khans were dropped.  However, the Khans are now demanding restitution of actual and punitive damages in the amount of $1.2 billion as a result of the banks' alleged misrepresentations as to its own concealed misappropriations.

To read a full copy of the complaint filed in the U.S. District Court for the Middle District of Florida, click here

Alleged Misrepresentations About the $5 Million Loan.

Florida's Office of Insurance Regulations prohibits assets of an HMO to be encumbered as collateral.  The complaint asserts that it was clearly understood by both parties that QHP-HMO assets could not be encumbered as collateral for the $5 million loan extended to QHP.  Instead, only assets of QHP Group could be encumbered as security for the loan in the event of a default.  

However, the complaint alleges Herald Bank misrepresented this assumed understanding when it told the OCC that the $5 million loan issued to QHP was secured by cash collateral in an account owned by the QHP Group.  Even after QHP began operating at a loss due to various factors and maintained a negative net worth, Herald Bank did not issue a default on the loan but rather continued to assert its confidence in the security of the extended credit. 

The Alleged Misappropriation of the $5 Million: "Claim Jumping?"

It is further alleged in the complaint that in an effort to collect on its own debts, Herald Bank withdrew $5 million from the QHP-HMO bank account in violation of the loan terms and despite having no collateral rights to such assets.  This was also despite a current stay order issued just three months prior by Circuit Judge Terry Lewis, specifically prohibiting the disposition of any assets of QHP-HMO. 

The Alleged Incentive of Defendants.

The Khans allege in their complaint that Herald Bank continued with these misrepresentations to federal and state officials in the middle of its pending merger with BankUnited in 2011.  The complaint further alleges Herald Bank knew it had to follow through with the misappropriation of the $5 million in order to back its misrepresentations to federal regulators at the OCC and BankUnited about having the cash collateral on the QHP loan.  Failing to do so could result in Herald Bank losing the $71.4 million merger buy out with BankUnited or facing federal sanctions with the OCC and other federal agencies.  

The merger with BankUnited enabled Herald Bank to expand outside of Florida and gain a reported $7 billion in assets since the transaction occurred.  The Khans allege that BankUnited was aware of the misappropriation but chose to conceal it as well.  

For more information on the penalties associated with RICO violations, click here


Do you think plaintiffs should be able to recover damages of $1.2 billion based on the allegations set forth in the complaint? 

Contact Health Law Attorneys Experienced with Investigations of Health Professionals and Providers.

The attorneys of The Health Law Firm provide legal representation to physicians, nurses, nurse practitioners, CRNAs, pain management doctors, dentists, pharmacists, psychologists and other health providers in Department of Health (DOH) investigations, Drug Enforcement Administration (DEA) investigations, FBI investigations, Medicare investigations, Medicaid investigations and other types of investigations of health professionals and providers.

To contact The Health Law Firm, please call (407) 331-6620 or (850) 439-1001 and visit our website at www.TheHealthLawFirm.com.


Complaint and Demand for Jury Trial 11-17, Nov. 10, 2015.

Hale, Nathan.  "Former Fla. HMO Owners Sue BankUnited for $1.2B."  Law 360.  Portfolio Media Inc.: 13 Nov. 2015.  Web.  19 Nov. 2015.

About the Author: George F. Indest III, J.D., M.P.A., LL.M., is Board Certified by The Florida Bar in Health Law.  He is the President and Managing Partner of The Health Law Firm, which has a national practice.  Its main office is in the Orlando, Florida area.  www.TheHealthLawFirm.com The Health Law Firm, 1101 Douglas Ave., Altamonte Springs, FL 32714, Phone: (407) 331-6620.

Keywords: Florida health attorney, racketeering defense lawyer, health law attorney, Florida health lawyer, The Health Law Firm, health law defense lawyer, complex business litigation attorney, mergers and acquisitions lawyer, health professional attorney, health care litigation attorney, complex litigation lawyer, health care business transactions, health care loan contracts, contract negotiations lawyer, health maintenance organization (HMO), Racketeer Influenced and Corrupt Organizations Act (RICO), misappropriation of funds, HMO attorney, misrepresentation to federal agencies, Florida's Office of Insurance Regulation, U.S. Office of the Comptroller of the Currency (OCC), breach of contract attorney

“The Health Law Firm” is a registered fictitious business name of George F. Indest III, P.A. – The Health Law Firm, a Florida professional service corporation, since 1999.
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