"Small businesses are desperate - they will take any offer they can afford to secure health insurance," said Snowe. "Rather than stay with companies that they know, but can't afford, many are taking chances on alternative, cheaper plans that simply are not what they seem."

Snowe, along with Senator Chuck Grassley (R-IA) and Senator Kit Bond (R-MO) submitted a request to the GAO to prepare a report examining health insurance scams and their effect on small business (GAO-04-312: "Employers and Individuals Are Vulnerable to Unauthorized or Bogus Entities Selling Health Benefits"), which was released today during a hearing in the Senate Finance Committee of which Snowe is a senior member. In the report, the GAO disclosed that 144 fraudulent entities, portraying their services as health insurance plans, were operating between the years 2000 and 2002, selling so-called insurance to 15,000 employers and more than 200,000 individuals. As a result, consumers doing business with these plans were left holding the bag for at least $252 million in unpaid medical claims.

In Maine, the GAO found between 15 and 24 unauthorized entities operating as fraudulent insurers during the period examined by the report. The plans identified by GAO existed solely for the purpose of scamming money from unsuspecting small businesses with no intention of providing the necessary health insurance coverage for the life saving treatments and procedures that enrollees expect.

"Unfortunately, too many hard working employers and their employees with few health insurance options, have fallen prey to those hawking fraudulent insurance scams and frauds," Snowe added. "In fact, according to the GAO, the number of fraudulent entities targeting small businesses and their employees nationwide has almost doubled between 2000 and 2002, growing from 31 to 60."

Snowe called operators of such fraudulent plans "masters" at playing an intricate insurance shell game. "They know how to stay one step ahead of the enforcement authorities by characterizing their operations as just beyond the reach of that authority," Snowe said. "If a state pursues them, they will claim that they are federally regulated. If the federal government comes after them, they will say that they are a state regulated insurance company."