KPMG Sued by Florida Insurance Department

Claiming the Big 5 firm failed to uncover improprieties in the audit of HMO SunStar Health Plan, Inc., the Florida Insurance Department has filed suit against KPMG for $47 million.

Earlier this year the department seized SunStar, claiming the organization didn't have enough money to pay the claims of its 80,000 policyholders. Fifteen of SunStar's officers and directors have also been sued for mismanagement of the company and for misleading investors.

The lawsuit against KPMG alleges that the firm's audits for 1997 and 1998 understated SunStar's expenses and liabilities, failed to reveal an $8 million debt to SunStar's parent company, and that the department relied on those financial statements in making its decision to allow SunStar to continue operations.

Health-care providers supplied services to SunStar policyholders and have not been reimbursed. The $47 million requested in the lawsuit against KPMG would cover the preliminary estimate of all outstanding claims.

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