The suspension order said that "despite representations to the contrary, Mr. and Mrs. Pinedo's physicians were not in the Amber II network of contracted providers, nor covered under the Amber II plan," which they didn't find out about until three months after they enrolled.
That's when they began receiving invoices totaling $4,500 for medical services.
State officials are not sure whether the Pinedo couple's physicians were paid, or whether they are having to write off the loss.
Contacted Wednesday at his Marina del Rey home, Chesler says the order is "not final. It's an allegation. I'm not about to explain it to you."
In the suspension order, state officials described misrepresentations by Chesler to three other elderly individuals, who were persuaded to switch Medicare Advantage plans.
One of them is Frank Genta, 87, who was enrolled in a SCAN Medicare Advantage plan that provided daily home care, a benefit that "was extremely important to Mr. Genta because he requires assistance with his daily living activities," according to the state.
But Chesler reportedly told Genta that SCAN was going to eliminate that benefit, and persuaded him to join Healthy Heart II, another plan, that does not offer the benefit. Genta agreed, but later changed his mind, according to the suspension order.
Chesler said he would cancel the man's enrollment, but he did not, according to the state.
"I took Mr. Genta approximately one month to have his Healthy Heart II enrollment cancelled and to get reinstated with SCAN. For the entire month, Mr. Genta was extremely stressed and worried that he would not be able to get his SCAN membership reinstated and that he would lose his home care," said the state officials.
The DMHC is the only stand-alone HMO watchdog agency in the nation, and has jurisdiction over plans that enroll 21 million Californians. Previously, the agency has taken action against fraudulent discount health plans that aren't officially considered plans and don't really include discounts.
Last year, the DMHC shut down a phony labor union health coverage scheme that put hundreds of consumers at risk of losing coverage, the agency said in a statement.