National Century Founder and CEO Resigns

November 11, 2002 ( - National Century Financial Enterprises, Inc. announced the resignation of its founder and CEO Lance Poulsen, according to the Wall Street Journal.

The resignation, effective November 8 th , was brought on by a lawsuit filed by bondholders claiming financial mismanagement.   The suit claims Poulsen’s interest in companies which National Century does business with does not allow for prudent fiscal management.  

Fifty-six percent of the value of the latest $2.1 billion bond offering is tied to companies Poulsen or National Century hold an interest in, according to the lawsuit.    One such company is Rx Medical Services Corp.   Rx currently has 48% of its common stock and 100% of its preferred stock held by Healthcare Capital LLC.   Healthcare Capital’s directors include Poulsen and his wife Barbara Larson.

Cash Non-Flow

National Century provides cash flow to about 100 health care providers in a financing process called securitization.   Securitization allows health care providers to sell their medical claims awaiting payment from insurance companies to National Century.    National Century buys the claims at a discount and gives cash to providers immediately, as opposed to waiting months to collect from insurance companies.

Bonds are then issued by National Century, who pays its bondholders once insurance payment is received. These bonds, totaling approximately $3 billion, are now at risk.   National Century has been unable to issue bonds since May, and is currently drawing money from reserves to continue making payments to bond holders.  

On the short end are health care providers, who rely on weekly payments from National Century worth approximately $30 million.   In recent weeks, these have not been met to all health care provider clients.   Tied to the payments are payroll accounts, which have resulted in providers’ inability to meet payroll for its employees.