A Coeur d’Alene firm that operated an insolvent medical benefits plan has been barred from doing business by the federal government and ordered to pay $1.9 million to settle unpaid medical claims.

In 2001, ePEO Link began offering medical, vision and dental benefits to other employers, eventually attracting clients in 22 states. But the company failed to base its premiums on risk studies for expected payouts, according to a 2005 lawsuit filed by the U.S. Department of Labor. As a result, the premium rates were set too low, the suit said.

Within a month of offering the medical plan, ePEO Link began to accrue unpaid claims, the suit said. By the time the plan was terminated in 2004, the company had amassed millions of dollars in unpaid claims.

EPEO Link also contracted with other insurance firms to provide coverage, but many of those contracts were canceled because ePEO Link failed to make payments on the policies, according to the suit.

About 1,500 workers were covered under health plans offered by ePEO Link.

“The defendants’ misconduct caused workers and their families to be burdened with million of dollars in unpaid health claims,” Secretary of Labor Elaine Chao said in a press release.

A consent order signed Monday bars ePEO Link from selling employee benefit plans in the future. Jacklyn Holovoka and other company principals are included in the order. The order also covers a California firm, Integrated Professional Insurance Services, which acted as claims administrator for the insurance plan.

A total of $2.37 million has been identified to settle the unpaid medical claims, government officials said. The remainder of the money comes from Integrated Professional Insurance’s insurance company and other defendants.