The department asked businesses with "any leads to further this ongoing investigation or who have contracted with National Employers Network, LLC, ePEOLink, [of Coeur D'Alene, Idaho] or any of the individuals named in the cease and desist order [issued by the department], to contact the California Department of Insurance, Valencia Investigation Division at (661) 253-7500."

The department said Friday that Insurance Commissioner John Garamendi had issued the cease and desist order to National Employers Network, LLC, for operating without a license.

Gary Gartner, a spokesman for the department, said National Employers is a professional employee organization. PEOs, also known as labor leasing or employee leasing organizations, provide a variety of services, such as payroll, human resources services, and health and workers' compensation insurance, to employers.

It said the firm, doing business as ePEOLink, offered and provided medical, dental and workers' comp insurance to small employers in California who were victimized by the company.

Officials at ePEOLink, who were asked for comment, had no immediate response.

According to the department, ePEOLink accepted premiums, issued proof of coverage, and handled and paid claims, all without proper licensing.

Businesses that bought this "coverage" from ePEOLink, the department said, now face financial danger if claims are filed and the policies they secured are found to be invalid.

According to the department, several employers who bought policies from ePEOLink have since discovered that premiums they paid have not been used to secure coverage for employees' hospital and provider medical bills.

"I am warning all employers to be wary of offers that seem too good to be true," said Mr. Garamendi. "Good, affordable insurance can be difficult to find in this current insurance marketplace. But the financial consequences of buying bogus coverage could, and will, drive you right out of business."

Also named in the cease and desist order is Integrated Professional Insurance Services Inc. (IPS) of Bakersfield, Calif., a licensed third-party administrator that acted as ePEOLink's claims administrator. Individuals named include Roger and Dawn Jeffrey of San Diego; Steven W. Hendricks of Turlock, Calif.; Fred Roh and Jacqueline Holovka of Coeur d'Alene, Idaho.

Mr. Hendricks, a licensed life agent, solicited, negotiated and effected contracts of insurance on behalf of ePEOLink, the department said.

The agency accused Roger Jeffrey, Dawn Jeffrey, Mr. Roh and Ms. Holovka of soliciting, negotiating and effecting contracts of insurance on behalf of ePEOLink in this state without holding a license.

Mr. Jeffrey and his daughter, Dawn, the department said, currently operate OutsourceNow Inc., a business processing organization headquartered in La Mesa, San Diego County. Their Web site, OutsourceNowInc.com, says that they provide health care plans and human resources, benefits and payroll systems for small-to-mid-size companies.

According to investigators, in one case the unpaid medical claims of one El Cajon family, Don and Maria Gastineau, are estimated at close to $1 million. The Gastineau's 2-year-old daughter Carli has had three heart surgeries at Children's Hospital in San Diego, but ePEOLink has failed to pay the Gastineau's medical bills.

If the firms and individuals violate the order, Commissioner Garamendi can impose a fine of up to $5,000 for each day that the cease and desist order is violated.

The department said that PEOs like the one in question often claim to provide insurance at discounted group rates, which is not always the case.

"When considering purchasing any kind of employer benefit plan providing medical, dental and vision benefits, make sure that there is a licensed insurance company behind it and that it meets both state and federal guidelines," the department cautioned.