State insurance regulators have settled their lawsuit against the founders of Zoom Management, reaching a deal that includes $285,000 in civil penalties.

The department said Zoom Management and an affiliate, Zoom Health Plan, also agreed to pay $2.1 million in cash to cover member claims and liabilities.

The settlement allows Zoom Management to concentrate on running and growing its popular chain of health clinics, the company said. Those clinics, located in Portland and Seattle, see about 20,000 patients a month, generating about $50 million in annual revenue.

The camps view the settlement very differently.

State regulators say the consent order "establishes that Zoom and its management filed inaccurate financial statements and committed over violations of the insurance code."

"The size of these fines show that DCBS will not tolerate repeated violations of the insurance code," said Jean Straight, acting director of the Oregon Department of Consumer and Business Services, in a written statement Tuesday.

Zoom founders said they're guilty only of missing the state deadline for financial filings.

"Anyone looking at the full record of facts will come to the same conclusion as the global settlement agreement: we never intended to do anything wrong, but we were late in our filings. And we apologize to any Zoom Health Plan insurance policy holder who was inconvenienced, confused or concerned while the matter was resolved," Zoom founders Dave Sanders and Albert DiPiero said.

DBCS sued Zoom Management in April claiming executives at the company had falsified the books of its health insurance provider, Zoom Health. The state claimed that Zoom Health had listed $3 million it had received in a loan from its parent company among it assets. The state claimed in its lawsuit that the loan proceeds didn't exist.

Absent that money, Zoom Health was insolvent, the state claims. All insurance companies are required to maintain a minimum base of capital reserves of $2.5 million. The state convinced a judge to appoint a receiver to take charge of the insurance start-up and wind down its affairs.

Sanders positioned Zoom as a company at the forefront of U.S. health care transformation. He wanted to build an integrated health system along the lines of Kaiser Permanente that would rely on technology to remain lean and efficient.

Zoom Management is the parent company of Zoom+Care and the now defunct Zoom Health insurance operation.

Tuesday's settlement resolves the lawsuit and outstanding regulatory issues, according to DCBS, which said it agreed not to investigate whether the $3 million misstatement was intentional.

Provisions of the agreement include:

A finding that Zoom Health Plan and Zoom Management violated Oregon's insurance code by filing financial statements that included that $3 million loan, even though it never received the funds.

A $150,000 fine for violations of the insurance code.

A requirement that Zoom Management and Zoom Health pay $2.1 million to cover member claims and company liabilities.

A $100,000 fine levied on Sanders, Zoom's chief executive, and a $35,000 fine levied on his cofounder, DiPiero, for filing late financial statements.

A requirement that Zoom Health members be allowed to keep their current health coverage through the end of the year.

"We are pleased to have this matter completely closed and behind us so that we can continue to serve the hundreds of thousands of people who rely on us for their healthcare," Sanders and DiPiero said in their statement. "While reaching this settlement was best for all parties, we are confident that we operated a successful health plan in a turbulent market."

Zoom says it serves 20,000 people each month in Oregon and Washington. Its was at risk after the state lawsuit and, more recently, when its largest investor also sued the company alleging breach of contract.

Last week, Endeavour Capital and Zoom executives got back on the same page. Endeavour dropped the lawsuit and agreed to invest another $25 million in Zoom Management.

Oregonian reporter Mike Rogoway contributed to this article.

-- Jeff Manning; 503-294-7606; jmanning@oregonian.com