Darryl Spellman never thought much about his company health plan until medical bills stamped "Unpaid" began arriving in the mailbox and collection agents started calling on the phone.

"I'm getting stuck with all their bills," said Spellman, a 26-year-old Simi Valley resident, of the $2,500 worth of medical claims that have gone unpaid by his former employer, Calmark Development, a Los Angeles-based real estate development firm.

While Spellman and fellow employees continued to pay for insurance through payroll deductions, the company has never fully explained why it won't pay the bills. Some employees say the firm ran into trouble after being hit with higher-than-expected medical claims.

"I tell them the bills are going to collection, and (Calmark says) 'We don't know what to tell you,' " said Spellman.

State insurance regulators and lawyers don't know what to tell him, either.

Of big employers that provide health insurance to their workers, Calmark is among the majority of large firms--those with more than 100 workers--which, over the past few years, have sought relief from spiraling health-care costs by canceling insurance policies and paying employee medical claims themselves.

While the strategy is designed to save cash, it also insulates employers from state insurance regulations and penalties as well as law suits under state regulations, which permit much higher damage awards than federal statutes. Employees in self-insured companies are left protected only by federal laws that critics say are weak and by agencies that are understaffed.

The potential for problems has grown as self-insurance has spread from large corporations--where problems have been relatively few--to smaller firms that may lack the deep pockets to cover medical claims, state officials say.

The practice has allowed some companies to deny coverage to groups of individuals with diseases that may require costly care, including employes stricken with cancer or AIDS.

Self-insured firms "are outside of our reach," said Walter Zelman, special deputy for health insurance at the California Department of Insurance. "Employees are much more (dependent upon) the employer. They have very little recourse."

However, both critics and supporters of self-insurance agree that most such plans are well managed--and, indeed, often offer coverage that exceeds state requirements.