AG Martha Coakley’s office and the Division of Insurance announced a mega settlement in the case brought against MEGA Life and Health Insurance, and their alter-egos, HealthMarkets, Inc., Mid-West National Life Insurance, the National Association for the Self Employed, Americans for Financial Security and the Alliance for Affordable Services.
This is the insurer that HCFA Board President Chip Joffe-Halpern exposed as misleading consumers by selling inadequate insurance masquerading as meeting state standards. The AG accused them of multiple counts of deceptive and illegal practices, including deceptive marketing; deceptive sales to seniors; illegal benefit exclusions, such as failure to cover maternity care and newborn visits; and violation of privacy rights. Our legal partner, Health Law Advocates, documented over 37 client complaints and submitted over 100 pages of supporting documentation. Some 27,000 Bay Staters get their “insurance” from the firm and its affiliates.
We first blogged about their misbehavior in 2006, a post that got almost 60 comments as people from all over the country added their tale of woe at the hands of the firm. At issue was the Romney administration’s hope that the Connector would bless their plans and allow them into the Commonwealth Choice program.
Now they must leave the state entirely. The AG’s settlement bans them from selling coverage in Massachusetts for at least 5 years, and forces them to clean up their act and comply with all state laws if they want to come back. The $17 million in fines is the largest of its type.
The AG urges consumers concerned about deceptive health insurance practices in the Commonwealth to call the Health Care Hotline at (888) 830-6277.
The DOI also reached a settlement with the firm for violations of insurance regulations. Under the DOI agreement, the firm will pay $2 million to the Commonwealth, and will also be subject to payment of $3 million more if it does not adhere to provisions in the settlement. Also, they will reimburse customers for claims improperly denied.
This is a MEGA win for consumers in Massachusetts. It shows the power of the kind of insurance regulations and consumer protections being proposed in Washington for national applicability. Congratulations to the AG and Insurance Commissioner Nonnie Burns for their ongoing work to protect all of us.
UPDATE – a page 1 story on the Berkshire Eagle exposes how rapacious the MEGA guys were:
A company salesman had convinced the couple to buy a bare-bones policy for more than $200 a month even though they were eligible for Commonwealth Care, the state insurance plan that runs $35. The salesman misled them when he said they would be fined $1,400 if they didn’t buy the plan.
“And then when Ernie turned 65, they told us we should keep the policy as a supplemental one in addition to Medicare, but it wasn’t even valid,” Beth Tatro said.