ATTORNEY GENERAL MARTHA COAKLEY SUES HEALTH INSURERS FOR DECEPTIVE MARKETING & SALES, DENYING MANDATED BENEFITS & VIOLATING CONSUMER PRIVACY RIGHTS
August 23, 2007
CONTACT: Amie Breton
(617) 727-2543
BOSTON – Attorney General Martha Coakley filed an amended complaint in Suffolk Superior Court late yesterday against MEGA Life and Health Insurance, Mid-West National Life Insurance, and their parent company; HealthMarkets, Inc., raising serious new allegations about unfair and deceptive trade practices.
Specifically, the Attorney General's complaint alleges that the insurance companies violated state law by misrepresenting the provisions of their policies, failing to cover health benefits and services required by Massachusetts law, disclosing personal health information about insured consumers to third parties, and illegally requiring self-employed individuals and small businesses to pay fees to join associations to gain access to small group insurance. The Attorney General's action seeks to stop the alleged unlawful practices, to require that MEGA and Mid-West pay refunds and restitution to harmed Massachusetts residents and substantial civil penalties and costs to the state.
"Our complaint alleges that MEGA and Mid-West routinely mislead people about the benefits in their health insurance policies," said Attorney General Coakley. "These companies targeted individuals and small businesses looking for low cost health insurance, but the coverage they provide is not what MEGA and Mid-West’s advertising and sales agents make it out to be, and it falls far short of what the law requires."
The complaint asserts that MEGA and Mid-West failed to comply with Massachusetts law by denying claims for benefits, such as maternity health care, "pap" test screening, contraceptive services, infertility treatment, mammography and preventive care for children up to age six. Similarly, health insurers cannot exclude coverage for a preexisting condition if an insured had proper coverage.
The Attorney General's complaint also alleges that MEGA and Midwest imposed illegal restrictions on coverage of pre-existing conditions. The complaint further alleges that MEGA and Mid-West deceptively marketed their substandard health insurance policies by misrepresenting benefits and limitations.
The new lawsuit dramatically expands upon an October 2006 complaint filed against MEGA which alleged that the company failed to provide outpatient contraceptive services mandated by Massachusetts law and illegally excluded benefits for some patients with pre-existing conditions.
Under Massachusetts law, health insurers must provide insurance to individuals and small groups where the consumer has met minimum eligibility criteria. Today's complaint alleges that MEGA unfairly required membership in a third-party association as an unlawful condition for self-employed individuals and small businesses to gain access to insurance.
Consumers concerned about deceptive health insurance practices in the Commonwealth are urged to call the Attorney General's Health Care Hotline at (888) 830-6277.
Assistant Attorneys General Thomas O'Brien, Emiliano Mazlen, Emily Paradise, and Danielle Wood of Attorney General Martha Coakley's Health Care Division are assigned to this case, with assistance from Health Care Division Chief Quentin Palfrey.