Says Defendants Misled Consumers Into Buying Unnecessary Health Insurance Products
Attorney General Maura Healey has filed suit against three companies alleging that each misled consumers here in the Commonwealth into buying needless supplemental health insurance products. As a result, AG Healey argues that since 2011 more than 15,000 Massachusetts residents were cheated out of approximately $43.5 million. The three health insurance companies targeted in the the lawsuit are HealthMarkets, Inc. and its subsidiaries The Chesapeake Life Insurance Company, and HealthMarkets Insurance Agency, Inc. f/k/a Insphere Insurance Solutions, Inc
While the companies are based in Texas all three operated both in Massachusetts and many other states. UnitedHealth Group has owned these entities since 2019.
“Their business model was to dupe consumers into buying supplemental health insurance products, which they did not know about, did not want, or were misled into thinking were necessary or valuable,” said AG Healey. “The misconduct here is even worse, because HealthMarkets is a repeat offender. We are suing to recover the money taken from Massachusetts residents and ensure that this never happens again.”
According to the complaint filed in Suffolk Superior Court, the companies violated Massachusetts’ consumer protection statute as well as a prior consent judgement entered in this same court. The following is the AG’s explanation of the case as outlined in the official release:
“The AG’s lawsuit alleges that the companies deceived consumers both about their sales agents and the insurance products they were selling. It alleges that they used consumers’ need for traditional health insurance as a “trojan horse” to meet with them and sell unnecessary and limited value supplemental health insurance. The companies’ advertising deceptively claimed that their sales agents were objective, that their services were free, and that they represented all insurance carriers. The AG’s complaint alleges, however, that their agents were not objective, but were incentivized with higher commission rates to sell Chesapeake’s supplemental insurance. The complaint further alleges that those agents did not represent all carriers and sometimes did charge consumers fees.
The complaint also alleges that sales agents deceptively passed off supplemental insurance as major medical insurance or as part of major medical insurance, including by hiding it in bundles with major medical insurance. Other allegations include:
- Illegally advertising their agents as insurance advisors, when they were not licensed as advisors;
- Targeting consumers who had low incomes and were Medicaid-eligible;
- Unlawfully selling supplemental health insurance as a substitute (rather than a supplement) for major medical insurance;
- Making incomplete or unfair comparisons relating to their supplemental health insurance; and
- Deceptively manipulating consumers’ emotions in order to sell supplemental health insurance.
According to the complaint, the companies’ misconduct is in violation of a 2009 Superior Court judgment enjoining them from engaging in many of these activities based on an earlier lawsuit brought by the Attorney General’s Office alleging that HealthMarkets, Inc. and two different subsidiaries had engaged in similarly deceptive practices related to sales of health insurance. “