Latest announcement part of the Attorney General’s multi-pronged approach to address deceptive marketing practices
Attorney General Martha Coakley’s office announced that Texas-based Careington International Corporation has been ordered to pay $200,000 in restitution along with penalties and costs to the Commonwealth for unfair and deceptive sale of discount health plans. The AG’s office says that a consent judgement orders that the restitution amount be directed to consumers and preventative measures to ensure future compliance of Massachusetts law.
In addition, The Commonwealth will be paid $5,000 in penalties and $5,000 for the costs of the investigation and Careington will be enjoined for three years from selling any physician and hospital discount plan and from engaging in deceptive sales practices in offering discount health plans to Massachusetts residents.
Careington International is alleged to have sold discount health plans through a variety of deceptive acts including “…misleading descriptions of a plan’s provisions and failure to disclose properly that is discount health plans are not in fact, health insurance.”
Massachusetts residents are generally required to have health insurance and are afforded a wide range of coverage options to satisfy their individual needs, ” explained AG Coakley. “It is particularly important that companies offering discount health plans clearly disclose what their plans do and do not offer. Companies must properly disclose to Massachusetts residents that their discount plans are not health insurance.”
Discount health plans claim to offer discounts for specific health care products or services from certain providers in exchange for a fee. Under a discount health plan, the member receives a discount but is obligated to make all payments for services provided. Because discount plans are not insurance products, the AG says that the Massachusetts Division of Insurance (DOI) is not allowed to regulate them nor do the plans meet the Commonwealth’s requirement that all citizens have health insurance.
On April 25, 2012 the AG filed a complaint along with a consent judgment with the Suffolk Superior Court. The terms state that Careington will pay $190,000 for restitution to consumers who have indicated that they were victims of plans sold to provide discounts to hospitals and physicians rather than providing a comprehensive health plan.
This latest announcement of a consent judgment against Careington International is part of “a multi-pronged approach to address the deceptive marketing of discount health plans, including issuing discount health plan regulations, publishing consumer education advisories and pursuing other enforcement actions in order to safeguard consumers from these scams,” says the AG’s office. To date, two other judgments, one in the amount of $2.4 million and the other for $475,000 have been been obtained by the Attorney General Coakley’s Health Care Division against these type of discount health plans.
