USA Today
Bogus health plans that advertise comprehensive coverage at bargain prices are on the rise, luring desperate consumers to pay for policies that won't cover their medical bills, state insurance commissioners say.
In recent weeks, Missouri regulators have cracked down on 13 companies. California has ordered firms to stop selling misleading and unlicensed health discount cards. Tennessee regulators have seized a company they allege has collected more than $14 million from people across the U.S. — then stranded them with unpaid bills.
"I've never seen anything like this," said Oklahoma Insurance Commissioner Kim Holland, who said the bad economy has fueled the uptick in scams.
James Quiggle, spokesman for the Coalition Against Insurance Fraud, which represents consumers and insurance companies, said: "There's high unemployment, health premiums are expensive and tens of millions of people have no health coverage. This is an ideal breeding ground for scams."
Among 37 insurance bureaus responding to a coalition survey last fall, 57% reported increases in health plan scams.
The nation's new health care law may inspire more scams that prey on public expectations for expanded coverage and misrepresent the changes, Secretary of Health and Human Services Kathleen Sebelius warned in letters this month to states.
Among the groups regulators are targeting:
• American Trade Association: Last month, Tennessee regulators seized the headquarters of the association and another firm, Smart Data Solutions. The state alleges in court records the firms enticed at least 12,400 consumers to buy "bogus health coverage," then unjustly denied claims and diverted funds. An attorney for the two companies, Nader Baydoun, said his clients were just membership benefit administrators who also are victims of outside insurance companies. Tennessee regulators question whether the products were ever underwritten by any legitimate insurance company, court papers say.
• Consolidated Workers Association: Montana regulators are among those that have taken actions to stop the association and an affiliated firm, the National Alliance of Benefit Services Association (NABSA), from selling "bogus insurance." Internet ads and unsolicited faxes advertised $10 doctor visits and "Pre-existing Conditions OK" at rates starting at $199, regulators said in a press release. NABSA never knowingly violated any law and was a victim of Consolidated Workers, said attorney Sheldon Wilensky. Consolidated Workers officials could not be reached for comment.
• HealthcareOne: California regulators issued cease-and-desist orders in February against HealthcareOne, Elite Healthcare and others at the same Arizona address. The firms mislead consumers into thinking they're getting insurance accepted by 900,000 providers, then the consumers can't locate providers who honor the discount card, the state alleges in the orders. Company officials did not respond to interview requests.
A HealthcareOne television ad featured an image of the White House and the words: "Healthcare Alert! Daily registration limits have been established for all Americans seeking affordable access to healthcare. Register now for immediate acceptance," according to the state's order. Cindy Ehnes, director of the California Department of Managed Health Care, said the ad capitalized on the national health care law then pending in Congress.
Said Kansas Insurance Commissioner Sandy Praeger, whose office is investigating several firms: "Anytime there's increased attention about changes in the marketplace, they'll find a way to weasel in and take advantage of it."
State insurance regulators say consumers should check with their offices before buying health plans.
"Check with us to see whether they're actually licensed to do business in the state, whether the product they're offering is actually registered with us. If not, those are huge red flags," Montana's commissioner, Monica Lindeen, said.
Montana resident Wendy Kruse, 43, is suing Consolidated Workers Association for $100,000 in unpaid medical bills from a car accident. "It's completely destroyed her life," her attorney, Glenn Tremper, said.
In recent weeks, Missouri regulators have cracked down on 13 companies. California has ordered firms to stop selling misleading and unlicensed health discount cards. Tennessee regulators have seized a company they allege has collected more than $14 million from people across the U.S. — then stranded them with unpaid bills.
"I've never seen anything like this," said Oklahoma Insurance Commissioner Kim Holland, who said the bad economy has fueled the uptick in scams.
James Quiggle, spokesman for the Coalition Against Insurance Fraud, which represents consumers and insurance companies, said: "There's high unemployment, health premiums are expensive and tens of millions of people have no health coverage. This is an ideal breeding ground for scams."
Among 37 insurance bureaus responding to a coalition survey last fall, 57% reported increases in health plan scams.
The nation's new health care law may inspire more scams that prey on public expectations for expanded coverage and misrepresent the changes, Secretary of Health and Human Services Kathleen Sebelius warned in letters this month to states.
Among the groups regulators are targeting:
• American Trade Association: Last month, Tennessee regulators seized the headquarters of the association and another firm, Smart Data Solutions. The state alleges in court records the firms enticed at least 12,400 consumers to buy "bogus health coverage," then unjustly denied claims and diverted funds. An attorney for the two companies, Nader Baydoun, said his clients were just membership benefit administrators who also are victims of outside insurance companies. Tennessee regulators question whether the products were ever underwritten by any legitimate insurance company, court papers say.
• Consolidated Workers Association: Montana regulators are among those that have taken actions to stop the association and an affiliated firm, the National Alliance of Benefit Services Association (NABSA), from selling "bogus insurance." Internet ads and unsolicited faxes advertised $10 doctor visits and "Pre-existing Conditions OK" at rates starting at $199, regulators said in a press release. NABSA never knowingly violated any law and was a victim of Consolidated Workers, said attorney Sheldon Wilensky. Consolidated Workers officials could not be reached for comment.
• HealthcareOne: California regulators issued cease-and-desist orders in February against HealthcareOne, Elite Healthcare and others at the same Arizona address. The firms mislead consumers into thinking they're getting insurance accepted by 900,000 providers, then the consumers can't locate providers who honor the discount card, the state alleges in the orders. Company officials did not respond to interview requests.
A HealthcareOne television ad featured an image of the White House and the words: "Healthcare Alert! Daily registration limits have been established for all Americans seeking affordable access to healthcare. Register now for immediate acceptance," according to the state's order. Cindy Ehnes, director of the California Department of Managed Health Care, said the ad capitalized on the national health care law then pending in Congress.
Said Kansas Insurance Commissioner Sandy Praeger, whose office is investigating several firms: "Anytime there's increased attention about changes in the marketplace, they'll find a way to weasel in and take advantage of it."
State insurance regulators say consumers should check with their offices before buying health plans.
"Check with us to see whether they're actually licensed to do business in the state, whether the product they're offering is actually registered with us. If not, those are huge red flags," Montana's commissioner, Monica Lindeen, said.
Montana resident Wendy Kruse, 43, is suing Consolidated Workers Association for $100,000 in unpaid medical bills from a car accident. "It's completely destroyed her life," her attorney, Glenn Tremper, said.
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