Minnesota AG Sues 2 Insurers for Alleged Fraudulent Activity

Minnesota Attorney General Lori Swanson is suing two out-of-state companies for selling allegedly fraudulent health insurance coverage to the uninsured.

In an announcement on the AG’s Web site, Swanson said the two companies are “scamming Minnesota citizens struggling with the high cost of health care into believing they were purchasing health coverage at an affordable price when they were really purchasing non-insurance products that offered limited benefits.”

In separate filings, Swanson sued:

(1) Consumer Health Benefits Association, a Missouri non-profit corporation with its principal place of business in Florida – which sold the “New Choice Health Plan,” a discount health plan touted as being the same as or just like health insurance; and

(2) Home Health America LLC of Nevada, which offered long-term and home care benefits to elderly citizens for fees of up to $4,000 without being licensed as an insurance company. As noted below, both Consumer Health Benefits Association and Home Health America’s owner have in the past had actions taken against them by other states over similar conduct.

Both lawsuits seek injunctive relief, restitution for consumers, and civil penalties

A spokesman for the attorney general’s office, Ben Wogsland, told the Associated Press the companies duped uninsured consumers with offers of inexpensive health insurance coverage. He says consumers typically pay hundreds of dollars or more for startup fees and premiums before finding out they’re not getting much in return.

Swanson said the companies are among a niche group of marketers that seek out citizens who are looking for affordable coverage in the face of high health insurance premiums.

The AG’s office noted that family health insurance premiums in Minnesota rose 108 percent from 2000-2009, while median earnings rose by only 22.6 percent, according to a September, 2009 report by Families USA.

The average annual premium for family coverage in Minnesota rose from $6,957 in 2000 to $14,498 in 2009, according to the same report.

Another Families USA report from March, 2009 found that nearly one out of four Minnesotans under the age of 65 went without health insurance for all or part of the two year period 2007-2008.

The cost of nursing home and home health care for the elderly is also on the rise. For example, the average annual cost to receive 40 hours a week of home health care is $52,977, according to the website www.insure.com. The average annual long-term care insurance premium for someone age 70 or above was $3,026 in 2007, according to the Web site www.longtermcare.gov.

Sources: Minnesota Attorney General’s Office, www.ag.state.mn.us, Associated Press