Texas company ordered to pay $200K

Bryan Cohen Apr. 26, 2012, 6:00pm


BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley announced a $200,000 consent judgment against a Texas-based discount health plan company for allegedly engaging in unfair and deceptive sales practices on Thursday.

The consent judgment orders Careington International Corp. to pay restitution to customers and enact preventative measures in the future to effectively comply with the law. Careington allegedly sold discount health plans by making misleading descriptions about the provisions of the plans and failing to properly disclose that its discount health plans are not 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," Coakley said.

"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 give discounts for certain health care services or products from particular providers in exchange for a fee. A discount health plan gives members a discount but still requires them to make all payments for services rendered.

Discount plans are not insurance products, are not regulated by the Massachusetts Division of Insurance and do not meet the state legal requirement to have health insurance.

Under the terms of the judgment, Careington will pay $190,000 in restitution to consumers who were subject to one or more of the allegedly deceptive practices in the sale of discount health plans. The state will receive $5,000 in penalties and $5,000 for court costs. Additionally, the judgment enjoins Careington for three years from selling hospital and physician discount plans and from engaging in deceptive sales practices related to offering discount health plans to residents of Massachusetts.

More News