BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley announced on Monday that a health insurance company will pay restitution and payments to the commonwealth as part of a consent judgment for selling unauthorized health insurance.

United States Life Insurance Company in the City of New York, a subsidiary of AIG, agreed to pay $760,000 with $500,000 set aside to refund premiums and pay claims to consumers for mandated services and $260,000 to be paid to the commonwealth.

Coakley's office alleged that U.S. Life sold and marketed illegal health insurance products that did not cover mandated benefits to Massachusetts consumers.

"When Massachusetts consumers buy health insurance, they should be able to feel confident that the coverage complies fully with Massachusetts law," Coakley said. "Our office will continue to monitor the marketing and payment practices of health insurers issuing coverage for Massachusetts residents to make sure that consumers are not misled and are not denied benefits to which they are legally entitled."

Coakley's office alleged that U.S. Life sold health insurance policies in Massachusetts that had not been authorized for sale and that the company did not cover health services required by Massachusetts law. The mandated services that were at issue included mental health, maternity health care, "pap" test screening, mammography, infertility care and preventive care for children up to six years of age. Coakley alleged that marketing health insurance not authorized for sale and denying mandated benefits violated the state's Consumer Protection Act.

As part of the settlement, U.S. Life will send letters to consumers who are entitled to relief. The company will refund premiums paid by Massachusetts residents who purchased unauthorized health insurance coverage less any claims paid under it.

U.S. Life must also pay for mandated services previously denied to Massachusetts residents who had been covered under certain health insurance policies.

As part of the judgment, U.S. Life did not admit any liability and cooperated in the resolution of the matter.

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