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Mass. AG obtains $2.4M judgment

By Bryan Cohen | Aug 3, 2011


BOSTON (Legal Newsline) - Massachusetts Attorney General Martha Coakley announced a $2.4 million civil judgment Tuesday against two companies for alleged fraudulent marketing and selling a discount health plan as health insurance.

The judgment against Consumer Health Benefit Association and National Benefits Consultants, LLC orders restitution for consumers and preventive measures to ensure future compliance with the law. The companies are ordered to pay consumers in Massachusetts $586,960.95 in restitution and to pay the state $1,780,000 in civil penalties and $99,000 in attorneys' fees.

The judgment permanently prohibits the defendants from representing a discount health plan or insurance as enabling a state resident to meet the state health insurance coverage mandate when the product does not meet the requisite standard, marketing or selling as health insurance a product that is not a health benefit plan and violating regulations issued by Coakley governing discount health plans and discount health plan organizations.

"Massachusetts residents are generally required to have health insurance and are afforded a wide range of coverage options to satisfy their individual needs. It is particularly important that companies offering discount health plans clearly disclose what their plans do and do not offer," Coakley said. "We will continue to vigorously pursue companies if they misrepresent discount plans as health insurance in Massachusetts."

According to a complaint filed in October 2009 against CHBA, NBC, Guarantee Trust Life Insurance Company and Vantage America Solutions, Inc., the defendants allegedly engaged in deceptive and unfair sales of a discount health plan to consumers using multiple tactics and represented the discount health plan as health insurance and as sufficient to satisfy the state law requiring individuals to have health insurance.

CHBA and NBC have filed for bankruptcy in Florida, which will necessarily affect the availability of funds to pay the judgment. Coakley's lawsuit against Vantage America Solutions, Inc. and Guarantee Trust Life Insurance Company is ongoing.

Discount health plans claim to offer consumers discounts for specific health care services or products from certain providers in exchange for some form of fee. Under a discount health plan, the plan member should receive a discount but is obligated to make all payments for provided services.

Discount health plans are not themselves insurance products and are not regulated by the Massachusetts Division of Insurance, Coakley says. These plans are not actually health insurance and do not meet the requirement under state law to have health insurance.

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