CASTING SHADE ON DUBIOUS HEALTH COVERAGE

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CASTING SHADE ON DUBIOUS HEALTH COVERAGE

Before enactment of the Affordable Care Act in 2010, health coverage was a bit of the “Wild West,” with scam artists taking advantage of people desperate for medical treatment. The growth of shady health coverage thrived with the layoffs of the Great Recession from 2008 to 2010. In 2007, 7.2 percent of Minnesotans were uninsured for health care. By 2009, over 9.1 percent of Minnesotans were without health coverage.

Attorney General Lori Swanson was one of the first officials in the country to take action during this period against dubious and fraudulent health care practices. In October of 2009 Swanson filed lawsuits against two companies masquerading worthless documents as health insurance policies. One company, Consumer Health Benefits Association of Florida, was neither not licensed as an insurance company. Yet, it launched an intense campaign to induce the hapless uninsured by claiming it paid 80% of medical bills from a vast network of Minnesota health providers. In fact, what was sold was essentially a health discount plan, where the consumer could get a 20% discount off inflated list prices from certain physicians. The company generally charged a monthly premium of $259 per month. Swanson alleged in the lawsuit that 41% of the 2,250 Minnesotans who bought the policy tried to rescind the transaction in the first month and 91% tried to rescind the policy in the first year. In July of 2010, Swanson secured a judgment against the company which prohibited it from doing business in Minnesota. A month later, in August of 2010, the Federal Trade Commission followed up on Swanson’s leadership with a nationwide lawsuit filed in New York.

On the same day she sued Consumer Health Benefits Association, Swanson also sued Home Health America. Home Health engaged in intense of senior citizens and sold “policies” on a lump sum basis, meaning that the consumer would pay $3,000 - $4,000 and thereafter supposedly be eligible for round-the-clock nursing care. Consumers who bought the policies complained it was difficult if not impossible to get any payments in exchange for the hefty “premiums.”

In February of 2010 Swanson sued two unlicensed Texas companies that touted their health coverage but in fact were no more than health discount plans. One company, Direct Medical Network Solutions of South Lake, Texas, contacted Minnesotans and claimed that, for a $150 application fee and a $380 monthly premium, it would provide 80% coverage. Other telemarketers would lower the monthly premium of $159 per month to lure consumers.

In fact, the “policy” issued by Direct Medical provided that the consumer, not the company, paid the 80% coverage. In March of 2010 Swanson won a judgment against Direct Medical that barred it and its principles from selling health discount plans in Minnesota.

The other Texas company was also aggressive in deceiving consumers about the nature of the coverage. In August of 2010 Swanson secured a Consent Judgement against the second company which prohibited it from telemarketing to Minnesotans.

Both companies used insurance terms such as “coverage,” “deductible,” “co-pay,” and premium” to confuse consumers into thinking they were buying health insurance. Swanson said at the time that the two Texas companies duped over 4,600 Minnesotans.

During her tenure as Attorney General, Swanson filed at least a half dozen other health care lawsuits involving usurious interest rates charged by health providers , health care credit cards issued by providers , and unlawful seizure in collections . While the implementation of the Affordable Care Act in 2010 reduced the appetite of consumers to seek health coverage from telemarketers, shady operators still try to take advantage of the high cost of health insurance premiums.

References:

  1. Bakst, Brian, “Minnesota accuses company of health insurance fraud", Duluth News Tribune, page B4, October 1, 2009.
  2. https://www.twincities.com/2009/09/29/minnesota-accuses-companies-of-health-insurance-fraud/
  3. Olson, Jeremy, “Firms sued for health insurance fraud,” Pioneer Press, page 1B, October 1, 2009.
  4. https://www.twincities.com/2009/09/30/minnesota-attorney-general-suing-two-companies-for-health-insurance-fraud/
  5. Lerner, Maura, “Health policies offered little value", Star Tribune.
  6. Foster, Julie, “State sues 2 discount health plans”, Pioneer Press, page 1C, February 11, 2010.
  7. https://www.twincities.com/2010/02/09/state-sues-2-discount-health-plans/
  8. Chen. May Yee, “A target for shady health plans: The uninsured", Star Tribune, p. A1, May 2, 2010.
  9. Snowbeck, Christopher, “Bogus Health Insurers Targeted”, Pioneer Press, page 1C, October 12, 2010.
  10. “AG sues Texas health care companies”, St. Cloud Times, page 1, February 11, 2010.
  11. Swanson v. Association Health Care Management, Hennepin County District Court, File 27-CV-10-2691 (2010).
  12. Wayne, Alex, “FTC cracks down on health insurance scams,” Bloomberg News, August 12, 2010, page D3.
  13. https://www.startribune.com/ftc-cracks-down-on-health-insurance-scams/100489229/
  14. Swanson v. Erik Okeson, Dakota County District Court, file # 19HA-CV-09-7091 (2009).
  15. Chen, May Yee, “Minnesota sues over Allina’s 18% interest rate,” Star Tribune, page A1, January 22, 2009 https://www.startribune.com/allina-sued-over-18-interest-rate/38138604/ ; “Minn. AG sues Allina over interest on Medical debt,” Minnesota Public Radio, January 22, 2009; https://www.mprnews.org/story/2009/01/22/minn-ag-sues-allina-over-interest-on-medical-debt; “Allina settles with AG over medical interest,” St. Cloud Times, April 15, 2009; https://www.startribune.com/allina-to-refund-1-1-million-to-patients/42965722/
  16. “Minn. Chiropractor accused of credit card fraud,” Pioneer Press, August 12, 2009; https://www.twincities.com/2009/08/12/minn-chiropractor-accused-of-credit-card-fraud/ ;Pugmire, Tim, “Minnesota AG sues clinic pushing credit cards on patients,” Minnesota Public Radio; August 12, 2009
  17. Swanson v. Accretive Health Care, https://casetext.com/case/minnesota-v-accretive-health-1; https://www.mprnews.org/story/2012/07/31/accretive-agrees-to-25m-fine-company-to-withdraw-from-minn