Thursday, September 23, 2010

Another Scam

Yesterday I posted on how insurance companies intend to avoid the new healthcare requirement that they stop denying coverage to children with pre-existing conditions. They simply won't offer policies. It's all perfectly legal.

Today I'm interested in one of the not-so-legal insurance company policies, "Essential Health Plans", marketed to people who can't afford traditional plans. Minnesota has cracked down on these cheap but essentially useless policies and one of the companies it nailed is AIG.

The Minnesota Department of Commerce has fined an insurance company owned by the troubled American International Group Inc. $100,000 for deceptive marketing and ordered it to refund money to those who bought policies.

At least 1,500 Minnesotans bought the "Essential Health" plans from the National Union Fire Insurance Co. of Pittsburgh, a unit of AIG based in New York.

The Essential Health plans included accident and sickness insurance as well as medical discounts. However, they were not approved for sale by the Minnesota Commerce Department and did not meet state requirements. ...

The department's move is part of a growing national crackdown on bogus medical plans. As many Americans have lost their health insurance along with their jobs, they've become vulnerable to companies selling cheaper alternatives. When these buyers seek medical care, they discover too late that the plans don't cover much.
[Emphasis added]

In other words, families have been paying $40-50 a month for nothing. Nice scam, eh? What's even more brazen about the program is that it happened after the federal government poured millions in bailout money to keep AIG afloat, taking a 79% ownership in the company. And the scammers didn't even bother to take certain steps which would give at least the appearance of a legitimate operation:

[Deputy Commerce Commissioner] Munson-Regala said the marketing of the Essential Health policies violated Minnesota law in several ways.

"No. 1, they were not approved for sale in the state. No. 2, they wouldn't have met the requirements for approval anyway. No. 3, they misled consumers as to the nature of the products, and No. 4, the folks selling the insurance in Minnesota were not licensed in Minnesota," he said.

The department has instructed the National Union Fire Insurance Co. to fully refund to all Minnesotans who bought polices the money they paid.

Nice, huh?

Keep in mind that this was one of those companies we were told was "too big to fail."

I really am getting closer to taking to my bed.

Labels: ,


Post a Comment

<< Home