Insurer To Pay $1.5M More to Mass.

BOSTON – After allegedly failing to provide all the consumer relief required by a consent judgment, Life Insurance Company of North America (LINA) has agreed to pay more than $1.5 million in additional restitution to consumers and payments to the Commonwealth, Attorney General Martha Coakley announced today.

With an amendment to the original settlement, filed Thursday in Suffolk Superior Court, LINA has now agreed to pay collectively $5.25 million, which includes approximately $3.5 million in consumer relief and $1.75 million to the Commonwealth as a deterrent.

“LINA’s failures to comply fully with its obligations under the consent judgment are unacceptable,” AG Coakley said. “This amendment will ensure that all Massachusetts consumers entitled to relief under the settlement will receive restitution from this company, and it will help further our ongoing efforts to ensure access to mental health services to veterans and their families.”

As part of the consent judgment entered in July of 2012, LINA was required to refund premiums paid, minus any insurance claims collected, to all Massachusetts consumers, including veterans, who had purchased certain supplemental health insurance. Under an amendment to the settlement, LINA has agreed to pay at least $750,000 in additional consumer relief to Massachusetts residents who had the supplemental health insurance coverage, but have not yet received the restitution required.  Half of the $750,000 in additional deterrent payments to the Commonwealth will be used to continue funding grantsthat assist Massachusetts veterans, seniors, and those with mental health conditions.

The AG’s original complaint alleged that LINA marketed its supplemental health insurance coverage to veterans, especially WWII veterans, through direct mail and Internet solicitations in deceptive ways.  These included misleadingly marketing the insurance as though it were a government program and misrepresenting the value of its health benefits. The settlement required LINA to ascertain all Massachusetts consumers who had the insurance and to pay restitution. As a result, LINA has already paid more than $2.8 million in direct relief to Massachusetts veterans and their families and $1 million to the Commonwealth. The total consumer relief already far exceeds original estimates of $650,000.

LINA is required to send letters to all consumers entitled to relief, to pay claims denied in violation of Massachusetts statutory mandates, including for non-discriminatory coverage of mental health services, and to refund consumers who purchased the supplemental insurance coverage the amount of premiums they paid, minus any insurance claims collected.

In addition to providing at least $750,000 in new restitution to consumers, LINA has agreed to pay an additional $750,000 to the Commonwealth as a deterrent, $375,000 of which is for civil penalties and $375,000 of which will be used to promote initiatives designed to assist Massachusetts military veterans, seniors, or residents with mental health conditions, through the Attorney General’s Access to Mental Health Services Grant Program.

Last month, using funds from the original settlement with LINA, the AG’s Office awarded $500,000 in grantsto five organizationsfor programs to provide mental health services to veterans and their families.

Recognizing the unique needs of service members and veterans, AG Coakley created an office-wide Veteran’s Task Forceto ensure that Massachusetts veterans and their families have access to the full range of benefits and services offered to them.  The task force coordinates resources and services for veteransacross the AG’s Office on relevant issues they may face upon returning from deployment overseas, such as consumer, health care, and employment issues. The AG’s Office also updated its Veterans Resource Guide, a comprehensive resource that highlights the many special protections and benefits that are available to veterans, along with information regarding healthcare, education, employment and housing benefits.

This case is part of the AG Coakley’s sustained efforts to combat unfair and deceptive practices in the marketing and administration of health insurance, including failures to cover as required by state law mental health and other statutorily mandated services.

The matter is being handled by Assistant Attorney General Emiliano Mazlen of the AG’s Health Care Division with assistance from Division Chief Thomas O’Brien and from William Mackay of the AG’s Civil Investigations Division.