3 UnitedHealthcare affiliates ordered to pay $165M in Mass. lawsuit

Three health insurance companies affiliated with UnitedHealthcare have been ordered to pay $165 million in fines and restitution for deceptive marketing practices in what is believed to be the largest total civil penalty brought against a company by the state of Massachusetts.

Acting on a complaint by the state’s attorney general, Superior Court Justice Helene Kazanjian lowered the boom on the three companies – HealthMarkets Inc., the Chesapeake Life Insurance Company, and HealthMarkets Insurance Agency – and said the insurers intentionally targeted “vulnerable consumers who could least afford their products.” The justice said the companies’ deceptive conduct “was particularly egregious.”

The case has a long history dating back to 2006, when the then-AG sued HealthMarkets alleging the companies engaged in misleading marketing tactics. In 2020, the state reopened the case and alleged the companies violated the state’s consumer protection law by misleading consumers into buying unnecessary health insurance products to the tune of more than $43.5 million and also violated a prior consent judgment meant to protect consumers.

In April 2022, the Superior Court found all three companies liable for violating the consent judgment and the Massachusetts Consumer Protection Act.  The court found that the companies deceived consumers both about their sales agents and the insurance products they were selling; deceptively advertised claims that their sales agents were objective; and that they represented all insurance carriers when in reality they did not.

The companies, all owned by UnitedHealthcare, are based in Texas, and have operated in Massachusetts and other areas around the country. The court judgement issued Dec. 31, ordered the companies to pay $50 million in restitution for consumers and $115 million in civil penalties.

UnitedHealthcare to appeal

In a statement, UnitedHealthcare said it would appeal the judgment.

“We disagree with the Massachusetts court’s latest ruling in the litigation involving the HealthMarkets companies,” the spokesperson said. “The fundamental errors in this ruling compound those already made by the trial court earlier in this case and have resulted in a decision that is clearly unsupported by the evidence and contrary to established Massachusetts law.”

In the “Findings of Fact” included in the 48-page court order, the judge said more than 19 agents of the companies, all named, engaged in false and deceptive advertising on radio, television, on their websites, and in emails. The state said the agents sent more than 114,000 flyers or forms to Massachusetts residents between 2013 and 2019 that falsely explained the insurers’ products.

The court also showed that agents sold supplemental health insurance using marketing materials that hid the fact that the single premium price included both major medical and supplemental health insurance. “The summary judgment record also included undisputed evidence that they were trained to do so,” the judge’s order said.

Testimony credited by court

Kathryn Kelley, a Massachusetts resident, testified at the trial that she thought her Chesapeake agent was a local agent, offering to help her find what she needed to buy to fulfill the Massachusetts requirement to have health insurance. The court credited her testimony, and that of two other residents, with information that company agents deceived them into paying for Chesapeake supplemental health insurance when they were seeking only to purchase major medical insurance to comply with Massachusetts requirements.

Chesapeake agents also marketed discount health plans, including dental plans, to
Massachusetts residents as "coverage," and using insurance-related terms like "premium," "co- pays," and "carriers," even though the plans were not insurance.

“For years, the defendants preyed on financially vulnerable individuals, deceiving them into buying products they didn’t need or couldn’t afford,” said Massachusetts Attorney General Andrea Joy Campbell. “This order holds the companies accountable and will provide meaningful restitution to consumers across the Commonwealth.”

Campbell said the judge’s order “is believed to impose the largest total of civil penalties in an action brought by the Attorney General’s Office under the Massachusetts Consumer Protection Act.”

UnitedHealthcare has been in the national news crosshairs since its chief executive was fatally shot in Manhattan last month by a 26-year-old individual who was angered by what he said was the company’s unfair practices. The shooting pulled the cover off a latent and boiling level of anger toward the entire healthcare industry as aggrieved patients took to social media with their tails of what they said was overpriced premiums, unjustified claim denials and alleged corrupt practices.

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Doug Bailey is a journalist and freelance writer who lives outside of Boston. He can be reached at [email protected].