Insurer Agrees To Pay $1.3M Settlement

BOSTON – An insurance company and its subsidiary have agreed to pay $1.3 million to settle allegations that they deceptively marketed and sold a discount health plan to hundreds of Massachusetts consumers, Attorney General Martha Coakley announced today. This result is in addition to a previous default judgment of $2.4 million against two other companies that were co-defendants in the lawsuit first filed in 2009.

“Companies offering discount health plans need to make clear disclosures about their products, including that they do not satisfy the state’s health insurance mandate,” AG Coakley said. “We will not accept companies engaging in illegal sales practices that mislead vulnerable individuals who are seeking actual health insurance. We are pleased that this settlement will result in relief for Massachusetts consumers.”

The consent judgment with Guarantee Trust Life Insurance Company (GTL) and its subsidiary Vantage America Solutions, Inc. (VAS), approved Wednesday in Suffolk Superior Court, requires them to pay a total of $1.3 million, including restitution and civil penalties. The settlement prohibits the companies from misrepresenting a discount health plan as sufficient to comply with Massachusetts laws requiring health insurance coverage since it does not meet the state mandate. The companies are also prohibited from marketing or selling as health insurance a product that is not an insured health plan as defined by state law referenced in the settlement, and from violating the AG’s regulations governing discount health plans and organizations.

According to the complaint, filed in October 2009 against GTL and VAS, along with Consumer Health Benefit Association (CHBA) and National Benefits Consultants, LLC (NBC), the companies unfairly and deceptively marketed and sold a discount health plan to consumers.  The complaint alleged the companies falsely represented a discount health plan as enabling a Massachusetts resident to meet the state’s health insurance coverage mandate, and by misleading consumers to believe that the plan was health insurance.

In 2011, the AG’s Office obtained a civil default judgment totaling $2.4 million against CHBA and NBC directing the payment of restitution to consumers and including preventive measures to ensure future compliance with the law. This settlement with GTL and VAS fully resolves the lawsuit, which had been set for a trial date of Oct. 20, 2014.

Under the terms of the consent judgment, GTL and VAS will be required to pay close to $476,000 for restitution or other relief for Massachusetts consumers who purchased the discount health plan at issue, along with more than $272,000 for interest, and close to $552,000 in civil penalties and costs. Consumers who may be eligible to receive relief under the settlement will be contacted directly.

This action is part of AG Coakley’s multi-faceted approach to address the deceptive marketing of discount health plans, including issuing discount health plan regulations, publishing consumer education advisories and pursuing other enforcement actions in order to safeguard consumers from these scams.

Discount health plans claim to offer consumers discounts for specific health care products or services from certain providers in exchange for a fee. Discount health plans are not themselves insurance products and are not regulated by the Massachusetts Division of Insurance.  These plans are not health insurance and do not meet the requirement under Massachusetts law to have health insurance.

Consumers looking for tips on how to avoid scams and make smart health plan choices, can go to the Attorney General’s website.

The matter is being handled by Assistant Attorney General Emiliano Mazlen with assistance from Assistant Attorney General Eric Gold, Legal Analyst Kathryn Doty and Acting Division Chief Margret Cooke, all of Attorney General Coakley’s Health Care Division and from Investigator Christine Junod and Director Kevin McCarthy of the Attorney General’s Civil Investigations Division.