Lawsuit Filed to Stop Malicious ‘Health Plan’ Marketing Scheme that Preyed on Vulnerable People

PR Newswire

SANTA MONICA, Calif., July 29, 2021 /PRNewswire/ -- Vulnerable Americans who needed comprehensive medical insurance were fooled into buying limited healthcare plans that didn't meet their needs by a group of insurance agencies that used misleading advertising, according to a new federal lawsuit filed by California-based McLaren Insurance Solutions. The lawsuit alleges that Insurance Care Direct (ICD) and its various business entities engaged in a malicious scheme that hurt families and individuals. Insurance Care Direct claims to be one of the nation's largest health and life insurance agencies.

Filed July 27, 2021, in the United States District Court for the District of California, the complaint (Case 2:21-cv-06066) describes a scheme hinged on false and deceptive advertising. Families and individuals looking to purchase healthcare coverage were led to believe they would be receiving comprehensive health insurance through reputable insurers like Humana, Blue Cross/Blue Shield, United Healthcare, Cigna, Aetna, or others. But instead, the ICD scheme forced nearly every person who reached to purchase a limited benefit plan that exposed the consumers to the risk of being under- or un-insured.

"ICD used deceptive and misleading marketing tactics to rip people off," said Jim Gale, one of the attorneys representing the plaintiffs. "This wasn't about getting people coverage. This was about ICD making money and padding its pockets on the backs of unsuspecting victims."

The lawsuit alleges the people who bought these policies were carefully and deliberately targeted and deceived by ICD.

"Limited healthcare benefit plans can be right for many people," said Gale. "But they are not the same as comprehensive plans, and ICD and its many pseudonym entities simply deceived people through its advertising and marketing."

The ICD scheme involved operating websites under unregistered fictitious names, such as "Affordable Healthcare of California." Unwary consumers would go to these sites that were filled with logos from well-known insurance carriers. Seeing these familiar companies, consumers would believe they were on a trustworthy website selling quality healthcare plans.

Consumers were then directed to share their personal information, including a phone number and email address, to receive "instant health plan quotes." But instead of seeing a quote, they would receive a phone call from an agent who would then force the consumer into a limited benefit plan when they thought they were buying a comprehensive plan that would provide full healthcare coverage.

"As we detail in our lawsuit, ICD is a well-oiled marketing machine that takes advantage of people who are vulnerable," said Gale. "It's a classic bait-and-switch."

In fact, in a recent bulletin, the Texas Department of Insurance warned insurance companies, agents, and marketers of discount health care programs, that this type of activity could lead to cease and desist orders, fines, suspensions, as well as possible criminal referrals.

The lawsuit also explains how ICD hired well-connected former politicians to escape regulatory scrutiny, such as former United States Senator and Governor of Nebraska, E. Benjamin Nelson and former Oklahoma Insurance Commissioner, John Doak.

In addition to the false advertising and unfair competition alleged in the complaint, ICD conducted their insurance business without a registered agent, which is a direct violation of insurance regulations. In fact, the person designated as the company's agent admitted under oath that he was just a "figurehead."

Attorneys for McLaren have already heard from many victims of this scheme and expect to hear from more. If you suspect you are a victim, email [email protected].

Attorneys for McLaren are available for comment upon request.

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