'Scam' Insurers Preyed on Elderly, Minn. Says

The Minnesota attorney general has sued two out-of-state insurers for allegedly preying on the elderly by offering to sell them bogus discount health care coverage plans.

The Consumer Health Benefits Association and Home Health America scammed consumers into thinking they were buying affordable health coverage when in fact they were really purchasing non-insurance products that offered limited benefits, according to the complaint filed in the Hennepin County District Court.

Minnesota Attorney General Lori Swanson said in a statement that the companies sought out elderly citizens who were looking for cheap coverage in the face of "skyrocketing" health insurance premiums.

"Some companies are exploiting the lack of affordable health coverage by aggressively promoting risky, unregulated coverage products that offer little or no financial protection if you get sick," Swanson said.

The Missouri-based Consumer Health Benefits Association allegedly misled consumers into paying an enrollment fee of $130 and a monthly fee of between $130 and $150 by misrepresenting that it offered health insurance "or the functional equivalent" of health insurance.

CHBA told consumers in sales calls that its plan covers 80 percent of medical expenses and requires only minimum co-pays for doctor and hospital visits, according to the lawsuit.

In reality CHBA does not provide insurance coverage and is not licensed or regulated by the state of Minnesota.

The company also refused to refund the fees after customers realized they had been duped, according to the suit.

Home Health America, the complaint goes on, targeted elderly victims through the mail by offering them "around-the-clock" long-term home care services for fees of up to $4,000.

The Nevada-based company also falsely told seniors that their health coverage included 24-hour nursing care and assisted-living care, according to the complaint.

Swanson said she is not aware of any cases in which the company actually paid claims in excess of the victim's initial payment.

Like CHBA, she added, Home Health America is not a licensed insurance company in Minnesota.

The lawsuit claims that both companies violated the state's laws on consumer fraud, deceptive trade practices, long-term-care insurance and home solicitation.

In her statement Swanson warned consumers to be on guard against companies that use false promises and misleading statements to sell unlicensed and unregulated health insurance products that offer "little or no" financial protection.

"A health discount plan is not an insurance policy and does not provide insurance protection," Swanson said.

At best such plans offer limited discounts from the retail price charged by certain doctors and clinics, she added.

Company officials did not respond to requests for comment on the litigation.

On its Web site CHBA provides a disclosure stating that its plan "is not a health insurance policy."

Home Health America makes a similar disclosure on its site, noting that its program "is not insurance."

In addition to an injunction the state seeks restitution and civil penalties against the two companies.

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