For Immediate Release - August 02, 2011

AG Coakley's Office Obtains $2.4 Million Judgment Against Companies for Fraudulently Marketing and Selling Discount Health Plan

BOSTON - A $2.4 million civil judgment has been entered against two companies for fraudulently marketing and selling a discount health plan as health insurance to Massachusetts consumers, Attorney General Martha Coakley announced today. The judgment orders restitution for consumers and preventive measures to ensure future compliance with the law.

Under the judgment filed in Suffolk Superior Court, Consumer Health Benefit Association (CHBA) and National Benefits Consultants, LLC, (NBC) are ordered to pay Massachusetts consumers $586,960.95 in restitution and to pay the Commonwealth $1,780,000 in civil penalties and $99,000 in attorneys' fees. The judgment permanently prohibits the defendants from: marketing or selling as health insurance a product that is not a health benefit plan; representing a discount health plan or insurance as enabling a Massachusetts resident to meet the Massachusetts health insurance coverage mandate when the product does not meet the requisite standard; and violating regulations issued by the Attorney General governing discount health plans and discount health plan organizations.

"Massachusetts residents are generally required to have health insurance and are afforded a wide range of coverage options to satisfy their individual needs. It is particularly important that companies offering discount health plans clearly disclose what their plans do and do not offer," AG Coakley said. "We will continue to vigorously pursue companies if they misrepresent discount plans as health insurance in Massachusetts."

According to the complaint filed in October 2009 in Suffolk Superior Court against CHBA, NBC, Guarantee Trust Life Insurance Company, and Vantage America Solutions, Inc., the defendants unfairly and deceptively sold a discount health plan to consumers using multiple tactics. The complaint alleges the defendants falsely represented the discount health plan as health insurance and as sufficient to satisfy the Massachusetts law requiring individuals to have health insurance. CHBA and NBC have filed for bankruptcy in Florida, which will necessarily affect the availability of funds to pay the judgment. The Attorney General's lawsuit against Guarantee Trust Life Insurance Company and Vantage America Solutions, Inc. is ongoing.

This litigation is part of the Attorney General'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 some form of fee. Under a discount health plan, the plan member should receive a discount but is obligated to make all payments for services provided. 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 and review a joint consumer advisory issued by the Attorney General's Office and the Division of Insurance pdf format of health_advisory.pdf .

The matter is being handled by Assistant Attorney General Emiliano Mazlen with assistance from Assistant Attorneys General Susan Brown, Sarah Ragland and Division Chief Thomas O'Brien, all of AG Coakley's Health Care Division and from Dante Annicelli of the AG's Civil Investigations Division.

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