For Immediate Release - March 02, 2011

AG Coakley's Office Obtains Judgments Against New Jersey Businesses and Individuals for Fraudulently marketing and Selling Discount Health Plan

BOSTON - Attorney General Martha Coakley has obtained civil judgments against two New Jersey companies and three New Jersey individuals for fraudulently marketing and selling a discount health plan as health insurance to Massachusetts consumers. The judgments order restitution for consumers and preventive measures to ensure the defendants' future compliance with the law.

Under the judgments, filed in Suffolk Superior Court, National Alliance of Associations, Professional Benefit Consultants, Inc., Thomas Sullivan, James Doyle and Christopher Ashiotes are ordered to pay Massachusetts consumers $147,920 in restitution and to pay the Commonwealth $285,000 in civil penalties and $43,800 in attorneys' fees. The judgments also permanently prohibit the defendants from marketing or selling a product that is not a health plan as health insurance; misrepresenting any product, including association memberships, as health insurance; violating regulations issued by the Attorney General governing discount health plans and discount health plan organizations; and sending unsolicited facsimiles to Massachusetts consumers.

"Massachusetts residents are required to have health insurance and are presented with a wide range of coverage options. It is critical that companies that offer any kind of medical coverage plans or medical discount cards clearly disclose what their plans do and do not offer, and whether they fulfill the individual mandate," AG Coakley said. "Our office has received numerous complaints from consumers who have fallen victim to these deceptive discount health plan scams where companies purport to offer health insurance but do not and we will continue to investigate and prosecute those companies that engage in these types of fraudulent business practices."

In April 2009, the Attorney General's Office filed a lawsuit in Suffolk Superior Court against the defendants, alleging that they sent unsolicited facsimiles advertising: "LOW COST QUALITY HEALTH CARE FOR THE INDIVIDUAL & ENTIRE FAMILY," and "TOP RATED INSURANCE." According to the complaint, the defendants sought to convince consumers that they were offering health insurance, although the product was not health insurance and the companies were not licensed to provide health insurance in Massachusetts. The complaint further alleged that the defendants misrepresented that their products satisfied the Massachusetts insurance mandate.

This litigation is part of the Attorney General's multi-pronged approach to address the deceptive marketing of discount health plans, including issuing , publishing consumer education advisories and pursuing other enforcement actions in order to safeguard consumers from these scams. In addition to the case resolved by the judgments announced today, the Attorney General Coakley's office has also filed a lawsuit against four companies alleging that they were involved in deceptively marketing and selling a discount health plan to hundreds of Massachusetts residents. In that litigation, the companies agreed to be legally barred from marketing, selling or promoting certain discount health plans to any Massachusetts resident while the lawsuit against them is pending.

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 receives a discount, but is obligated to make all payments for services provided. Discount health plans are not insurance products and are not regulated by the Massachusetts Division of Insurance. These plans also do not meet the minimum coverage standards for health insurance as required under Massachusetts law.

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

This matter was handled by Assistant Attorney General Emily Paradise with assistance from Assistant Attorney General Emiliano Mazlen and Division Chief Thomas O'Brien of Attorney General Coakley's Health Care Division, and Monique Cascarano from the Attorney General Coakley's Civil Investigations Division.