A health insurer was banned from operating in Rhode Island for three years and ordered to pay more than $2.3 million in restitution after allegedly engaging in illegal underwriting practices.
MEGA Life and Health Insurance Co. (MEGA), a division of HealthMarkets, based in North Richland Hills, Texas,engaged in a number of health insurance underwriting practices in violation of the Rhode Island Small Employer Health Insurance Availability Act, according to Rhode Island Health Insurance Commissioner Christopher F. Koller. It declined coverage to employees who did not meet MEGA’s health underwriting standards, charged small employers premiums higher than the 4:1 ratio required by Rhode Island law, charged excessive membership fees and failed to offer coverage equally to small businesses, according to Koller’s investigation.
MEGA will pay an estimated aggregate restitution of $2.3 million to about 5,500 Rhode Island small businesses for excessive premiums, “improperly” denied health care claims and excessive subscriber fees paid from Oct. 1, 2004, to the present, authorities said. It also will pay a $225,000 penalty to the state.
Koller also banned MEGA from operating in Rhode Island for three years.
“MEGA Life and Health Insurance Co. voluntarily discontinued marketing health insurance products in the state of Rhode Island in 2007″ and cooperated with regulators “to resolve issues during the market conduct examination that commenced in 2006,” HealthMarkets said in a statement. “The company is pleased to have this matter finally brought to a conclusion and will fully comply with all aspects of the settlement agreement.”
Since 2008, HealthMarkets and its subsidiaries paid more than $40 million to settle complaints in more than 30 states, according to the Dallas Business Journal.
In a similar case in 2009, the state of Massachusetts ordered HealthMarkets and its subsidiaries, MEGA and Mid-West National Life Insurance, to pay more than $17 million in consumer relief, penalties and costs; banned them for at least five years from selling their health plans in Massachusetts; and required them to exit the Massachusetts health plan business.
HealthMarkets and its owners, Blackstone Group and Goldman Sachs Group, also face a Los Angeles lawsuit brought by the city a year ago that alleges that its subsidiaries sold coverage that was marketed as comprehensive but which included “hidden and obscure exclusions and limitations,” according to the Fort Worth Star-Telegram.
MEGA is licensed to sell health insurance plans in all states except New York.
The HealthMarkets Cos. include MEGA, Mid-West National Life Insurance Co. of Tennessee, and the Chesapeake Life Insurance Co.
Insurer banned from R.I. for three years, pays $2.3M restitution via IFAwebnews .
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