Minn. Gov. Urges Consumers to be Aware of Fraudulent Health Insurance Providers

May 19, 2005

Gov. Tim Pawlenty is alerting Minnesota consumers to misleading “health plan” advertisements that have been faxed to Minnesota businesses and individuals. These plans do not provide insurance coverage and do not directly pay hospital or doctor bills.

“Minnesota consumers need to know that this is not health insurance, plain and simple,” Gov. Pawlenty said. “These are unregulated discount programs that are dressed up to look like health insurance policies.”

The Governor is alerting consumers based on cease and desist orders issued by the Minnesota Department of Commerce to 12 entities that have allegedly engaged in false and misleading advertising of health care plans:

Affordable Health Care / Continental Health, San Diego, Calif;
US Healthcare / Family Care / File, Houston, Texas;
Smart Health Care Solutions, Tempe, Ariz;
Family Choice, Newport Beach, Calif;
Peoples Health Plan / Health Care Advantage, Deerfield Beach, Fla;
Med Health Plus or One Equal Access Health, Arlington, Texas;
Colonial Health, Houston, Texas;
All American Health Plan, Houston, Texas;
Protective SmartHealth Plus;
Extra Health Family;
American Medical Services, Clearwater, Fla.

None of these entities is authorized to sell insurance in Minnesota.

The advertisement for each company employs a similar approach:

Include terms such as “health plan”, “healthcare”, “insurance”, “benefits”, and “medical program.” One advertisement used Spanish terms such as “beneficios” and “programa medico.”

Offer to enroll individuals or families for a monthly fee to receive discounted services from participating health care providers, both medical and dental. In some cases, a one-time enrolment fee was required.

In 2004, Cease and Desist Orders were also issued to:

Family Health – also known as Family Health Benefits, Family Healthcare, A&B Marketing, AB National Marketing – of Bellaire and Houston, Texas;
Health One Inc. of Houston, Texas;
Med One Gold of Plainfield, New Jersey.

Minnesota law defines “health plan” as a policy or certificate of accident and sickness insurance. The advertisement only offers discounts in a preferred provider organization (PPO). For example, if a person who purchases one of the advertised programs visits a physician participating in the PPO, they would be entitled to a discount, but would not otherwise be “covered.” The advertised program would make no payment to the physician on behalf of the patient.

Some advertisements made claims such as

“ALL preexisting conditions accepted!”
“NO limitations on usage!”
“You cannot be singled out for rate increases or cancellations.”
“No restrictions.”
“Get health care that includes Maternity, Vision and Dental, Accidental Injury (Emergency Room)”
Offered to “an entire family for only $89.95 per month for a limited time only.”

“Minnesota consumers would be in for a shock if they think these companies will pay for their doctor and hospital bills,” Commerce Commissioner Glenn Wilson said. “My best advice is to check out the company and make sure you understand what will come out of your pocket and what benefits, if any, are provided by the company. Don’t fall for the ‘too good to be true’ claims.”

The Department of Commerce is alleging that each of the 12 entities have violated Minnesota insurance law in regard to solicitation of a health care plan. They are ordered to stop any further deceptive or misleading advertising and may not make any other misrepresentations relating to the business of insurance in Minnesota. Each may request a hearing.

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