AG Healey sues UnitedHealth insurance companies alleging residents were cheated out of more than $43.5 million

BOSTON – Attorney General Maura Healey announced today that her office has sued three companies for misleading consumers looking for traditional health insurance into purchasing supplemental health insurance products of very limited value, cheating more than 15,000 Massachusetts residents out of more than $43.5 million since 2011.

The AG’s Office filed the complaint today in Suffolk Superior Court against HealthMarkets, Inc. and its subsidiaries The Chesapeake Life Insurance Company, and HealthMarkets Insurance Agency, Inc. f/k/a Insphere Insurance Solutions, Inc. The complaint alleges that the companies violated the state’s consumer protection law and a prior consent judgment in the same court meant to protect consumers.

“Their business model was to dupe consumers into buying supplemental health insurance products, which they did not know about, did not want, or were misled into thinking were necessary or valuable,” said AG Healey. “The misconduct here is even worse, because HealthMarkets is a repeat offender. We are suing to recover the money taken from Massachusetts residents and ensure that this never happens again.”

The companies are based in Texas and have operated in Massachusetts and around the country. Since 2019, they have been owned by UnitedHealth Group.

The AG’s lawsuit alleges that the companies deceived consumers both about their sales agents and the insurance products they were selling. It alleges that they used consumers’ need for traditional health insurance as a “trojan horse” to meet with them and sell unnecessary and limited value supplemental health insurance. The companies’ advertising deceptively claimed that their sales agents were objective, that their services were free, and that they represented all insurance carriers. The AG’s complaint alleges, however, that their agents were not objective, but were incentivized with higher commission rates to sell Chesapeake’s supplemental insurance. The complaint further alleges that those agents did not represent all carriers and sometimes did charge consumers fees.

The complaint also alleges that sales agents deceptively passed off supplemental insurance as major medical insurance or as part of major medical insurance, including by hiding it in bundles with major medical insurance. Other allegations include:

-Illegally advertising their agents as insurance advisors, when they were not licensed as advisors;
-Targeting consumers who had low incomes and were Medicaid-eligible;
-Unlawfully selling supplemental health insurance as a substitute (rather than a supplement) for major medical insurance;
-Making incomplete or unfair comparisons relating to their supplemental health insurance; and
-Deceptively manipulating consumers’ emotions in order to sell supplemental health insurance.

According to the complaint, the companies’ misconduct is in violation of a 2009 Superior Court judgment enjoining them from engaging in many of these activities based on an earlier lawsuit brought by the Attorney General’s Office alleging that HealthMarkets, Inc. and two different subsidiaries had engaged in similarly deceptive practices related to sales of health insurance.

Consumers who have been impacted by these practices and would like to provide information about HealthMarkets or Chesapeake’s sales of health insurance in Massachusetts may contact the Attorney General’s Health Care Division at 617-963-2580.

This matter is being handled by Assistant Attorneys General Emiliano Mazlen and Michael Wong, and Division Chief Eric Gold, all of the AG’s Health Care Division, along with State Trial Counsel Jim Sweeney. The case also received assistance from Mediator Jennifer Morris, Paralegal Troy Brown, Mediator Patricia Hamilton and Mediation Coordinator Lisa Fenichel, of the AG’s Health Care Division, and Anthony Crespi and Marlee Greer of the AG’s Civil Investigations Division.