Know Your Rights
Beware Health Plan Fraud
By David S. Casey, Jr. and Martin W. Edelman
Sadly, the warning signs seem like nothing out of the ordinary: long delays in receiving paperwork, interminable waits after submitting claims, a merry-go-round of recorded messages, never talking to live person when you call to follow-up.
All of these are the tell-tale signs of health plan fraud -- that is, a health plan that doesn't really exist and is just another scam to steal money from you and your family.
Take the case of Judy Coburn, who was seeking pre-approval to get cataract surgery. At one point, she spent four and a half hours on hold before making a startling discovery: her insurance company, Employers Mutual was unlicensed, as well as the target of cease-and-desist orders in a number of states. In short, it was a fraud.
Terri Orr of Montverde Florida made a similar discovery when her husband was diagnosed with advanced lymphoma and needed chemotherapy. Her health plan was being shut down by the state.
Once a local or regional issue, the health plan fraud scam has gone national. According to one recent study conducted by Georgetown University, bogus insurers have left about 100,000 victims with $85 million in unpaid medical bills. And don't think if you're the victim of a bogus health plan that you don't need to pay your medical bills. You do.
These fraudulent health plans have a pretty simple method of attack. They take on a name and appearance similar to a health plan that you are likely to have heard of. (Remember the bogus Employers Mutual? There is a real-life and legitimate Employers Mutual Casualty Co. in Iowa.)
Once they are set up, these bogus plans try and sign up as many people as possible, collect their premiums, pay a few claims to add the appearance of legitimacy. But when the claims really start to pile up or the inspectors catch on, they shut down and get out of town.
There are a number of precautions that you can take to be sure you do not become the victim of health care plan fraud:
- Check out the insurer. Contact your state insurance department to confirm that the company is properly licensed. Use the exact name – to better learn whether there have been past complaints or problems.
- Check out the sponsor. Be wary of health plans that lack clear eligibility requirements. Always ask if the plan is fully insured by a licensed insurer.
- Don't jump at a deal. As the old saying goes, if it sounds too good to be true, it probably is. Be careful of plans offering low premiums, easy access, no health assessments, etc.
- Beware of "unregulated" plans. A plan that claims to be exempt from state regulation is almost certainly fraudulent.
- Know who you're dealing with. Deal only with reputable, licensed agents and brokers. Check with your state insurance department for this data.
There are also a number of good sources of information. The National Association of Insurance Commissioners offers a useful brochure titled, "Protect Yourself Against Illegal Health Plans." It can be found at http://www.naic.org/pressroom/consumer_alerts/MEWA.pdf. The Coalition Against Insurance Fraud also provides a list of 10 warning signs for bogus health plans and also provides a roster of unlicensed operators. That can be found at http://www.insurancefraud.org. And for information about how the insurance system can be improved for you, check out http://www.insurance-reform.org.
David S. Casey, Jr., president of the Association of Trial Lawyers of America, is a partner in the San Diego, CA law firm of Casey, Gerry, Reed, and Schenk.
Martin W. Edelman, president of the New York State Trial Lawyers Association, is a partner in the New York law firm of Edelman & Edelman, P.C.
