LOS ANGELES (CN) — A class action accuses AARP of financially abusing elders by taking kickbacks from UnitedHealth insurance, forcing members to pay extra and violating California insurance and business laws.
Lead plaintiff Simon Leavy sued AARP and UnitedHealth Group on Friday in Superior Court, on behalf of all California 65 years or older who paid membership fees to AARP, and were deceptively charged an extra 4.95 percent “royalty” for selling AARP-branded UnitedHealth policies. Leavy calls that a “legal fiction,” which enables AARP to operate as an unlicensed insurer.
Represented by the Homampour Law Firm and Schimmel & Parks, both of Sherman Oaks, the class claims AARP misrepresents itself as a nonprofit, but “receives hundreds of millions of dollars through business partnerships with large insurance companies such as UnitedHealth Group, Inc. and UnitedHealthCare Insurance Company (collectively, ‘United Health’) in the form of ‘royalties,’ which are actually commissions in disguise to avoid obtaining an insurance license and to avoid paying taxes on the income.”
The class calls it “an elaborate scheme” whereby AARP “markets, advertises, endorses, solicits, offers and sells AARP branded insurance policies on behalf of UnitedHealth,” and administers the policies and collects and remits insurance premiums for the 4.95 percent fee.
AARP claims to have more than 40 million members and earns $750 million a year through business partnerships with large insurers, despite its nonprofit status, the complaint states. It entered into the partnership with UnitedHealth in 1997.
Leavy et al. seek class certification, restitution, disgorgement of unjust profits and treble and punitive damages for two counts of California Insurance Code violations, negligence, two counts of unlawful business practices, and financial elder abuse.
The Superior Court complaint was filed Friday. None of the parties could be contacted for comment over the weekend.