Class Calls Group Policies ‘Virtually Worthless’

LOS ANGELES (CN) - "Sham organization" HealthExtras charged consumers pricey premiums for "virtually worthless" group insurance, a class action claims in Federal Court.

Lead plaintiff Arie Waiserman claims that at the tail end of the 1990s HealthExtras tricked him into buying an insurance policy he believed would provide him with $1 million of coverage if he ever became permanently disabled.

He claims that HealthExtras used information it gleaned from his marketing connections with American Express-, VISA- and MasterCard-issuing banks, reeling him in by using "Superman" actor Christopher Reeve in a marketing campaign.

HealthExtras and a long list of co-defendants, in an "extraordinary display of self-dealing" formed a "fictitious, illegal and sham" trust called AIG Group Insurance Trust, Waiserman claims in the 46-page lawsuit, with 19 additional pages of exhibits. The trust sold insurance policies to unwitting consumers as an illegal blanket insurance group, though none of the members qualified for such a plan under California insurance laws, according to the complaint.

"The illegal group to whom the insurance product was sold consists solely of persons whose only commonality is that they have a credit card and were chosen by HealthExtras and others as a good marketing prospect for the policy," the lawsuit states.

HealthExtras used its account with the sham trust to collect "excessive, illegal" premiums that provided no benefit to consumers, Waiserman claims.

He claims that HealthExtras is "not licensed anywhere as an insurance company," but collects almost 80 percent of policy premiums and hikes its rates "without prior approval," as required by state law.

Waiserman claims that he and the class believed they had $1 million in permanent disability coverage, but their policies are "replete with extremely harsh, restrictive and confusing exclusions and contradictory terms and definitions which intentionally renders the policy virtually worthless to purchasers."

He claims that underwriters denied thousands of customers disability benefits after they suffered catastrophic career-ending injuries.

"For nearly 14 years, the various underwriters engaged by HealthExtras have used the harsh and restrictive exclusions in the HealthExtras policies to deny disability claims while collecting millions from California residents and all 50 states," the lawsuit states.

Those co-defendant underwriters allegedly include National Union Fire Insurance, a member of insurance giant American International Group (AIG), both of which are named as defendants.

Waiserman seeks class certification, an injunction and punitive damages for conspiracy, consumer law violations, false advertising, unfair competition, unjust enrichment, violation of good faith and fair dealing.

Here are the defendants: National Union Fire Insurance Company of Pittsburgh, PA, dba National Union Fire Insurance Co.; American International Group Inc. (AIG); HeatlhExtras Inc.; HealthExtras LLC; HealthExtras Benefits Administrators Inc.; Catamaran Health Solutions LLC, fka Catalyst Health Solutions Inc.; Healthextras Insurance Agency Inc.; Alliant Insurance Services Inc., fka Driver Alliant Insurance Services Inc.; Alliant Services Houston Inc., fka JLT Services Corp.; Alliant Insurance Services Houston LLC, fka Capital Risk LLC, fka Jardine Lloyd Thompson LLC; Virginia Surety Company Inc.

Waiserman is represented by Paul Sizemore of El Segundo.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit