MANHATTAN (CN) - In a federal class action, AARP members claim that AARP's "relentless appetite for royalty revenues" led the organization "to increase the cost of premiums for AARP-sponsored health insurance in a manner unrelated to the cost of the insured health service."
AARP - the American Association of Retired People - claims to have 38 million members. The class also sued the AARP Insurance Plan (aka the Trust), and defendants' trustees and directors.
The class claims the Trust processed $5.9 billion in insurance premium payments in 2007, and received nearly $500 million in royalties, "more than 50% of which were derived from AARP's sponsorship of health insurance plans and which funds were transferred to AARP directly from the Trust." It claims the defendants, "aided and abetted by AARP, have violated their fiduciary duties to the beneficiaries of the Trust, abdicating their duties of due care, loyalty and good faith in favor of AARP and contrary to the interests of plaintiff and other AARP member-insureds."
The class is represented by Judith Spanier with Abbey Spanier & Rood.