BIRMINGHAM, Ala. (CN) - A predatory insurance group deceived thousands of consumers by selling "junk insurance" plans with low caps and extremely limited benefits, advertising it as comprehensive medical insurance, consumers claim in a class action.
Lead plaintiff Jacquelyn Weaver sued The National Better Living Association, Allied Health Benefits, The United States Life Insurance Company in the City of New York, Albert Cormier Solutions and Health Lead Systems, in Federal Court.
Weaver claims the companies targeted consumers who couldn't afford employer-sponsored plans or did not qualify for them, and persuaded them to buy worthless insurance policies and pay "membership" fees to the association.
"This action challenges a deceptive and predatory 'association plan' insurance scam designed to enrich defendants at the expense of vulnerable consumers seeking individual health insurance," the lawsuit states. "The scheme is carried out by setting up a dubious 'group association,' which is nothing more than a subterfuge to evade regulatory oversight. Then, as part of the association's purported 'group benefit,' the defendants deceptively market and sell certain worthless, junk insurance under the auspices of comprehensive, major medical insurance to consumers who cannot afford or are ineligible for credible coverage. In truth, the purported 'coverage' is extremely limited and essentially worthless, often leaving consumers with substantial unpaid medical bills and medical debt. This scheme, which has reaped substantial profits for the defendants, was played upon the named plaintiff and thousands of other vulnerable consumers across the United States."
The Norcross, Ga.-based National Better Living Association claims to be a membership association that offers health and wellness services, including medical insurance group benefits.
"Defendant The National Better Living Association was formed under dubious circumstances with loose membership criteria for the sole (and improper) purpose of soliciting and selling health insurance nationally to the insurance buying public," the complaint states. "The health insurance sold by NBLA and its agents is purposefully bundled with other purported 'benefits,' such as travel discounts or prepaid legal services, to obfuscate the Association's actual purpose of soliciting and selling health insurance under the auspices of a 'group association' or 'group benefit,' thus fostering a belief in consumers that the association coverage is 'group' coverage with benefits and protections similar to job-based group insurance." (Parentheses in complaint).
Allied Health Benefits, which shares an address with The National Better Living Association, promoted and sold the association's membership and insurance products through contracts with third-party telemarketers. Defendants Albert Cormier Solutions and Health Lead Systems acted as telemarketing agents for the association, according to the complaint.
Tennessee-based Albert Cormier was dissolved in 2011 and its assets were distributed, according to publicly available information.
Health Lead Systems, a Texas corporation, could not be reached at its former phone number.
The association and its agents sold so-called health policies with poor coverage and limited benefits to consumers in Alabama and other states. By buying the policies, underwritten by AIG subsidiary The United States Life Insurance Company in the City of New York, consumers automatically became members of the association and were charged association fees on top of the insurance premiums, according to the complaint.
Weaver claims the defendants targeted people like her, who could not afford comprehensive medical insurance from major providers.
In February 2009, Weaver says, she entered her information on one of the defendants' website and received a quote for a purported group-based health insurance policy.
Weaver says she believed she was dealing with a legitimate health insurance company which would provide her comprehensive health coverage.
She claims the defendants intentionally misrepresented the policies as inexpensive health plans with great coverage, when in fact they were so limited as to be worthless.
The association claimed the insurance would provide full coverage for all pre-existing conditions and would offer group benefits such as a major medical insurance plan, according to the complaint.
In reality, Weaver says, the buyers paid out-of-pocket premiums for useless coverage and ended up with substantial medical bills.
She claims the defendants took advantage of state regulators' lack of authority over "limited benefit plans" and association coverage to carry out their misleading marketing scheme.
Hundreds of defrauded consumers have filed online complaints and other lawsuits against the defendants over their misleading practices, and some states have shut down the scheme, according to the complaint.
In February 2012, Montana's Commissioner of Securities and Insurance announced a settlement with the National Better Living Association and several of its affiliates, which relieved Montana victims of more than $170,000 in medical debt that resulted from the company's allegedly illegal marketing of health insurance policies.
Weaver seeks class certification, restitution and damages for RICO violations, conspiracy, breach of contract and unjust enrichment.
She is represented by R. Brent Irby with McCallum, Hoaglund, Cook & Irby, of Vestavia Hills, Ala.
The National Better Living Association did not reply to a request for comment Thursday.
Read the Top 8
Sign up for the Top 8, a roundup of the day's top stories delivered directly to your inbox Monday through Friday.