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Morrison Orders Full Refunds
For Montana Victims Of Insurance Law Violations
Settlement announced with California-based Prudent Choice
to resolve violations of Montana Insurance Code
8/3/07, MONTANA - Montana State Auditor John
Morrison today announced details of a settlement agreement
with California-based Prudent Choice to resolve violations
of the Montana Medical Care Discount Card Act. In March of
last year, Morrison issued a cease and desist order after
charging Prudent Choice and its CEO, President and CFO, Stephen
T. Cook, a California resident, with numerous violations of
the Montana Insurance Code.
“This settlement agreement serves to
remind medical discount card companies that protecting Montanans
is our number one priority,” said Morrison. “If
discount card providers refuse to play by our new rules, they
will pay the price and won’t be allowed to operate in
Montana.”
The action taken against Prudent Choice was
only the second of its kind in Montana, and among the first
in the nation, relying on a recently enacted law governing
medical care discount cards. Morrison requested the legislation
in the 2005 session to ensure that medical care discount card
providers were legitimate before they were allowed to sell
their products in Montana.
Under the agreement, Prudent Choice must offer
full refunds to all of its Montana customers and pay an administrative
fine of $150,000 – with $75,000 of that suspended dependent
upon full compliance with the final order. Prudent Choice
has also agreed to reimburse Montana residents 15% of all
medical expenses, up to $300, incurred while on the plan.
In addition Prudent Choice is banned from marketing and selling
its products in Montana for five years.
"Through our actions, we stopped Prudent
Choice from victimizing additional Montanans,” said
Morrison, “but perhaps more importantly, we were able
to get reimbursement and restitution for the victims. People
can expect to receive settlement letters within the next few
weeks – they need to follow the instructions outlined
in their letter. Folks can certainly call my office if they
have questions.”
Morrison’s order is based on his findings
that Stephen T. Cook and his company Prudent Choice, which
are not organized or licensed as insurance companies, are
promoting and selling unauthorized and unapproved medical
care discount card plans. Morrison strongly urges any Montanan
who has purchased medical care discount coverage from Stephen
T. Cook and his company Prudent Choice to contact the Montana
State Auditor’s Office and to meet with a licensed insurance
agent as soon as possible to secure legitimate coverage.
Unfortunately, when people go to the doctor
or hospital and attempt to use the unregistered discount cards,
they discover they are responsible for the entire medical
bill. “Not only do they have to pay 100% of the costs,
they are out whatever amount they paid for the phony coverage,”
said Morrison.
Cook and his group are accused of advertising
and selling illegal medical discount plans for a one-time
fee of $99 and $39.99 per month for individual coverage or
$55.99 per month for family coverage. Although Morrison had
previously put Cook on notice to stop operating as a supplier
of medical care discount cards until they had properly registered
with the State Auditor’s Office, Cook continued offering
the illegal product. Advertisements offering Prudent Choice
medical care discount plans aired on television stations and
ran in newspapers across the state and were also broadcast
to Montana fax machines.
“This is a sad example of how a few unscrupulous
businesses target and take advantage of the most vulnerable
members of our society,” said Morrison. “These
businesses are making false promises to Montanans who already
have a hard time finding traditional means of insurance. While
these cards appear to be a form of insurance, they are anything
but real protection.”
Fake insurance schemes are easy to avoid.
“Simply call my office to check the registration of
both the insurance product and the person or company offering
it,” said Morrison. “If there is no registration
with my office, that’s a red flag that the product or
the marketer is illegal.”
The settlement agreement can be found at: http://www.sao.mt.gov/legal/insurance/I07_PrudentChoice.pdf.
Montanans who have questions regarding the settlement can
call the State Auditor’s Office at 1-800-332-6148.
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