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Colorado Insurance Commissioner Orders
“Cease and Desist” for Sale of Fraudulent
Health Insurance; DORA’s Division of Insurance
Advises Consumers to Verify License Before Purchasing
Health Plans
12/17/08 - COLORADO - “Some
people spend more time deciding where to eat lunch than
they do researching where to purchase insurance,”
said Marcy Morrison, Colorado Commissioner of Insurance.
“With sophisticated scam artists working to convince
people to send money off to an imaginary company promising
great health benefits for practically pennies, the risk
of being deceived is really high. An outfit that can
offer health insurance at half the cost anywhere else
may be offering nothing but empty promises in exchange
for your hard-earned cash.”
Typically, fake insurance companies
collect premiums for false policies with no intention
of paying claims. These illegitimate companies offer
significantly lower premiums and may solicit new business
by fax, by phone or through emails and phony internet
sites.
If a consumer is tempted by the incredible
deal, the first smart step is to find out if it’s
legitimate insurance.
“Consumers need to check the
credentials of anyone claiming to sell insurance before
they hand over access to a checking account or credit
card,” said Morrison. “Every licensed company
and agent in Colorado is listed on our web site. The
Division of Insurance will assist consumers in verifying
that the plan they want to purchase is really insurance
before they sign on the dotted line.”
Earlier this month, the Commissioner
signed an emergency Cease and Desist order against individuals
and businesses who were selling unauthorized “insurance”
to Colorado consumers, taking consumers’ money
and providing nothing in return. The Cease and Desist
order names Consolidated Workers Association (CWA);
The Consolidated Workers Risk Retention Group, LLC (CWRRG);
the National Alliance of Benefit Services Association
(NABSA); Claims and Benefit Management (CBM); Integrated
Health Benefits (IHB); Walter R. Cecchini, Jr; and Brad
Wessler. The companies named are located in Washington,
D.C., Delaware and California, but are accused of selling
unauthorized insurance in Colorado and other states.
One of the methods for enticing consumers
to pay premiums for the fraudulent insurance was to
convince individuals that they would be eligible for
a limited benefits plan if they paid to join an organization
first. Enrollment in the association entitled members
to access the organization’s “health benefit
plan.” The plan outline listed benefits for hospitalization,
surgical procedures and doctor visits.
Detailed in the Cease and Desist
order is one consumer’s statement that the membership
fee and subsequent “premiums” of $369 per
month were deducted from her bank account as payment
for “comprehensive health insurance” coverage.
During the time in which this consumer and her family
paid for the coverage, a family memberdeveloped a serious
illness and sought treatment. The health providers who
treated the family member claim they have received no
compensation for services. After discovering the “health
plan” was fraudulent, the family secured legitimate
health insurance from another company. However, the
serious illness is not covered by that policy on the
grounds it was a pre-existing condition.
In addition to the consumer and her
family detailed above, the Division has learned of at
least 27 other “members” of the health plan
(sold by those named in the Cease and Desist order)
who live in Colorado and who have paid fees for similar
health coverage that is not licensed in the state. Seriously
ill people who purchased phony health insurance may
find their credit ruined when they can’t pay large
medical bills after their policy refuses to pay.
The Colorado Division of Insurance
urges consumers to take the time to check for warning
signs when offered a “too good to be true”
deal on insurance.
Warning signs for fake insurance
include:
- The unsolicited offer comes by
“blast fax” and does not include a company
name, physical address or contact name.
- The primary contact is a toll-free
number and “operators are standing by.”
The person on the phone may be vague or misleading
about where the offices are physically located.
- The salesperson or promotional
material pressures consumers for a quick decision.
Phrases like “limited time offer” or “offer
ends tomorrow” will be prominent. Ask yourself:
why would an insurance company pressure you to make
a quick deal, if they are planning to serve you well
and work with you for years to come?
- The salesperson is vague about
the company underwriting the policy. In some cases,
the salesperson may imply it is a very large and well-known
company underwriting policy at a fraction of the standard
cost. At the very least, ask for the name of the insurer,
its address and a phone number for its customer service
department. Call the company before you sign or give
your bank account numbers to see if they really offer
a policy for the quoted price.
- The salesperson or company is
not listed as an authorized licensed insurance company
or producer (agent) on the Division of Insurance website.
Taking time to research the company
or agent, and to be sure you are choosing a health insurance
policy that works for you is well worth the effort.
Any insurance policy issued by a company that is not
licensed to do business, or any paperwork or policies
that it hands out, are probably not worth the paper
they are printed on. No consumerwants to find out they’ve
been “taken” by an unscrupulous scam artist,
but discovering this when there is a stack of unpaid
claims for medical treatment is even worse.
Protect your family’s health
and your financial resources: be sure you are purchasing
authorized insurance and not falling victim to an insurance
scam.
Consumers may verify a license of
an insurance provider or agent in Colorado at the following
link on DORA's Division of Insurance website: http://cdilookup.asisvcs.com/.
For additional consumer tips on insurance or other issues,
please visit www.dora.state.co.us
# # #
DORA is dedicated to preserving the
integrity of the marketplace and is committed to promoting
a fair and competitive business environment in Colorado.
Consumer protection is our mission.
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