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
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.