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How it Works: Association Scam (PDF)

Companies settle more than $170,000 in medical debt for Montana victims

February 8, 2012

HELENA, Mont. – Commissioner of Securities and Insurance Monica J. Lindeen today announced a settlement with the National Better Living Association and several of its affiliated companies that will relieve Montana victims of more than $170,000 in medical debt that amassed as a result of the company's allegedly illegal marketing of health insurance policies.

"Association scams are one of the worst insurance scams operating today," said Lindeen. "By leading people to believe they had the full coverage of major medical health insurance, these scams damaged not only their victims' wallets, but their health. This case should send a clear message to scammers who would follow in their footsteps: not in Montana."

In legal documents filed by the Commissioner's office last year, the Commissioner's investigators alleged the National Better Living Association purchased cheap insurance policies with limited coverage and hired high-pressure telemarketers to sell the policies as if they were major medical insurance.

Montanans who were roped into the scam told investigators that telemarketers promised the insurance would provide full coverage for all preexisting conditions. According to one victim, telemarketers said the policy was an "Obamacare" plan, alluding to the federal health care reform law. The law, however, doesn't prohibit exclusions for preexisting conditions until 2014.

Investigators believe the telemarketers obtained phone numbers and other personal information from victims through fake "get-a-quote" websites that claim to compare health insurance products and recommend the most affordable options. In reality, information submitted on these websites was used to target individuals and families with the greatest need for major medical insurance.

Most victims didn't realize how little coverage they had until after they had undergone a costly medical procedure and filed a claim for reimbursement. As a result, many victims were left with tens of thousands of dollars in medical debt they couldn't pay.

"We buy health insurance so that when disaster strikes, we don't have to face the financial burden alone," said Lindeen. "But people who think they've found an inexpensive option through association scams often don't realize how alone they are until it's too late."

Allied Health Benefits, Inc., a company affiliated with the National Better Living Association, agreed to pay $25,000 as a result of the settlement. The National Better Living Association agreed to stop selling its products in Montana. One of the telemarketer "call centers," PSI/Health Leads System, Inc., settled with the Commissioner, paid a $15,000 fine and agreed to cease doing business in Montana. Two of the insurance companies who backed the policies sold in Montana, the U.S. Life Health Insurance Company and the National Union Fire Insurance Company, agreed to settle more than $170,000 in medical debt accrued by Montana victims. Additional penalties for companies involved in the sale of the National Better Living Association's products in Montana, including the telemarketers, are expected in the coming months.

Lindeen recommended consumers take steps to protect themselves from association scams, like avoiding unfamiliar "get-a-quote" websites and reading a complete outline of benefits before purchasing health insurance.

"Some things should never be bought sight-unseen, and health insurance is one of them," said Lindeen. "Always read through the outline of coverage before you buy insurance, and if you have questions, call my office. Finally, if you're in the market for health insurance, start your search with a reputable, local agent."

To see how association scams work, download the Commissioner's new handout, "How it Works: The Association Scam," available on the Commissioner's website at csi.mt.gov/AssociationScam. For more information about the Commissioner's work on this and other association scam cases, visit the Commissioner's website at csi.mt.gov or call 800-332-6148.